Rent control in the United States
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In the United States,
rent control Rent regulation is a system of laws, administered by a court or a public authority, which aims to ensure the affordability of housing and tenancies on the rental market for dwellings. Generally, a system of rent regulation involves: * Price con ...
refers to laws or ordinances that set
price control Price controls are restrictions set in place and enforced by governments, on the prices that can be charged for goods and services in a market. The intent behind implementing such controls can stem from the desire to maintain affordability of good ...
s on the
rent Rent may refer to: Economics *Renting, an agreement where a payment is made for the temporary use of a good, service or property *Economic rent, any payment in excess of the cost of production *Rent-seeking, attempting to increase one's share of e ...
of residential
housing Housing, or more generally, living spaces, refers to the construction and assigned usage of houses or buildings individually or collectively, for the purpose of shelter. Housing ensures that members of society have a place to live, whether i ...
to function as a price ceiling. More loosely, "rent control" describes several types of price control: * "strict price ceilings", also known as "rent freeze" systems, or "absolute" or "first generation" rent controls, in which no increases in rent are allowed at all (rent is typically frozen at the rate existing when the law was enacted); * "vacancy control", also known as "strict" or "strong" rent control, in which the rental price can rise but continues to be regulated in between tenancies (a new tenant pays almost the same rent as the previous tenant); and * "vacancy decontrol", also known as "tenancy" or "second-generation" rent control, which limits price increases during a tenancy but allows rents to rise to market rate between tenancies (new tenants pay market rate rent but increases are limited as long as they remain). As of 2022, six states (
California California is a state in the Western United States, located along the Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the most populous U.S. state and the 3rd largest by area. It is also the m ...
, New York,
New Jersey New Jersey is a state in the Mid-Atlantic and Northeastern regions of the United States. It is bordered on the north and east by the state of New York; on the east, southeast, and south by the Atlantic Ocean; on the west by the Delaware ...
,
Maryland Maryland ( ) is a state in the Mid-Atlantic region of the United States. It shares borders with Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware and the Atlantic Ocean to ...
,
Oregon Oregon () is a state in the Pacific Northwest region of the Western United States. The Columbia River delineates much of Oregon's northern boundary with Washington, while the Snake River delineates much of its eastern boundary with Idaho. T ...
, and
Minnesota Minnesota () is a state in the upper midwestern region of the United States. It is the 12th largest U.S. state in area and the 22nd most populous, with over 5.75 million residents. Minnesota is home to western prairies, now given over to ...
) and the
District of Columbia ) , image_skyline = , image_caption = Clockwise from top left: the Washington Monument and Lincoln Memorial on the National Mall, United States Capitol, Logan Circle, Jefferson Memorial, White House, Adams Morgan, ...
have localities in which some form of residential rent control is in effect (for normal structures, excluding mobile homes). Thirty-seven states either prohibit or preempt rent control, while seven states allow their cities to enact rent control but have no cities that have implemented it. For localities with rent control, it often covers a large percentage of that city's stock of rental units. For example, in
New York City New York, often called New York City or NYC, is the most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the most densely populated major city in the Un ...
as of 2017, 45% of rental units were "rent stabilized" and 1% were "rent controlled" (these are different legal classifications in NYC). In the District of Columbia as of 2019, about 36% of rental units were rent controlled. In
San Francisco San Francisco (; Spanish for " Saint Francis"), officially the City and County of San Francisco, is the commercial, financial, and cultural center of Northern California. The city proper is the fourth most populous in California and 17th ...
as of 2014, about 75% of all rental units were rent controlled, and in
Los Angeles Los Angeles ( ; es, Los Ángeles, link=no , ), often referred to by its initials L.A., is the List of municipalities in California, largest city in the U.S. state, state of California and the List of United States cities by population, sec ...
in 2014, 80% of multifamily units were rent controlled. In 2019,
Oregon Oregon () is a state in the Pacific Northwest region of the Western United States. The Columbia River delineates much of Oregon's northern boundary with Washington, while the Snake River delineates much of its eastern boundary with Idaho. T ...
's legislature passed a bill which made the state the first in the nation to adopt a state-wide rent control policy. This new law limits annual rent increases to inflation plus 7 percent, includes vacancy decontrol (market rate between tenancies), exempts new construction for 15 years, and keeps the current state ban on local rent control policies (state level preemption) intact. In November 2021, voters in
Saint Paul, Minnesota Saint Paul (abbreviated St. Paul) is the capital of the U.S. state of Minnesota and the county seat of Ramsey County. Situated on high bluffs overlooking a bend in the Mississippi River, Saint Paul is a regional business hub and the center ...
, passed a rent control
ballot initiative In political science, an initiative (also known as a popular initiative or citizens' initiative) is a means by which a petition signed by a certain number of registered voters can force a government to choose either to enact a law or hold a p ...
that capped annual rent increases at 3 percent, included vacancy control, and did not exempt new construction or allow inflation to be added to the allowable rate increase. This resulted in an 80% reduction in requests for new multifamily housing permits, while in neighboring
Minneapolis Minneapolis () is the largest city in Minnesota, United States, and the county seat of Hennepin County. The city is abundant in water, with thirteen lakes, wetlands, the Mississippi River, creeks and waterfalls. Minneapolis has its origins ...
, where voters authorized the city council to craft a rent control ordinance which might exempt new construction, permits were up 70%. There is a consensus among economists that rent control reduces the quality and quantity of rental housing units. Other observers see rent control as benefiting the renter, preventing excessive rent increases and unfair evictions. Rent control may stabilize a community, promoting continuity, and it may mitigate
income inequality There are wide varieties of economic inequality, most notably income inequality measured using the distribution of income (the amount of money people are paid) and wealth inequality measured using the distribution of wealth (the amount of we ...
.


