I am no economist, but it seems to me that Kahlon's plan that will meddle with the free market is a bad idea and will backfire.
Kahlon announced his first law proposal being the "Fair Rent Law". Kahlon is focusing on trying to bring housing costs down, and with this bill he is focusing on rental prices.
The idea of Kahlon's proposal is that rental prices would be standardized, and landlords would be limited in their ability to raise rent - once a renter signs on an apartment, the landlord will not be allowed to raise the rent for a period of three to five years, though the rent could increase as it would be tied so some housing market index, or a flat 2% per year.
It seems to me, in my non-expert opinion, that this is meddling in the free market. If landlords cannot charge the rent they want, and cannot raise rents when values go up, when supply is down and when demand is high, they won't invest in real estate.
Perhaps landlords will decide to sell their apartments, with their rental income limited, and that will flood the housing market and bring prices down. Maybe that is really behind Kahlon's plan.
I think the market should dictate what landlords can charge. If a landlord charges too much, he wont find a renter.
I have no problem with his ideas of taxing rental income from the first shekel. I don't see why I need to pay taxes on my income from the first shekel but landlords do not need to. So I am fine with that. They should pay taxes on their income like everybody else. That is not meddling i the market.
Telling landlords they cannot raise the prices, despite an apartment increasing in value due to local market forces seems unfair to the landlord.
Kahlon should increase the number of public housing units available where the government can establish rent control. I don't think he should meddle and control rental prices in the private market.
what do you think?
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