The How's and Why's of Rent Control
If you're moving to a new city and planning to rent an apartment you may
want to investigate legislation on rent control in the area you plan on
moving to. Some questions you may want to ask are:
What is rent control?
Rent control is a legal term that describes when a municipality, county,
state or country imposes restrictions on property owners that regulate or
prohibit rent increases. Generally, only residential property is affected,
and most rent control laws allow for regulated rent increases.
Historically, rent control has occurred in wartime, and in times of inflation
and is more likely to occur in areas where the vacancy rates are low.
The Santa Monica Rent Control Board, one of the country's most well-established
rent control advocacy groups, says that all rent control policies operate
under the following four principles:
- Preserving residential housing which is affordable to low and moderate
income people. Rent control places a ceiling on landlord rent hikes,
thus insuring that monthly rent will stay within the income brackets
of people who need it.
- Controlling monthly rents on residential rental dwellings. Rent control
forces landlords to reasonable limits on the amount of rent they can
charge for units.
- Limiting circumstances for evictions. Rent control laws force landlords
to present due and just cause when presenting tenants with eviction
notices.
- Encouraging the maintenance of rental properties. Rent control laws
prevent landlords for charging outrageous rents for substandard housing.
What does rent control mean to me in terms of
evictions and rent increases?
It depends on what kind of rent control applies in you area. Generally,
there are two types of rent control--"rent control" and "strict
rent control." "Rent control" itself limits the amount of
rent that can be charged to an individual by setting the amount by which
rent can increase annually. Usually this amount is a set percentage of a
price index. If a tenant moves, the rent can be increased, but the price
can increase annually only as much as the set percentage allows. Under "strict
rent control," landlords cannot raise the amount of rent even when
the property is vacant.
Rent control also means that property managers and owners must provide tenants
with just cause notice when serving a tenant with an eviction notice. Mary
Ann Yurkonis of the Santa Monica Rent Control Board says that "what's
called rent control today is actually rental de-control. In other words,
the owner has the right to set that rent, but is subject to controls for
the amount of money he or she charges in subsequent years. Rent control
also forces landlords to give good cause eviction notices."
Which cities have rent control and how do I find
out if my city has it?
Rent control exists in 200 municipalities nationwide. You should investigate
rent control depending of where you are moving. In many areas of the South
and Southwest, rent control is non-existent. Most eastern cities besides
New York and Boston do not have rent control. Contact your local City Hall
to find out if rent control exists in your area. Once you find out if it
exists, you will need to find out of it applies to your building. In San
Francisco, for example, buildings built in certain areas, or after 1978,
may be exempt from rent control.
What are the drawbacks of rent control?
Generally speaking, rent control creates artificial scarcity. In markets
with rent control, it may be very difficult to find an apartment that is
available. Also, since the price of units is artificially depressed, the
price of available units may be inflated to compensate.
Also, rent control leads to so-called "gray-markets." Tenants
who have favorable lease terms tend to hold onto rentals for a long time
and may illegally sub-lease them as opposed to putting them back on the
market.
Sadly, the worst impact of rent control is that it creates a strongly adversarial
relationship between natural affinities: landlords and tenants. If a landlord
has a building that is filled with tenants paying far below market rents,
the landlord has a strong economic motive to evict the tenants, or to convert
the building to another use--such as condominiums. In most markets with
rent control, there are also strong restrictions against converting rental
units into condos.
Statistics in some cities say that rent control actually drives out affordable
housing. Many people who live in rent controlled housing are professionals,
while the poor, elderly and students are often excluded. According to William
Tucker, author of The Excluded Americans: Homelessness and Housing Policies
and Zoning, Rent Control and Affordable Housing, cities where rent control
exists usually possess two housing markets: the rent controlled market in
which prices are held down--and a shadow market in which prices skyrocket.
In cities such as Atlanta or Chicago, where there is no rent control, there
is still a moderately priced housing market, whereas in cities like New
York or San Francisco there is not.
Nonetheless, this has not discouraged avid proponents of rent control in
areas such as Berkeley and Santa Monica to continue to push for rent control
policies--what they see as the only solution to unreasonable, skyrocketing
rental prices in a free market economy.
More Resources on the Web:
The Tenant Resource Directory
City of Santa Monica Rent Control Board
Berkeley Rent Stabilization Board
California Department of Consumer Affairs
National Multihousing Council Statistics
CATO Institute Policy Analysis
By Zelda Pusey
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