History

In the United States during
World War I World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, the United States, and the Ottoman Empire, with fightin ...
, rents were "controlled" through a combination of public pressure and the efforts of local anti-rent-profiteering committees. Between 1919 and 1924, a number of cities and states adopted rent- and eviction-control laws. Modern rent controls were first adopted in response to the Great Depression and WWII- era shortages. Because of these shortages and the overall national economic crisis, the federal government called for emergency price control on consumer goods and rent control in 1942. However, not all states decided to implement these rent control laws. It was not until the 1970s, during the economic recession, that Richard Nixon temporarily implemented a national wage and price controls to combat hyperinflation, but this did not last for long and began to phase out in 1973. Nonetheless, tenants particularly in Berkeley kept organizing and brought rent stabilization to the June 6, 1973 L972 ballot. They won and Berkeley became the first city in California to have rent control since World War II. Other cities around the country followed and some still remain in effect or have been reintroduced in certain cities with large tenant populations, such as
New York City New York, often called New York City or NYC, is the most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the most densely populated major city in the Un ...
,
San Francisco San Francisco (; Spanish for " Saint Francis"), officially the City and County of San Francisco, is the commercial, financial, and cultural center of Northern California. The city proper is the fourth most populous in California and 17th ...
,
Los Angeles Los Angeles ( ; es, Los Ángeles, link=no , ), often referred to by its initials L.A., is the List of municipalities in California, largest city in the U.S. state, state of California and the List of United States cities by population, sec ...
,
Washington, D.C. ) , image_skyline = , image_caption = Clockwise from top left: the Washington Monument and Lincoln Memorial on the National Mall, United States Capitol, Logan Circle, Jefferson Memorial, White House, Adams Morgan, ...
, and
Oakland, California Oakland is the largest city and the county seat of Alameda County, California, United States. A major West Coast of the United States, West Coast port, Oakland is the largest city in the East Bay region of the San Francisco Bay Area, the third ...
. Many smaller communities also have rent control — notably the
California California is a state in the Western United States, located along the Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the most populous U.S. state and the 3rd largest by area. It is also the m ...
cities of
Santa Monica Santa Monica (; Spanish: ''Santa Mónica'') is a city in Los Angeles County, situated along Santa Monica Bay on California's South Coast. Santa Monica's 2020 U.S. Census population was 93,076. Santa Monica is a popular resort town, owing to i ...
,
Berkeley Berkeley most often refers to: *Berkeley, California, a city in the United States **University of California, Berkeley, a public university in Berkeley, California * George Berkeley (1685–1753), Anglo-Irish philosopher Berkeley may also refer ...
, and
West Hollywood West Hollywood is a city in Los Angeles County, California, United States. Incorporated in 1984, it is home to the Sunset Strip. As of the 2020 U.S. Census, its population was 35,757. It is considered one of the most prominent gay villages ...
— along with many small towns in
New Jersey New Jersey is a state in the Mid-Atlantic and Northeastern regions of the United States. It is bordered on the north and east by the state of New York; on the east, southeast, and south by the Atlantic Ocean; on the west by the Delaware ...
. In the early 1990s, rent control in some cities, such as
Boston Boston (), officially the City of Boston, is the state capital and most populous city of the Commonwealth of Massachusetts, as well as the cultural and financial center of the New England region of the United States. It is the 24th- mo ...
and
Cambridge, Massachusetts Cambridge ( ) is a city in Middlesex County, Massachusetts, United States. As part of the Boston metropolitan area, the cities population of the 2020 U.S. census was 118,403, making it the fourth most populous city in the state, behind Boston ...
, was ended by state
referendum A referendum (plural: referendums or less commonly referenda) is a direct vote by the electorate on a proposal, law, or political issue. This is in contrast to an issue being voted on by a representative. This may result in the adoption of a ...
s. When rent control ended in Cambridge, the city realized a 20% increase in new development and an increase in property values, according to a study by the MIT Center for Real Estate. History reveals that these regulations are constantly in flux and adapting to situations such as natural disasters, economic crises, and pandemics. These changes do not always look the same and vary within each state and city. For example, due to
COVID-19 Coronavirus disease 2019 (COVID-19) is a contagious disease caused by a virus, the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The first known case was identified in Wuhan, China, in December 2019. The disease quickly ...
, Oakland, California implemented a moratorium to prevent evictions from happening, which ended in February 2021. Whereas in Massachusetts the eviction moratorium ended on October 17, 2020, and there was a CDC moratorium that stopped physical removals in cases where tenants owed rent due to illness or job loss until December 31, 2020.


