Rent control refers to laws or ordinances that set price controls on the renting of residential housing. It functions as a price ceiling on residential rental property.
In the United States, rent controls were first adopted in response to WWII-era shortages, or following Richard Nixon’s 1971 wage and price controls.
They remain in effect in some cities with large tenant populations, such as San Francisco, Washington, DC and New York City.
Smaller communities also have rent control, notably Santa Monica, Berkeley, and West Hollywood California along with many small towns in New Jersey such as Camden, Neptune.
In recent years, rent control in some cities, such as Boston and Cambridge, Massachusetts, has been ended by state ballot. Many feel the theory of supply and demand will control rents.
This isn’t always the case.
The Purpose of Rent Control
It is necessary to prevent landlords from imposing rent increases that force key-workers or vulnerable people to leave an area.
Maintaining a supply of affordable housing is essential to sustaining an economy.
Homeowners who support rent control point to the neighborhood instability caused by high or frequent rent increases and the effect on schools, youth groups, and community organizations when tenants move more frequently.
Landlords – No Rent Control!
Rent control is criticized for creating a shortage of housing, reducing its quality, deterring investment and raising the price of unaffected rental units.
If a price is artificially kept low, there will be higher demand for the low price housing, assuming it is habitable. When demand outpaces supply, there is a shortage.
However, since builders and landlords are restricted in the rents they may charge, they are less willing to construct more housing. Since supply is perpetually low, landlords also do not have to worry about tenants leaving – for example, unless the landlord can reasonably expect that punitive action will be taken against them for doing so, they defer maintenance in order to mitigate the lower rental income.
Rent Control “Boards”
Famous rent control boards include the New York City Rent Control Board. Made of political leaders, landlords, tenant reps and more, these hearings are often loud.
Actually, the politically correct name is the New York City Rent GUIDELINES Board. The word “control” is eliminated. for a complete list of Rent Control / Rent Guidelines, see our directory.
How Tenant’s Profit
Many tenants benefit from rent control in that they enjoy a very good salary while paying the artificially low rent. Others use their regulated unit and become a landlord – without owning the apartment.
By ILLEGALLY subletting their apartment (or rooms within their apartment) to sub-tenants who pay market rate, or above as with AirBnb, tenants are able to make a profit at the expense of the owner.
Many tenants may actually live elsewhere, while subletting the unit out. In these cases, many owners hire investigators to flush out those who exploit the system. Once evicted, many owners are able to raise the rents to market or a substantial increase from the previous tenant.
Mobile Homes and Rent Control
In some regions rent control laws are more commonly adopted for mobile home parks (sometimes called manufactured home communities). Reasons given for these laws include residents owning their homes (and renting the land), the high cost of moving “mobile” homes, and the loss of home value once they are moved. Many developers have been purchasing mobile home parks – just for the value of the land.
Rent control is both good and bad. It depends how it is enforced and if the landlords can maintain the ever increasing taxes, insurance and regular repairs while trying to pay the bills.