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 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. 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. Other use their regulated unit and become a landlord - without
owning the apartment. By subletting their apartment (or rooms within
their apartment) to sub-tenants who pay market rate, 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 - 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 land.