New York

New York State New York, officially the State of New York, is a state in the Northeastern United States. It is often called New York State to distinguish it from its largest city, New York City. With a total area of , New York is the 27th-largest U.S. stat ...
has had the longest history of rent controls, since 1943. New York City contains the majority of units covered by rent control. Rent control laws have stayed on the books for decades in New York because of an inadequate supply of "decent, affordable housing". The worsening in the rental market led to the enactment of the Rent Stabilization Law of 1969, which aimed to help increase the number of available rental units. The current system is very complicated, and most of the protected renters are elderly. William A. Moses, the founder of the Community Housing Improvement Program, a trade association that represents the owners of over 4,000 apartment buildings in New York City, said in 1983 that rent control was "the principal reason for neighborhood deterioration" and that at least 300,000 apartment units would have been built in New York City without it. Moses argued that landlords might not maintain their property if they were not allowed to collect adequate rent. Urban planning scholar
Peter Marcuse Peter Marcuse (November 13, 1928 – March 4, 2022) was a German-born American lawyer and professor of urban planning. Biography Marcuse was the older son of Sophie Wertheim and philosopher and critical theory, critical theorist Herbert Marcuse. ...
said in 1983 that rent control was not the reason for some landlords abandoning their NYC properties at the low end of the market – instead, such abandonment stemmed from the inability of low-income renters to pay the maximum rent allowed by law. New York expanded rent control to encompass other municipalities in 2019 through the passage of the Housing Stability and Tenant Protection Act of 2019. Since then, opponents have argued these new rent control regulations hinder investment in multifamily properties in New York City. New York's rent control laws have also received criticism for inadvertently benefiting affluent tenants who might not otherwise need rental assistance. Additionally, a survey of property owners who own or manage rent stabilized units in New York City found that rent regulations would lead to fewer non-essential improvements and proactive maintenance at their buildings.


