Rent Control Is Making a Comeback, but Is That a Good Idea?


Rent Control Is Making a Comeback, but Is That a Good Idea?

2018-11-28T14:35:35+00:00November 28th, 2018|Advocacy, Local Updates|

After decades of being dismissed by economists as a has-been, rent control is making a comeback.

It’s a high-stakes resurgence, fueled by a rapidly worsening housing crisis — but it faces strong opposition from the real estate industry.

In the past year, an energized renters’ rights movement has won approval of rent control measures in Berkeley, Chicago, Washington, D.C., and Westchester County, New York. In March, New York City’s mayor, Bill de Blasio, signed legislation extending rent regulation laws through April 2021.

The issue also is attracting attention in statehouses. Lawmakers in Hawaii, Illinois, Minnesota, New Jersey and Washington state have considered rent control bills in the last two years. Some of the measures would overturn existing bans on rent control; others, as in Hawaii, would establish rent control in the state or expand existing laws.

In New York state, where rent regulation laws are set to expire next year, legislators are considering a flurry of bills to strengthen those laws, which are a complex mix of rent control and rent stabilization.

New York state’s current rent regulation laws need strengthening in order to effectively promote housing stability, said Elizabeth Ginsburg, senior program officer with Enterprise Community Partners, a nonprofit housing group.

“Under the current system, landlords can revoke preferential rent upon lease renewal, putting families at risk of losing their homes,” Ginsburg said.

But rent control supporters also have suffered some setbacks, none more significant than the failure earlier this month of a California ballot initiative.

Proposition 10 would have overturned a 1995 law that blocks California cities and counties from imposing rent control on single-family homes and apartments built after that year. Opponents raised nearly $80 million to defeat the measure, the Los Angeles Times reported, arguing that it would worsen the state’s housing shortage and hurt the investments of single-family homeowners.

Much of that money came from national real estate investors with extensive holdings in California who feared that the measure might spur similar efforts in other states.  Supporters raised nearly $25 million.

“I’m very happy,” said Steven Maviglio, spokesman for No on Prop 10, Californians for Responsible Housing, the opposition campaign. “It was a lopsided policy that would’ve resulted in a loss of affordable housing units and a freeze on new construction.”

Homes and apartments would’ve been taken off the market with rent control, he said.

“That said, this issue isn’t going away,” Maviglio said. “All parties understand that. We’re going to work closely with the new governor on policies that work.”

Mark Willis, senior policy fellow with New York University’s Furman Center for Real Estate and Urban Policy, said, “It’s striking how much [rent control] has risen to the fore. It’s become very political. But California’s an indication that it’s not a slam dunk.”

Supporters argue rent control is the quickest and easiest way to provide relief to renters in danger of being priced out of their homes. But critics say it just makes the problem worse, by causing renters to hold fast to large apartments they may no longer need and by pushing many landlords out of the rental housing business.

Willis said that more localities may look to rent control in the near future, partly because it is a way for cities to address their affordable housing woes without spending taxpayer money. But he noted that many states have laws preventing cities from enacting rent regulations.

Out of Favor

Rent control fell out of favor in the 1970s and 1980s, as urban populations waned and apartments lay vacant. Under pressure from real estate interests, more than half of all states outlawed rent control.

As noted by the Chicago Reader earlier this year, many of the laws echoed language in a model law crafted by the American Legislative Exchange Council (ALEC), a conservative advocacy group.

But as more people have flocked to urban cores where jobs, transit and good restaurants are abundant, the available housing stock has shrunk, and rents have skyrocketed.

Nearly half of renters fit the federal definition of “cost burdened,” which means they spend at least 30 percent of their income on housing and “may have difficulty affording necessities such as food, clothing, transportation, and medical care,” according to a 2017 report by the Harvard Joint Center for Housing Studies.

The share of renters earning $30,000 to $45,000 who were cost burdened jumped from 37 percent in 2001 to 50 percent in 2016, and the share earn­ing $45,000 to $75,000 nearly doubled from 12 to 23 percent, the study found.

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