Rent control
This article is about a rent ordinance. For the movie of the same name, see Rent Control (film).Rent control refers to laws or ordinances that set price controls on residential housing. It functions as a
price ceiling.
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
New York,
San Francisco, and
Washington, DC. Smaller communities also have rent control, notably
Santa Monica, and
West Hollywood California along with many small towns in
New Jersey. In recent years, rent control in some cities, such as
Boston and
Cambridge, Massachusetts, has been ended by state ballot.
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 when they are moved. While California, for example, has only 13 local apartment rent control laws it also has over 100 local mobile home rent control laws.
Although the political debate over rent control is far-reaching, as described below, the purposes and provisions of such laws are intended to be limited in scope. They define which rental units are affected, and may have only larger or older rental complexes covered by the law. The frequency and degree of rent increases are limited, usually to the rate of inflation defined by the
Consumer Price Index or to a fraction thereof. (San Francisco, for example, allows annual rent increases of 60% of the CPI.) Unregulated rent increases may be allowed when a tenant moves ("vacancy decontrol"). Landlords have an opportunity to show that they are not receiving a fair return, for example by proving an increase in costs (such as capital improvements) that should be passed on to tenants. Tenants may be able to claim that decreased services or the lack of necessary repairs offset such additional increases or justify a rent reduction. Landlords may be required to register current rent levels or provide other information on rent increases and/or terminations of tenancy. (Since rent control laws vary considerably from jurisdiction to jurisdiction, landlords and tenants who may be affected should contact their local jurisdiction to obtain information on which law, if any, which applies to them.)
Proponents of rent control claim that it is necessary to prevent
landlords from imposing rent increases that force the elderly and the poor to move. Some proponents make the argument that housing is an inalienable
human right and that it should equal the rights of landlords. Other advocates claim that maintaining a supply of affordable housing is essential to sustaining job growth, and to maintaining a community that includes senior citizens and people of all income groups. 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.
Proponents of rent control can also point out that the market for housing suffers from
information asymmetries and high
transaction costs. Typically, a landlord has much more information about a home than a prospective tenant can reasonably detect. Moreover, once the tenant has moved in, the costs of moving again are very high. Unscrupulous landlords can thus conceal defects and, if the tenant complains, threaten to raise the rent at the end of the lease. With rent control, tenants can insist that hidden defects at least be repaired to comply with code requirements, without fearing retaliatory rent increases. Rent control may thus compensate somewhat for inefficiencies of the housing market. However, critics claim that such
adverse selection issues can and should be addressed directly.
Like all price ceilings, rent control is criticized for creating a
shortage of housing, reducing its quality, detering investment and raising the price of unaffected rental units. Opponents of rent control claim that its benefits accrue disproportionately to wealthy and well-connected tenants. They argue that the goal of making housing affordable and available to the poor can be accomplished by the same
free market that created the affordable units in the first place or by government construction or subsidy.
Moreover, critics see rent control as a violation of
property rights since landlords are told what they may and may not do with their property. Some also claim that rent control limits people's ability to sell their rent-controlled property, thus essentially forcing them to put their property to work for the state without recourse. Landlords and their organizations actively use their recourse to legislatures, initiative processes and the courts to affect what regulations are in place. In particular, many legal challenges to American rent controls are based on arguments that the government has taken landlord's property without compensation. In general the courts have found that this has not happened.
Other critics suggest that rent control promotes the practice of non-monetary exchange for access to coveted housing units.
Some landlords use extralegal means to evade rent controls and attempt to take advantage of housing conditions. Some landlords may step up
discrimination against certain groups if they believe there is a surplus of prospective tenants. Jurisdictions which implement rent controls may have to pass laws in response, such as forbidding landlords from compelling new tenants to hire the landlord's moving company. In some areas with especially strict rent controls, landlords may require
key money (a non-refundable deposit). Demanding key money is illegal in most of North America, but since the landlord will invariably demand it in
cash it is very difficult to trace and nearly impossible to prove in court.
*
Just cause eviction controls*
Affordable housing* Gilderbloom, John I. Editor.
Rent Control: A Source Book. Center for Policy Alternatives; 3rd edition, June 1, 1981. ISBN 0938806017.
* Niebanck, by Paul L. Editor.
The Rent Control Debate. Urban and Regional Policy and Development Studies. 148 pages. University of North Carolina Press. February 1, 1986. ISBN 0807816701.
* Tucker, William. "Zoning, Rent Control and Affordable Housing". 1991. ISBN: 0-932790-78-X
*
Pro-rent control article from tenant.net*
Rent Control History in Ontario and Canada*
Testing Hypotheses About Rent Control in Canada Commissioned by Canada Mortgage and Housing Corporation - Dispels many myths
*
Anti-rent control article by economist Paul Krugman*
New York Magazine article on Rent Control including interviews with tenants*
Almanac of Policy Issues - Rent Controls*
Rent Controls and Housing Investment*
Pro-rent control article from Dollars & Sense magazine