California

In California, municipal enactment of rent controls followed the high
inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduct ...
of the 1970s (causing rents to continually rise) and the 1979 statewide
Proposition 13 Proposition 13 (officially named the People's Initiative to Limit Property Taxation) is an amendment of the Constitution of California enacted during 1978, by means of the initiative process. The initiative was approved by California voters on J ...
, which set
property tax A property tax or millage rate is an ad valorem tax on the value of a property.In the OECD classification scheme, tax on property includes "taxes on immovable property or net wealth, taxes on the change of ownership of property through inhe ...
rates at 1%, and capped yearly increases at 2%. Leading the campaign to enact Proposition 13, California politician
Howard Jarvis Howard Arnold Jarvis (September 22, 1903 – August 12, 1986) was an American businessman, lobbyist, and politician. He was a tax policy activist responsible for passage of California's Proposition 13 in 1978. Early life and education Jarvis ...
tried to get tenants to vote for Prop 13 by claiming that landlords would pass tax savings along to tenants; when most failed to do so, it became an additional motivating factor for rent control. In 1985, California adopted the
Ellis Act The Ellis Act (California Government Code Chapter 12.75) is a 1985 California state law that allows landlords to evict residential tenants to "go out of the rental business" in spite of desires by local governments to compel them to continue provid ...
, eliminating municipalities' ability to prohibit the removal of properties from rental activities after the
California Supreme Court The Supreme Court of California is the highest and final court of appeals in the courts of the U.S. state of California. It is headquartered in San Francisco at the Earl Warren Building, but it regularly holds sessions in Los Angeles and Sac ...
in ''Nash v. City of Santa Monica'' ruled that municipalities could prevent landlords from "going out of business" and withdrawing their properties from the rental marke
New Study Calls for Ellis Act Reform
"Strong" or "vacancy control" rent control laws were in effect in five California cities (
West Hollywood West Hollywood is a city in Los Angeles County, California, United States. Incorporated in 1984, it is home to the Sunset Strip. As of the 2020 U.S. Census, its population was 35,757. It is considered one of the most prominent gay villages ...
,
Santa Monica Santa Monica (; Spanish: ''Santa Mónica'') is a city in Los Angeles County, situated along Santa Monica Bay on California's South Coast. Santa Monica's 2020 U.S. Census population was 93,076. Santa Monica is a popular resort town, owing to i ...
,
Berkeley Berkeley most often refers to: *Berkeley, California, a city in the United States **University of California, Berkeley, a public university in Berkeley, California * George Berkeley (1685–1753), Anglo-Irish philosopher Berkeley may also refer ...
,
East Palo Alto East Palo Alto (abbreviated E.P.A.) is a city in San Mateo County, California, United States. As of the 2020 census, the population of East Palo Alto was 30,034. It is situated on the San Francisco Peninsula, roughly halfway between the cities of ...
, and Cotati) in 1995, when AB 1164 (known as the Costa-Hawkins Rental Housing Act) preempted some elements of municipal rent control ordinances and eliminated strong rent-control in California (except in special cases like
mobile home parks A trailer park,caravan park, mobile home park, mobile home community or manufactured home community is a temporary or permanent area for mobile homes and travel trailers. Advantages include low cost compared to other housing, and quick and eas ...
). In 2018, a statewide
initiative In political science, an initiative (also known as a popular initiative or citizens' initiative) is a means by which a petition signed by a certain number of registered voters can force a government to choose either to enact a law or hold a ...
( Proposition 10) attempted to repeal the Costa-Hawkins law, which, if passed, would have allowed cities and municipalities to enact "strong" or "vacancy control" systems, allowed rent control to be applied to buildings built after 1995, and would have allowed rent control on single-family homes. All are currently prohibited by Costa-Hawkins. The proposition failed 59% to 41%. In 2019, the California legislature passed and the governor signed AB 1482, which created a statewide rent cap for the next 10 years. The Tenant Protection Act of 2019 caps annual rent increases at 5% plus regional inflation. For example, had the bill been in effect in 2019, rent increases in Los Angeles would have been capped at 8.3%, and in San Francisco at 9%. The increases are pegged to the rental rate as of March 15, 2019. The new law does not apply to buildings built within the prior 15 years, or to single-family homes (unless owned by corporations or institutional investors). It also includes a requirement to show "just cause" for evictions, and retains "vacancy decontrol", meaning that rents can increase to market rate between tenants. In 2020, Michael Weinstein, the founder of the
AIDS Healthcare Foundation AIDS Healthcare Foundation (AHF) is a Los Angeles-based 501(c)(3) nonprofit organization providing medicine and health care to individuals living with or affected by HIV/AIDS. As of 2020, it operates about 400 clinics, 64 outpatient healthcare ce ...
, sponsored and financed a second ballot initiative to allow more rent control, because he felt that AB 1482 (above) did not provide enough tenant protections, such as limiting rent increases between tenants. 2020 California Proposition 21, like its predecessor 2018 California Proposition 10, was funded almost exclusively by Weinstein's AIDS Healthcare Foundation, and failed by an almost identical margin.


Mobile homes

In some regions, rent control laws are more commonly adopted for mobile home parks. Reasons given for these laws include residents owning their homes while renting the land the home sits on, the high cost of moving mobile homes, and the loss of home value when they are moved. California, for example, has only 13 local apartment rent control laws but over 100 local mobile home rent control laws. No new mobile home parks have been built in California since 1991.


Law

Rent control laws define which rental units are affected, and may only cover larger complexes, or units older than a certain date. To attempt to not disincentivise investment in new housing stock, rent control laws often exempt new construction. For example, San Francisco's Rent Stabilization Ordinance exempts all units built after 1979.
New York State New York, officially the State of New York, is a state in the Northeastern United States. It is often called New York State to distinguish it from its largest city, New York City. With a total area of , New York is the 27th-largest U.S. stat ...
generally exempts units built after 1974 anywhere in the state (although owners can agree to rent stabilization in exchange for tax benefits). The frequency and degree of rent increases are limited, usually to the rate of inflation defined by the
United States Consumer Price Index The United States Consumer Price Index (CPI) is a set of consumer price indices calculated by the U.S. Bureau of Labor Statistics (BLS). To be precise, the BLS routinely computes many different CPIs that are used for different purposes. E ...
or to a fraction thereof. San Francisco, for example, allows annual rent increases of 60% of the CPI, up to a maximum 7%. Rent control laws are often administered by nonelected rent control boards. Officers in city government assign members of the board, which will ensure mixed numbers of tenants and property owners to balance out their benefits. As stated in Goodman's research, a typical rent control board in New York is structured by two tenants, two landlords, and one homeowner. (Gilderbloom & Markham, 1996).


