Playing Whack-a-Mole with Rent Control
Oregon’s newly adopted state-wide rent control law has opened up Pandora’s box, and threats to the industry abound. For example, housing affordability challenges in the nation’s cities are driving conversations about the return of rent control to Massachusetts, pushes in Florida, Illinois, Colorado and a renewed fight over legislation in California, despite the defeat of Proposition 10 last year.
Unfortunately, some policymakers are unconcerned with investing in housing affordability over the long-term. They are seeking a quick fix to an emotionally-charged issue affecting their constituents’, in their words, basic rights to housing. Rent control provides an off-the-rack solution. The term is easy for voters to digest, the policy is seemingly simple to implement and it provides short-term relief for low-income households who are fortunate enough to reside in the small segment of newly rent-controlled apartments. These characteristics tend to override the glut of economic evidence showing its detrimental effects on the long-term health of a city or state’s housing supply, making rent control an enticing policy choice for legislators to pursue.
Additionally, rent control is seemingly becoming more palatable as advocates and their supporters in government reframe this solution as an “anti-rent gouging” campaign to determine reasonable rent-increase amounts. The Oregon case represents a successful implementation of this reframing and advocates have begun using it as a template in rent control campaigns in other areas, regardless of the existence of state preemption laws. Moreover, groups in areas with rent control regimes are pushing their champions in state and local government to achieve broader coverage of property types by closing perceived regulatory “loopholes.” Examples include proposals to eliminate vacancy decontrol provisions, restrict when and how owners can remove their properties from the rental market, restrict rent increases for the purposes of recovering capital improvement costs and narrow the timeframe in which new construction is exempted from regulation.
In California, despite voters overwhelmingly defeating Proposition 10 at the ballot box last November, Democrats have introduced a package of housing bills to expand rent control in the state. The first, AB 36, would repeal key provisions of the Costa-Hawkins Rental Housing Act by allowing cities to apply rent stabilization measures to rental units older than 10 years and extend these controls to single-family rentals and condos. At present, any rental units built after 1995 are exempt under the Costa-Hawkins.
The second, AB 1482, intends to establish a definition of rent gouging in a similar way to Oregon’s state-wide rent control law, and prohibit rent increases beyond a government-mandated percentage rate. AB 1481 would institute a Just Cause Eviction ordinance requiring property owners to prove a specific and valid reason for evicting a resident in court, while AB 724 intends to create a statewide rental database on rental units containing information on eviction fillings and rent increases.
On the East Coast, three rent control-related bills in New York propose closing perceived loopholes in rent regulations. Assembly bill 2351 would implement vacancy control, preventing property owners from increasing rents to market rate when a resident moves following the end of a lease term. A second bill, S2605, establishes harassment of tenants residing in rent-regulated units as a criminal act.
Illinois is the last state with multiple rent control bills on the table. While HB 255, which would have repealed preemption, died in committee on March 29, three others are still in play and could be taken up next session. HB 3207, the Rent Control Act, would establish county rent control boards in every county and includes provisions relating to qualifications of members, vacancy of a Board member seat and meetings and duties of the board, which include establishing restrictions on rent increases, notice requirements of rent increases and the creation of a reserve account for property owners for repairs and capital improvements. HB 2192 is similar to HB 3207, except the state would be split into six regions, each with its own rent control board.
SHAPE Illinois, a coalition standing against these efforts, has garnered support for alternative solutions to housing affordability in place of rent control with HR 255 and SR 301. Both are resolutions urging the inclusion of affordable housing investment in an upcoming capital bill. The coalition continues to pursue additional co-sponsors in the state legislature for these initiatives.
Florida (HB 6053), Colorado (SB 19-225) and Massachusetts (SD 1796) are the remaining states with active legislation to repeal rent control preemptions to date. Such legislation would allow localities to implement rent controls on private rental property.
The threat of rent control is real in a growing number of jurisdictions around the country. NAA will continue to actively monitor rent control legislation nationwide and work with the affiliate network to supply critical resources to support their state and local advocacy campaigns.
However, affiliates and members must remain vigilant. Rent Control has become the policy of choice for renters’ rights groups and policymakers because of its perception as an off-the-rack solution to housing affordability. While rent control regimes benefit a section of current residents, in the long run, it greatly inhibits the housing market’s ability to supply housing to people across the income spectrum and reduces city and state property tax revenue substantially. The result over time is a dwindling supply of controlled housing and skyrocketing rental prices of uncontrolled units, exacerbating affordability issues, disincentivizing necessary development and creating a static rental market.
If rent control comes up in a jurisdiction near you or you would like to know more information about this policy concern, visit our policy issue page on rent control, or contact Alex Rossello, NAA’s Manager of Public Policy.