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Chapter 3: Q. 48 (page 79)

Can you propose a policy that would induce the market to supply more rental housing units?

Short Answer

Expert verified

1. Reduce property tax

2. Low priced building permits

Step by step solution

01

Step1. Introduction

Policy changes are initiated to promote economic growth or achieve some pre determined goal set. Here, the proposed problem is supply of rental house units.

02

Step2. Explanation

1. Reduce property tax

Property tax is the annual amount paid by a landowner to the local government or the municipal corporation of his area.

A cut in property tax makes it inexpensive for landlords to purchase more houses and rent them out with some discount or on low prices which in turn induce the customers to rent houses.

2. Low-priced and timely building permits.

Getting a building permit to build apartments takes a lot of time and money. so if the permits are low priced and on time the timely implementation of the building is possible and then it is rented.

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