Federal law

Rent regulation Rent regulation is a system of laws, administered by a court or a public authority, which aims to ensure the affordability of housing and tenancies on the rental market for dwellings. Generally, a system of rent regulation involves: *Price cont ...
in the United States is an issue for each state. In 1921, the Supreme Court of the United States case of ''
Block v. Hirsh ''Block v. Hirsh'', 256 U.S. 135 (1921), is a United States Supreme Court case which upheld a temporary rent control law in the District of Columbia. It set a precedent in American law that government can regulate housing conditions during times ...
'' held by a majority that regulation of rents in the District of Columbia as a temporary emergency measure was constitutional, but shortly afterwards in 1924 in '' Chastleton Corp v. Sinclair'' the same law was unanimously struck down by the Supreme Court. After the 1930s New Deal, the Supreme Court ceased to interfere with social and economic legislation, and a growing number of states adopted rules. In the 1986 case of '' Fisher v. City of Berkeley'', the US Supreme court held that there was no incompatibility between rent control and the Sherman Act.


State and local law

Oregon Oregon () is a state in the Pacific Northwest region of the Western United States. The Columbia River delineates much of Oregon's northern boundary with Washington, while the Snake River delineates much of its eastern boundary with Idaho. T ...
and
California California is a state in the Western United States, located along the Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the most populous U.S. state and the 3rd largest by area. It is also the m ...
are the only states with statewide rent control laws, both enacted in 2019. Six states—
California California is a state in the Western United States, located along the Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the most populous U.S. state and the 3rd largest by area. It is also the m ...
, New York,
New Jersey New Jersey is a state in the Mid-Atlantic and Northeastern regions of the United States. It is bordered on the north and east by the state of New York; on the east, southeast, and south by the Atlantic Ocean; on the west by the Delaware ...
,
Maine Maine () is a state in the New England and Northeastern regions of the United States. It borders New Hampshire to the west, the Gulf of Maine to the southeast, and the Canadian provinces of New Brunswick and Quebec to the northeast and ...
,
Maryland Maryland ( ) is a state in the Mid-Atlantic region of the United States. It shares borders with Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware and the Atlantic Ocean to ...
, and
Minnesota Minnesota () is a state in the upper midwestern region of the United States. It is the 12th largest U.S. state in area and the 22nd most populous, with over 5.75 million residents. Minnesota is home to western prairies, now given over to ...
—have localities in which some form of residential rent control is in effect.Prasanna Rajasekaran, Mark Treskon, and Solomon Greene
Rent Control: What Does the Research Tell Us about the Effectiveness of Local Action?
, Urban Institute (January 2019).
The
District of Columbia ) , image_skyline = , image_caption = Clockwise from top left: the Washington Monument and Lincoln Memorial on the National Mall, United States Capitol, Logan Circle, Jefferson Memorial, White House, Adams Morgan, ...
also has rent control for some rental units; publicly owned or assisted properties, properties built in 1978 or later, and properties held by an owner with fewer than five rental units are exempt from D.C.'s rent-control law. Thirty-seven states either prohibit or preempt rent control, while eight states allow their cities to enact rent control, but have no cities that have implemented it. As of 2019, about 182 U.S. municipalities have rent control: 99 in New Jersey, 63 in New York, 18 in California, one in Maryland, and
Washington, D.C. ) , image_skyline = , image_caption = Clockwise from top left: the Washington Monument and Lincoln Memorial on the National Mall, United States Capitol, Logan Circle, Jefferson Memorial, White House, Adams Morgan, ...
The five most populous cities with rent control are
New York City New York, often called New York City or NYC, is the most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the most densely populated major city in the Un ...
;
Los Angeles Los Angeles ( ; es, Los Ángeles, link=no , ), often referred to by its initials L.A., is the List of municipalities in California, largest city in the U.S. state, state of California and the List of United States cities by population, sec ...
;
San Francisco San Francisco (; Spanish for " Saint Francis"), officially the City and County of San Francisco, is the commercial, financial, and cultural center of Northern California. The city proper is the fourth most populous in California and 17th ...
; Oakland; and Washington, D.C. The sole Maryland municipality with rent control is
Takoma Park Takoma Park is a city in Montgomery County, Maryland, United States. It is a suburb of Washington, and part of the Washington metropolitan area. Founded in 1883 and incorporated in 1890, Takoma Park, informally called " Azalea City", is a Tree ...
.


