Rent Control Cannot Solve the Affordable Housing Crisis
By Adriann Murawski
In response to a growing affordable housing crisis throughout the U.S., state and local governments are considering adopting various rent control measures. The National Association of REALTORS® (NAR) opposes rent control and rent stabilization laws on both residential and commercial properties, as these measures do nothing to address residential construction deterrents like misguided local zoning measures and high land costs. Instead, rent control policies create political battles between landlords and tenants without addressing the root of—and possible solutions to—America’s affordability problems.
In 2017, following the consideration of various local-level rent control ballot initiatives in California, an NAR Working Group formed policy related to rent control regulations. Most of the ballot measures in 2016 originated in the San Francisco Bay Area, including: Alameda (Measure L1, passed; Measure M1, defeated); Burlingame (Measure R, defeated*); East Palo Alto (Measure J, passed); Mountain View (Measure V, passed; Measure W, failed); Oakland (Measure JJ, passed); Richmond (Measure L, passed); and San Mateo (Measure Q, defeated*).
Last year, California voters rejected a statewide measure that would have overturned the Costa Hawkins Act, which establishes limits on local rent control laws. Costa Hawkins ensures that buildings first occupied after 1995 are not subject to rent control regulations. Further, the law provides an avenue for vacancy decontrol, which gives building owners an opportunity to rehab facilities and establish new, fair market rates with new tenants
From Portland, Maine, to Portland, Ore., several jurisdictions have considered rent control regulations over recent years. Most states preempt local governments from adopting rent control measures in any form. In the states where rent control is permitted (California, Maryland, New Jersey, New York and the District of Columbia), local jurisdictions are able to regulate rental rates based off specific parameters written within the state law, like with the aforementioned Costa Hawkins Act in California.
Over recent years, Hawaii, Michigan, Minnesota and Washington, among others, have considered legislation repealing prohibitions of rent control, although none successfully. The most significant concerns are in states whose legislatures revisit rent control laws year after year. States such as California and New York see regular efforts to expand the reach of rent control to include just-cause eviction requirements and/or landlord-tenant relocation fees.
Illinois and Oregon have also revisited legislation to repeal existing bans on rent control, and have the political support to pass legislation this year. Oregon will be the first state to enact a statewide rent control law that requires local governments to incorporate rent control regardless of whether or not a housing shortage exists. This is unique, however, as most states allow local governments to decide if rent control is necessary. In Illinois, lawmakers are considering repealing existing rent control prohibitions, as well as creating a state regulatory body to oversee rent control regardless of housing supply.
If states are successful in easing rent control restrictions, NAR is concerned that residential rentals in those areas will lose value while both property tax assessments and bases will also decrease, forcing other property owners to eventually pay more in taxes or fees as a result. Ultimately, rent control discourages the production of new rental dwellings in the private sector, and NAR is committed to fighting against these laws across the country. Learn more about how NAR is partnering with state and local REALTOR® associations to engage communities about housing affordability and supply at realtorparty.realtor/state-local-issues/issues/housing-supply-shortage.