Definition and Examples of Rent Control
The National Apartment Association defines rent control as “government-enforced price control measures limiting the rents that property owners may charge in market-rate rental housing.” Again, this simply means government agencies can cap how much a landlord can charge for rent. Rent-control laws can apply at the local, state, or federal level. As of 2020, only Oregon and Washington, D.C., had broad rent-control measures in place. California had statewide rent-control caps and city-specific laws. New York, New Jersey, and Maryland also had rent-control laws, though they don’t apply statewide. Twenty-five states preempt localities from imposing rent- control measures altogether.
Alternate names: Rent regulation, rent stabilization, rent freezing
New York City is perhaps one of the best examples of a city that uses rent control to limit rental prices. Its rent-control program dates back to 1943 when President Franklin D. Roosevelt signed the Federal Emergency Price Control Act into law after it was deemed necessary to control rental pricing during the inflationary wartime economy.
How Rent Control Works
Rent control works by limiting the amount landlords can charge for rent. Local or state laws can dictate when rental-control restrictions apply. The restrictions you may be subject to can depend on where you live. In New York, for example, rent control applies to residential buildings constructed before February 1, 1947, in New York City and in Nassau and Westchester counties. Under New York’s rent-control laws, tenants are not required to sign renewal leases, rent increases are limited, and evictions are regulated. Renters in San Francisco are protected by the San Francisco Rent Ordinance, which provides rent control and lists requirements for eviction. Rents can only increase by a certain amount each year and evictions can only be carried out under certain circumstances, such as:
Nonpayment of rentHabitually late rent paymentsFrequent bounced checks for rent paymentsBreach of the rental agreementIllegal use of the rental unitUnapproved subtenantsNuisance reports from neighbors or damage to the unit
The COVID-19 pandemic affected rent control regulations in certain areas. In San Francisco, for instance, emergency legislation was passed to temporarily ban rent increases. Federal regulations also put a temporary halt to rental evictions, including those considered lawful under rent control statutes.
Criticisms of Rent Control
Rent-control programs afford benefits to renters, particularly those in lower-income brackets since they prevent steep rate hikes and offer protections against unfair evictions. Those protections can help lower-income people stay in their homes, especially in hot rental markets where rental prices are skyrocketing even as incomes remain stagnant. However, plenty of arguments are made against rent control. For instance, rent control is often perceived to be distorting the housing market by driving away real estate investors. Rent-control laws could limit the potential for profit, so individual investors or developers may take their investment dollars elsewhere. If fewer development and rehabilitation projects take place, the rent-controlled area may have increasing numbers of renters vying for the same number of rental units. The quality of those rental units may decline, as landlords may be reluctant to invest in anything more than the bare minimum maintenance and upkeep. Landlords may also face challenges in evicting tenants from rent-controlled units. Any new rental developments end up costing more because of increased demand. In turn, as renters are pushed out of rent-controlled areas, they may look elsewhere for housing. Landlords in surrounding areas can capitalize on this situation by charging higher rental rates. That’s a boon for those landlords, as they may be able to reap more profits. But it means renters may end up having to allocate more of their income to housing costs each month. As of May 2021, the national median rent for a two-bedroom unit was $1,544, though of course rent varies widely depending on your location. That figure represents a year-over-year increase of 4.8%. Meanwhile, more than half of cost-burdened renters spend 50% or more of their income on rent.