Impact

There is a consensus among economists that rent control reduces the quality and quantity of housing. A 2009 review of the economic literature by Blair Jenkins found that "the economics profession has reached a rare consensus: Rent control creates many more problems than it solves". In a 2013 analysis of the body of economic research on rent control by Peter Tatian at the
Urban Institute The Urban Institute is a Washington, D.C.–based think tank that carries out economic and social policy research to "open minds, shape decisions, and offer solutions". The institute receives funding from government contracts, foundations and pr ...
(a
think tank A think tank, or policy institute, is a research institute that performs research and advocacy concerning topics such as social policy, political strategy, economics, military, technology, and culture. Most think tanks are non-governmenta ...
described both as "liberal" and "independent"), he stated that "The conclusion seems to be that rent stabilization doesn't do a good job of protecting its intended beneficiaries—poor or vulnerable renters—because the targeting of the benefits is very haphazard.", and concluded that: "Given the current research, there seems to be little one can say in favor of rent control." Two economists from opposing sides of the political spectrum, Nobel Laureate
Paul Krugman Paul Robin Krugman ( ; born February 28, 1953) is an American economist, who is Distinguished Professor of Economics at the Graduate Center of the City University of New York, and a columnist for ''The New York Times''. In 2008, Krugman was ...
(who identifies as an American liberal or European
social democrat Social democracy is a political, social, and economic philosophy within socialism that supports political and economic democracy. As a policy regime, it is described by academics as advocating economic and social interventions to promote soc ...
),"Nobelpristagaren i ekonomi 2008: Paul Krugman"
, speech by Paul Krugman (Retrieved December 26, 2008)
and
Thomas Sowell Thomas Sowell (; born June 30, 1930) is an American author, economist, political commentator and academic who is a senior fellow at the Hoover Institution. With widely published commentary and books—and as a guest on TV and radio—he becam ...
, (who stated that " libertarian" might best describe his views) have both criticized rent regulation as poor economics, which, despite its good intentions, leads to the creation of less housing, raises prices, and increases
urban blight Urban decay (also known as urban rot, urban death or urban blight) is the sociological process by which a previously functioning city, or part of a city, falls into disrepair and decrepitude. There is no single process that leads to urban deca ...
. Writing in 1946, economists
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
and
George J. Stigler George Joseph Stigler (; January 17, 1911 – December 1, 1991) was an American economist. He was the 1982 laureate in Nobel Memorial Prize in Economic Sciences and is considered a key leader of the Chicago school of economics. Early life and e ...
said: "Rent ceilings, therefore, cause haphazard and arbitrary allocation of space, inefficient use of space, retardation of new construction and indefinite continuance of rent ceilings, or subsidization of new construction and a future depression in residential building." Historically, there have been two types of rent control – vacancy control (where the rent level of a unit is controlled irrespective of whether the tenant remains in the unit or not) and vacancy decontrol (where the rent level is controlled only while the existing tenant remains in the unit). In California prior to 1997, both types were allowed (the Costa/Hawkins bill of that year phased out vacancy control provisions). A 1990 study of Santa Monica, CA showed that vacancy control in that city protected existing tenants (lower increases in rent and longer stability). However, the policy potentially discouraged investors from building new rental units. A 2000 study that compared the border areas of four California cities having vacancy control provisions (Santa Monica, Berkeley, West Hollywood, East Palo Alto) with the border areas of adjoining jurisdictions (two of which allowed vacancy decontrol, including Los Angeles, and two of which had no rent control) showed that existing tenants in the vacancy control cities had lower rents and longer tenure than in the comparison areas. Thus, the ordinances helped protect the existing tenants and, therefore, increased community stability. However, there were fewer new rental units created in the border areas of the vacancy controlled cities over the 10-year period. A study that compared the effects of local rent control measures (both vacancy control and vacancy decontrol) with other local
growth management Growth management, in the United States, is a set of techniques used by the government to ensure that as the population grows that there are services available to meet their demands. Growth management goes beyond traditional land use planning, zon ...
