Renewed interest in rent control in California and otherplaces is a reaction to growing housing affordability challenges across the country and in high-cost coastal markets, in particular. As rents continue to rise, rent control is being advocated as a mechanism to help mitigate the rental affordability challenge and make it easier for lower-income individuals and families find housing they can afford in high-cost regions.
I understand the instinct to create a policy to restrict rent levels. Regulating rents seems like a logical way to keep housing costs low for people who need affordable housing. However, there are pretty significant problems with rent control. Economists nearly universally agreethat rent ceilings reduce the quantity and quality of housing and that even more moderate forms of rent stabilization—which place limits on rent increases rather than rent levels—are inefficient and have negative housing market impacts.
There have been many empirical studies on rent control and rent stabilization programs. Many researchers have examined New York City’s rent control law, but others have taken a look at rent control in Washington DC, Boston, Los Angeles, San Francisco, and Santa Monica. In a recent research review and synthesis, I evaluated the findings from more than two dozen empirical studies of rent control.
Here’s what I found:
Rent control and rent stabilization policies do a poor job at targeting benefits. While some low-income families do benefit from rent control, so, too, do higher-income households. There are more efficient and effective ways to provide assistance to lower-income individuals and families who have trouble finding housing they can afford.Residents of rent-controlled units move less often than do residents of uncontrolled housing units which can mean that rent control causes renters to continue to live in units that are too small, too large, or not in the right locations to best meet their housing needs.Rent-controlled buildings potentially can suffer from deterioration or lack of investment but the risk is minimized when there are effective local requirements and/or incentives for building maintenance and improvements.Rent control and rent stabilization laws lead to a reduction in the available supply of rental housing in a community, particularly through the conversion to ownership of controlled buildings. Rent control policies can hold rents of controlled units at lower levels, but not under all circumstances. Rent control policies generally lead to higher rents in the uncontrolled market, with rents sometimes substantially higher than would be expected without rent control.There are significant fiscal costs associated with implementing a rent control program.
Communities should understand the risks associated with rent control and rent stabilization policies and cast a wider net in terms of solutions for their housing affordability challenges.
A future blog will explore the question: If not rent control, then what?
If you need more information on the impacts of rent control—or research on any local housing policy—please contact me at email@example.com or call 703-598-1220!