Rent control is making a comeback

“The 360” shows you diverse perspectives on the day’s top stories and debates.

What’s happening

With rental prices still up significantly from where they stood before the pandemic, a growing number of cities across the country are dusting off an old solution to keep housing costs affordable: rent control.

During November’s midterm elections, voters in Santa Monica, Calif., Portland, Maine, and Orlando all approved ballot measures that would place new limits on annual rent increases. Boston’s progressive mayor recently released a rent control proposal for the city. In early January, a group of 50 Democrats in Congress sent a letter urging the Biden administration to take action to address “historically high rental costs and housing instability” in the U.S., including “anti-rent gouging” measures.

Rent control, also known as rent stabilization, can refer to any policy that caps how much a landlord can raise a tenant’s rent. In the past, that at times has meant landlords were forbidden from increasing rent at all. All rent control programs in effect today allow for rent hikes but limit how big they can be. Many also include exemptions for certain types of properties or homes built after a specific year.

Rent control first gained popularity in the U.S. in response to the massive economic disruption caused by World War II. Over time, most cities abandoned those policies, and opposition to rent control became near consensus among prominent economists. Today, rent control is banned in more than 30 states. Only two, Oregon and California, have statewide rent stabilization.

Why there’s debate

The conventional wisdom in opposition to rent control is still very prominent, especially among conservatives. Critics argue, and some major studies show, that rent control distorts the free market in a way that can ultimately make a city’s rental market even less affordable. That’s because capping rent below market values means developers have less of a profit incentive to build more housing units, which constrains supply and drives prices higher. There are also examples where landlords have allowed their properties to fall into disrepair, since they don’t have enough income to pay for upgrades and have no motivation to make their units more desirable.

But the new wave of rent control proponents say those views rely on research that is decades old and based on extremely strict policies that don’t reflect the way rent control works today. They argue that housing has become such an unmanageable expense for millions of Americans that allowing prices to rise without any limitations is a recipe for widespread displacement, higher poverty and homelessness. They make the case that modern rent control plans — many of which allow for as much as 10% annual rent hikes and include carve-outs to fund repairs and upkeep — can ensure families are able to keep their homes, while still creating plenty of room for landlords and developers to profit.

Others argue that it’s a mistake to look at rent control purely through an economic lens. They make the case that its greatest benefit is how it allows communities to flourish and grow over the years without residents constantly cycling in and out as rents become increasingly unmanageable.

What’s next

One state to watch is Colorado, where a bill that would repeal a decades-old prohibition on rent control has been introduced in the state legislature. If it passes, local governments will be freed to impose limits on rent hikes for the first time in more than 40 years.

Perspectives

SUPPORTERS

Too many Americans suffer when rents are subject to the free market alone

“In the current housing crisis, families are faced with frequent moves, evictions, and homelessness, causing more than just a disruption in their lives. Although the adoption of rent regulations may have upfront costs, an unregulated rental system carries high costs as well.” — Elizabeth Strom, Tampa Bay Times

We need rent control to help people survive until the housing shortage can be solved

“Even if everyone agreed right now to pursue the goal of housing abundance, it could still take decades for the housing markets to rebalance. So what is to be done for the tens of millions of rent-burdened families before we can reach housing abundance? Should we simply allow the cycles of displacement and segregation to occur without any policy intervention? Rent control is the answer.” — Jerusalem Demsas, Vox

The rigid rent control policies of the past are long gone

“Where RC does [exist], it generally does not reduce or freeze rents, but caps the amount of rent increases, so that tenants can know (and plan) for the maximum amount of rent raises. … In most cases, repairs, maintenance and improvement costs — along with tax increases — can be incorporated in rent increases. So landlords have no excuse to blame RC for poorly maintained housing stock. Reasonable returns are allowed within the rent increases.” — Mark Fearer, Boulder Weekly

The biggest benefits have nothing to do with money

“The most compelling case for rent regulation goes beyond the research and the statistics. It is that continuity and stability are vital elements of any neighborhood’s social health. They are weapons against the alienation and loneliness that prevail in any community in which nothing, not personal relationships nor physical familiarity, ever seems permanent.” — Alan Ehrenhalt, Governing

Rent control would help rebalance a system that punishes renters and rewards homeowners

“A deep strain of anti-tenancy runs through U.S. law. The current housing crisis is further exposing just how vulnerable renters are in a legal system that accords them a second-class status. The law already protects homeowners from unchecked market forces. It’s time for the law to better protect renters too.” — Sarah Schindler and Kellen Zale, Austin American-Statesman

OPPONENTS

Under rent control, housing would become even scarcer and more lower-quality

“Imagine a law that prevented steakhouses from charging more than $10 for steak. All decent steakhouses subject to the price control would be forced to close their doors. … And the few that remained open would serve the lowest quality steak available, served on a paper plate, without napkins, to a wobbly table, to be eaten while you sat on an uncomfortable chair. That is to say, the business owner would be forced to reduce costs and quality elsewhere to stay in business. This same dynamic occurs with rent control, too.” — Robert Fellner, Las Vegas Review-Journal

The way to control costs is to increase supply, which rent control undermines

“The best way cities can make housing affordable is to have policies that increase the housing supply. Rent control restricts supply and is economic madness.” — Editorial, Wall Street Journal

Rent limits would make housing inequities even more severe

“Rent control is a mistake, discouraging investment in both new and existing rental properties over the long haul, even if it provides short-term relief. It eventually hurts the very people it’s trying to help.” — Editorial, Star Tribune

Rent control is politically enticing, but a disaster in practice

“Capping rent by government edict is so deceptively simple it continues to lure policy makers. It’s a magic wand for politicians who rarely stick around long enough to answer for the eventual train wreck down the line.” — Editorial, Colorado Springs Gazette

There are many negative effects that go well beyond housing costs

“Rent control is infamous among economists for other negative impacts. It exacerbates racial discrimination in housing. It multiplies bureaucracy. It disproportionately hurts those it is intended to help. And what is true in America is true everywhere.” — Jeff Jacoby, Boston Globe

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Photo illustration: Yahoo News; photos: Joe Raedle/Getty Images, Getty images