measures in 490 California cities and counties (including all the largest ones) showed that rent control was stronger than individual land use restrictions (but not the aggregate effect of all growth restrictions) in reducing the number of rental units constructed between 1980 and 1990. The measures (both rent control and growth management) helped displace new construction from the metropolitan areas to the interiors of the state with low income and minority populations being particularly impacted. In 1994, San Francisco voters passed a
ballot initiative In political science, an initiative (also known as a popular initiative or citizens' initiative) is a means by which a petition signed by a certain number of registered voters can force a government to choose either to enact a law or hold a p ...
which expanded the city's existing rent control laws to include small multi-unit apartments with four or less units, built prior to 1980 (about 30% of the city's rental housing stock at the time). In 2017, Stanford
economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes ...
researcher
Rebecca Diamond Rebecca Diamond (born January 30, 1967) is a former contributor on the Fox Business Network and the Fox News Channel. Biography Born Rebecca Lee Gomez, the daughter of Nadine Ramirez and Leandro Olmos Gomez,condos A condominium (or condo for short) is an ownership structure whereby a building is divided into several units that are each separately owned, surrounded by common areas that are jointly owned. The term can be applied to the building or complex ...
or
TICs A tic is a sudden, repetitive, nonrhythmic motor movement or vocalization involving discrete muscle groups.American Psychiatric Association (2000)DSM-IV-TR: Tourette's Disorder.''Diagnostic and Statistical Manual of Mental Disorders'', 4th ed., ...
) which led to a 15% citywide decrease in total rental units, and a 7% increase in citywide rents. The authors stated that "This substitution toward owner occupied and high-end new construction rental housing likely fueled the gentrification of San Francisco, as these types of properties cater to higher income individuals." The authors also noted that "...forcing landlords to provide insurance against rent increases leads to large losses to tenants. If society desires to provide social insurance against rent increases, it would be more desirable to offer this subsidy in the form of a government subsidy or tax credit. This would remove landlords' incentives to decrease the housing supply and could provide households with the insurance they desire." The rental-accommodation market suffers from information asymmetries and high
transaction costs In economics and related disciplines, a transaction cost is a cost in making any economic trade when participating in a market. Oliver E. Williamson defines transaction costs as the costs of running an economic system of companies, and unlike pro ...
. Typically, a landlord has more information about a home than a prospective tenant can reasonably detect. Moreover, once the tenant has moved in, the costs of moving again are very high. Unscrupulous landlords could conceal defects and, if the tenant complains, threaten to raise the rent at the end of the
lease A lease is a contractual arrangement calling for the user (referred to as the ''lessee'') to pay the owner (referred to as the ''lessor'') for the use of an asset. Property, buildings and vehicles are common assets that are leased. Industrial ...
. With rent control, tenants can request that hidden defects, if they exist, be repaired to comply with
building code A building code (also building control or building regulations) is a set of rules that specify the standards for constructed objects such as buildings and non-building structures. Buildings must conform to the code to obtain planning permiss ...
requirements, without fearing retaliatory rent increases. Rent control could thus compensate somewhat for inefficiencies of the housing market. In older buildings, rent control may broaden incentives to renovate individual units: tenants may invest
sweat equity Sweat equity is a non-monetary benefit that a company's stakeholders give in labor and time, rather than a monetary contribution, that benefit the company. Sweat equity is rewarded in the form of sweat equity shares. These are shares given out by a ...
and their own money to improve their homes if they are protected from landlords trying to capture the added value, while vacancy decontrol preserves landlords' financial incentive to renovate vacant units because it allows them to re-rent at market value. According to a 2018 review of new research by Rebecca Diamond, new research showed that rent control benefitted tenants in the short-run, but had adverse effects for tenants and neighborhood stability in the long-run by reducing affordability, increasing gentrification, and creating negative spillovers for nearby neighborhoods. Landlords frequently responded to rent control policies by reconverting rentals into buildings exempt from rent control or by allowing rentals to decay. A 2019 NBER working paper, which evaluated the efficacy of different housing affordability government policies, found that better targeting of rent control (towards the neediest households) could be welfare improving. A 2021 study modelled rent control policies and found that they may raise housing prices and reduce housing quantities, but that "well-designed rent control may help policymakers to stabilize housing market dynamics, even without creating housing market distortions".


