I recently completed a research review of the effects of rent control and found—similar to what many others have found—that rent control is a decidedly inefficient approach to mitigating local affordable housing challenges. There are, of course, families that have benefitted from rent control and for those families the policy has had a positive outcome. But rent control suffers from significant drawbacks, and at the macro level does not provide a compelling way forward.
So if not rent control, then what?
The Terner Center for Housing Innovation at UC Berkeley issued a briefto support a “third way” dialogue around rent control in California. They offer two alternative options for protecting tenants from dramatic rent increases, without stifling new residential development:
Anti-Gouging Gap: Under California state statute, there is an opportunity to enact a statewide cap on rent increases based on the state or regional CPI plus an additional 5 percent. The published rent increases presumably would bring predictability and stability for renters and landlords.
Expand or Preserve the Affordable Housing Stock Through Tax Incentives: Property owners would be incentivized to create or preserve affordable housing units through an ad valorem property tax abatement. Modeled after a similar program in Washington state, the tax abatement would increase the supply and availability of below-market rate units.
I would add four other options that should be part of the dialogue on solving the rental housing challenge:
Build More Housing. I realize that there is a lot of controversy about a blanket “build more housing” statement, particularly among affordable housing and social justice advocates. Encouraging localities to relax regulation to allow more housing to be built is important and can be done in a way that sustains and creates inclusive neighborhoods.
Incentivize the Production of Below-Market Rate Housing as Part of New Residential Development. Communities should adopt well-designed, locally-appropriate inclusionary housing programs to add to the affordable housing stock. The offsets (e.g. density, financial or other subsidies) as part of an inclusionary housing program need to be appropriate to the local market.
Expand and Improve the Low Income Housing Tax Credit Program. The LIHTC program is the primary way in which affordable rental housing gets built, often leveraging other funding sources. While the program has its critics (see here and here, for example), there have to be ways to strengthen, improve and expand the program to get more affordable housing on the ground.
Allocate More Resources to Housing Vouchers. Housing vouchers provide assistance to families to help enable them to rent homes on the private market. There is nowhere near enough funding through the Federal Housing Choice Voucher program to meet the need. But local communities can create local housing voucher and grant programs that can be flexible to meet local needs. Key to creating these local vouchers—and maybe this should be a separate tool or options—is that local communities need a local housing trust fund that has dedicated or reliable funding over time.
What would you add to this list? Would love to hear from you!