If there’s one thing many renters can agree on, it’s that it can feel like rent prices are spiraling out of control.
Excluding the COVID year of 2020, the average monthly rent for all apartment types in the US has been steadily on the rise. From February 2022 to February 2023, for example, the average monthly rent price for a two-bedroom apartment spiked by almost $100, and some states have seen rent increases of over 20 percent.
To provide renters some relief, state and local governments are turning to a century old legal method known as rent control to help renters find an affordable place to live. In this article, we’ll go over what rent control is, how it differs from rent stabilization, as well as the pros and cons of the current state of rent control
What is rent control?
Rent control is a legal mechanism that limits the amount a landlord can charge for rent by restricting year-over-year increases. The goal of this method is to provide affordable housing to more renters, especially lower income residents, and to prevent renters from being priced out of their neighborhoods as these grow more desirable.
For example: in California, a law known as AB 1482 imposes a rent cap on certain residential rental properties and removes a landlord’s ability to evict renters without “just cause”. As of January 1, 2020, AB 1482 limits rent increases across the state of California to five percent per year, plus the local rate of inflation.
Because rent control is not enforced at the federal level, regulations can vary state-by-state and even by city. It’s also important to note that rent control is not available everywhere and, as of February 2022, 31 states had laws preventing local governments from implementing rent control measures. In fact, only seven states and the District of Columbia have some rent control laws in place, with Oregon being the first state to enact statewide rent control.
These days, it’s not surprising to see rent control back in the conversation, particularly in states and cities where both the cost of living and rents are spiraling out of control. As rent prices continue to outpace wage growth, rent control will continue to be a hot topic among renters, landlords, and policymakers.
Is rent control the same as rent stabilization?
Though the two terms are often used interchangeably, there are several differences between rent control and rent stabilization.
While both policies are designed to regulate the housing market and protect tenants, rent control tends to be stricter than rent stabilization and is the older policy of the two. Rent control often targets older buildings and prevents landlords from increasing rent once the lease is up for renewal. In New York, for example, buildings must meet specific criteria to qualify as rent controlled housing, including having been built before 1947, and they must be occupied by the same family since 1971.
On the other hand, rent stabilization means rent can be increased but only by a small, predetermined percentage per year. In addition to regulating rent, rent stabilization policies also provide tenants certain protections like the right to receive required services and to have their leases renewed. While you may be subject to paying a little more for rent each year, the good news is rent stabilized apartments are much more common to find than a rent controlled unit.
The pros and cons of rent control
There’s a reason why rent control remains a hot button topic—especially during election time—in spite of the benefits it can afford renters. On one hand, while rent control makes it possible for renters to afford and stay in their homes, it doesn’t address the underlying supply and demand issues contributing to unaffordable housing. Additionally, these regulatory policies don’t always benefit the individuals they were originally designed for. Because rent controlled units must be passed down from generation to generation and it can be difficult if not impossible for low-income tenants to secure housing that falls within their budget.
Pros of Rent Control
- Affordability—By far, the number one advantage of rent control is it caps how much landlords can charge for rent, making housing affordable for more people. Tenants who live in rent controlled, or rent stabilized, areas can rest easier, knowing they won’t be priced out of their homes.
- Stability—When tenants don’t have to worry about increasing rent prices, they benefit from increased financial stability and can better plan for the future. Knowing their rent stays consistent can empower renters to budget accordingly for other expenses and even save for homeownership down the road.
- Equity and Fairness—In theory, rent control was designed to provide affordable housing to low- and middle-income workers who were being unfairly priced out of their neighborhoods. While this has not always proved to be the case, rent regulation policies have the potential to level the playing field for all renters, not just the wealthy.
Cons of Rent Control
- Limited Availability—Due to its strict requirements, it’s incredibly difficult to find and secure rent controlled housing. Tenants aren’t likely to turnover once they find a rent controlled or stabilized unit, and many property owners resort to converting rent controlled units into a condo for sale. In New York alone, for example, there are only 16,400 rent controlled apartments compared to roughly 1,048,860 rent stabilized units up for grabs.
- Outdated Units—When property owners are limited on how much they can increase annual rent prices, they are much less motivated to upgrade or improve their rental units. Several arguments can be made that rent controlled housing units tend to lack the amenities that accompany new buildings and the quality of these homes fails to keep up with modern units.
- Impacts New Construction—Another drawback of rent control policies is the fear that it could dissuade developers from building new apartments if they anticipate being hit with rent regulations. This is especially concerning in high-density locations where housing demand is fast outpacing the available supply.
The bottom line
At the end of the day, there are numerous reasons why rent control is considered a controversial subject. While designed to bring fairness to the housing market, it also brings several drawbacks that have contributed to the housing inequality we’re witnessing today. Rent regulation policies can make renting more affordable for low income renters while simultaneously exacerbating housing supply and demand problems. But no matter where you stand on the issue of rent control, every tenant has the right to safe, affordable, and quality housing wherever you live and regardless of how much money you make.
Every renter also has the right to a fair and transparent rental application process. If you’re ready to take the next step in your rental journey and looking for an affordable application to get started, learn more about RentSpree’s Rental Application tool today.