Commentary

In 2000, ''
New York Times ''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid ...
'' columnist and Princeton University economist
Paul Krugman Paul Robin Krugman ( ; born February 28, 1953) is an American economist, who is Distinguished Professor of Economics at the Graduate Center of the City University of New York, and a columnist for ''The New York Times''. In 2008, Krugman was ...
published a frequently cited column on rent control. He wrote, "The analysis of rent control is among the best-understood issues in all of economics, and – among economists anyway – one of the least controversial. In 1992, a poll of the American Economic Association found 93 percent of its members agreeing that 'a ceiling on rents reduces the quality and quantity of housing." In light of recent legislative activity and ballot initiatives, several editorial boards have weighed in on rent control. In March 2019, the Chicago Tribune noted, "The cost of rent control would be borne throughout the city in ways that, over time, would leave Chicago worse off. Even for many renters." In September 2019, the Washington Post argued, "Rent-controlled laws can be good for some privileged beneficiaries, who are often not the people who really need help. But they are bad for many others." In September 2019, the Wall Street Journal wrote, "Economists of all stripes agree rent control doesn't work. A mere 2% think it has positive effects, according to a 2012 survey by the IGM Forum." Tenants' rights activists argue that rent control is necessary in times of long term housing shortages (See
California housing shortage Since about 1970, California has been experiencing an extended and increasing housing shortage, such that by 2018, California ranked 49th among the states of the U.S. in terms of housing units per resident. This shortage has been estimated t ...
) to reduce the human suffering caused by increasing rents and the homelessness which results when people who can no longer afford the rent increases get evicted. Milton Friedman argued that rent control restricts the
property right The right to property, or the right to own property (cf. ownership) is often classified as a human right for natural persons regarding their possessions. A general recognition of a right to private property is found more rarely and is typically ...
s of property owners, as it limits what they may do with their property, requiring petitioning and other processes by law, prior to taking action against a renter.


See also

*
Affordable housing Affordable housing is housing which is deemed affordable to those with a household income at or below the median as rated by the national government or a local government by a recognized housing affordability index. Most of the literature on af ...
* Price ceiling * Subsidized housing * Rent control in New York * Rent control in California *
Rent regulation Rent regulation is a system of laws, administered by a court or a public authority, which aims to ensure the affordability of housing and tenancies on the rental market for dwellings. Generally, a system of rent regulation involves: *Price cont ...
People *
Don A. Allen Don A. Allen, also known as Don A. Allen, Sr. (May 13, 1900 - August 1, 1983), was a member of the California State Assembly in the 1940s and 1950s and of the Los Angeles City Council between 1947 and 1956. Biography Allen was born on May 13, 1 ...
, member of the California State Assembly and of the Los Angeles City Council in the 1940s and 1950s, urged lifting of wartime rent controls in Los Angeles


Notes


References

* Baar, Kenneth K. (1983). "Guidelines for Drafting Rent Control Laws: Lessons of a Decade." Rutgers Law Review, Vol. 35 No. 4 (Summer 1983). * Baar, Kenneth K. (1992). "The Right to Sell the "Im"mobile Manufactured Home in Its Rent Controlled Space in the "Im"mobile Home Park: Valid Regulation or Unconstitutional Taking?" The Urban Lawyer, Vol. 24 pp. 157–221. * * Downs, Anthony (1996). ''A Reevaluation of Residential Rent Controls''. Washington, D.C. : Urban Land Institute, . * Friedman, Milton, and George J. Stigler (1946). ''Roofs or Ceilings? The Current Housing Problem''. Irvington-on-Hudson, N.Y.: Foundation for Economic Education. * Gilderbloom, John I., editor (1981). ''Rent Control: A Source Book''. Center for Policy Alternatives; 3rd edition, June 1, 1981. . * Keating, Dennis, editor (1998). ''Rent Control: Regulation and the Housing Market''. Center for Urban Policy Research, . * McDonough, Cristina (2007). "Rent Control and Rent Stabilization as Forms of Regulatory and Physical Taking." Boston College Environmental Affairs Law Review, Vol. 34 pp. 361–85. * Niebanck, Paul L., editor (1986). ''The Rent Control Debate''. University of North Carolina Press, . * Tucker, William (1991). ''Zoning, Rent Control and Affordable Housing''. . * Turner, Margery Austin (1990). ''Housing Market Impacts of Rent Control''. Washington, D.C.: Urban Institute Press, . *


External links


Rent Control Around the World: Pros and Cons

California cities with rent control








* ttp://www.nhi.org/online/issues/117/KeatingKahn.html Rent Control in the New Millennium by Dennis Keating
Almanac of Policy Issues – Rent Controls





Four Thousand Years of Price Control – Mises Institute

Rent Stabilized Apartments Go Up Again! – Best Rents NYC
{{DEFAULTSORT:Rent Control Affordable housing Housing in the United States Price controls
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...
Real property law in the United States Housing law Regulation in the United States fr:Contrôle des loyers sv:Hyresreglering