Rent Regulation Hurts Renters
NMHC/NAA Viewpoint: Rather than improving the availability of affordable housing, rent control laws exacerbate shortages, cause existing buildings to deteriorate and disproportionately benefit higher-income households.
Rather than improving the availability of affordable housing, rent control laws exacerbate shortages, cause existing buildings to deteriorate and disproportionately benefit higher-income households.
Rent control or rent stabilization laws set a ceiling on rents and severely limit or prohibit property owners from raising rents, particularly if vacancy controls are part of the law as well. Most of the nation’s existing rent control laws were first instituted in the post-war era, when America struggled to find enough housing for returning soldiers. While rent control is viewed as the politically expedient “solution” to helping renters in need, here’s the truth about its impact on communities and the renters it purports to support:
- Rent control laws stifle community development. Rent control laws lead to a reduction in the available supply of rental housing in a community.
- Rent control laws worsen housing affordability for renters. Without adequate supply, renters are faced with fewer and more expensive housing options in communities of choice.
- Rent control laws exacerbate inequitable outcomes for renters. Rent control and rent stabilization policies do a poor job at targeting benefits, resulting in an inequitable distribution of benefits to a “lucky few” vs. targeted benefits to renters in need.
- Rent control laws limit renter opportunity and upward mobility. There are three dimensions of upward mobility that affect housing stability— economic success, being valued in a community, and power and autonomy. Compared to proven solutions like housing vouchers, rent control is counter to mobility as it limits power and autonomy by causing renters to continue to live in units that do not best meet their housing needs, when they otherwise likely would have moved to a unit more suitable for their situation.
- Rent control laws disvalue rental communities and undermine a renter’s right to quality housing. Rent-controlled buildings can potentially suffer from deterioration or lack of investment since owners may not collect enough rent to keep up with repairs, therefore putting residents in the unfair position of prioritizing cost over quality.
Put plain and simple: Rent control hurts renters. Further, it is difficult to find any issue where economists on both sides of the political spectrum agree, except for rent control. Forbes lists the antiquated idea as one of the 10 worst economic ideas of the 20th century, saying: “Here we have a policy initiative that has done huge damage to cities around the globe. It is very hard today to find an economist supporting rent control.” Given the negative effects of rent control and the broad acknowledgement of its ineffectiveness, it’s little surprise that finding supporters for rent control is difficult. A survey by the American Economic Association found that 93% of U.S. economists agreed that rent control reduces the quality and quantity of available housing.
As such, lawmakers should pursue proven alternatives like voucher-based rental assistance to address renter distress in the short-term and policies that increase housing supply to support affordability and renter stability in the long-term.
Recognizing its counterproductive nature, 34 states prohibit local municipalities from implementing rent control laws.