Rent Control By Dan Threet, Research Analyst, NLIHC RENT REGULATION AS AN ANTI- ent control, or rent regulation more DISPLACEMENT TOOL generally, refers to policies that either In some jurisdictions, rent control may be a limit the maximum rent or the speed of useful means of preventing the displacement Rrent increases for privately owned rental homes. of renters in rapidly gentrifying areas. While such policies will not solve the housing Proponents argue that regulation can correct affordability crisis on their own, research suggests power imbalances between landlords and they can slow displacement and improve housing renters and give due recognition to long-term stability for some lower-income renters. tenants’ interest in staying in their homes. Because rent control lowers the rent burden for TYPES OF RENT REGULATION existing tenants and protects them from sudden Rent control policies come in many forms. While increases, renters in controlled rental homes historically some policies imposed a ceiling on tend to remain in their homes longer than those rents, most forms of rent control today instead in uncontrolled homes. Longer tenures may regulate the speed and size of rent increases, reflect greater housing stability and better access which can be referred to as rent stabilization. to neighborhood opportunities. On the other Some rent stabilization policies sharply restrict hand, longer tenures may also reflect restricted increases, while others merely prohibit large mobility, if renters stay in regulated homes of and sudden spikes or price gouging. Rent the wrong size or far from work in order to keep control policies also vary in what proportion of lower rents. the private-market rental stock they regulate. Rent control benefits renters who happen to While some cover all rental homes in an area, occupy regulated homes, not necessarily the most policies target older rental homes to avoid renters who have the greatest need. While some discouraging new construction. Some rent higher-income renters will benefit, renters in regulations exempt smaller buildings, and some regulated homes are much less likely than renters allow homes to be brought up to market rate in unregulated homes to be wealthy. In New when they are vacated. York City, the median income of renters in rent- In recent years, there has been increasing stabilized homes is considerably lower than the support for rent regulation measures in median income of renters in unregulated homes. some states and cities, though the majority of All the same, critics argue that insensitivity to jurisdictions with rent regulation are still found need makes rent regulation inefficient, wasting in New York, New Jersey, and California. In 2019, resources on higher-income tenants. Oregon limited annual rent increases on many Lower-income renters may be disadvantaged homes and New York strengthened existing rent by poorly designed regulations. Lower-income regulations. Despite a few proposals in Congress, households are more likely to need to move for rent regulation remains overwhelmingly an issue work, health, or family, so they may not be able for state and local politics, rather than a federal to hold onto regulated homes as well as higher- issue—partly because a permanent national income renters. Higher-income renters may policy would face greater legal challenges, and be willing to initially pay above-market rents partly because a uniform set of regulations would for stabilized units, confident that they will not serve high- and low-cost markets equally eventually benefit from slower increases, which well. lower-income renters are less likely to be able to do. Some have argued that regulations give landlords incentives to apply stricter screening 6–64 2021 ADVOCATES’ GUIDE criteria, which could make housing searches than they would in a city without regulation. Of harder for younger tenants and tenants with course, the design of rent regulation affects the children. size of the unregulated market. BROADER EFFECTS OF RENT Housing Quality REGULATION It is unclear what effect rent control has on housing quality. Some economists argue that The benefits and risks of rent control for low- regulation discourages landlords from investing income renters not yet living in the area or not in their buildings. While some research has living in rent-regulated homes are less well found a modest decline in the quality of regulated understood. Research provides mixed evidence buildings, which could point to decreased of how rent control affects overall housing supply, investment, others argue that factors like the rent levels in uncontrolled homes, and housing state of economy matter more, and a study of quality. There is little evidence that rent control rent control in the District of Columbia found increases economic or racial integration or that unregulated homes had more maintenance reduces homelessness. issues. Rent regulation policies may indirectly Housing Supply regulate housing quality, when approval of rent Conventional wisdom holds that rent control will increases is tied to proper maintenance and code diminish the supply of available rental homes, by enforcement. discouraging new construction and encouraging Other Effects landlords to pull homes out of the market, but the No consistent relationship has been observed empirical evidence is mixed. Several studies have between rent regulation and rates of found that rent regulation does not dampen new homelessness. Likewise, existing research construction, though that likely depends on how does not find any consistent effect on rates of much the policy restricts increases and how long overcrowding. While some proponents of rent new construction is exempted from regulation. regulation tout mixed-income neighborhoods Rent regulation can increase the likelihood as a goal of rent control policies, there is that owners convert rental homes to condos or little evidence that rent control consistently redevelop them for other purposes. What effect increases economic integration in the long rent regulation has on housing supply may well term. However, to the extent that rent regulation depend on related regulations, like whether slows displacement, it could allow lower-income landlords are prevented from taking homes off renters to stay in a neighborhood longer. Finally, the market or are guaranteed a certain rate of there is mixed evidence whether people of color return. access rent-controlled homes in proportion Rent Levels in Unregulated Homes to their share of the population. While people If rent regulation limits housing supply, then of color were found to be overrepresented in it might raise rents in unregulated homes, but regulated homes in New Jersey, they were the empirical evidence is also mixed on this underrepresented in Boston. point. Some studies show rising housing costs Proponents readily admit that rent regulation for uncontrolled homes in cities with rent needs to be paired with other measures to regulations, while other research has found no create more affordable housing, since it does impact or even a decrease in the rents of nearby not increase the supply, benefit all lower- uncontrolled rental homes. Given the uncertainty, income renters, or ensure economic and racial it may be best to consider this an unresolved integration. One common argument for rent worry about the side effects of rent regulation— regulation is that it is fast, scalable, and cheap, low-income renters who do not secure a since it does not require a direct subsidy. It may regulated home may have to spend more on rent allow many lower-income renters to remain in NATIONAL LOW INCOME HOUSING COALITION 6–65 place in cities with rising housing prices. There are still opportunity costs involved, however, since rent regulation requires administrative oversight and enforcement, and lower rents can affect property values and tax revenue that could be used for other purposes. Given the uncertainties about how rent regulation affects housing supply, unregulated rent levels, and housing quality, any rent regulation policy needs to be carefully designed and paired with supplementary regulation to protect low-income renters. FOR MORE INFORMATION Chew, A., & Treuhaft, S. 2019. Our homes, our future: How rent control can build stable, healthy communities. Washington, DC: PolicyLink. Pastor, M., Carter, V., & Abood, M. 2018. Rent matters: What are the impacts of rent stabilization measures? Los Angeles: USC Dornsife. Rajasekaran, P., Treskon, M., & Greene, S. 2019. Rent control: What does the research tell us about the effectiveness of local action? Washington, D.C.: Urban Institute. Sturtevant, L. 2018. The impacts of rent control: A research review and synthesis. Washington, DC: National Multifamily Housing Council. 6–66 2021 ADVOCATES’ GUIDE.