The latest state and local update on rent control.
August 23, 2023 |
Updated August 23, 2023
While most housing policy activity has cooled with many state legislatures adjourned and Congress on August recess, several hotspots for rent control activity have emerged this summer: California, Illinois, Maryland and Massachusetts. The rental housing industry also continues to await an announcement from the Federal Housing Finance Agency (FHFA), which is considering whether to impose new requirements on enterprise-backed multifamily properties.
The Justice for Renters Act initiative qualified for the November 5, 2024, ballot in California. This initiative seeks to end statewide rent control limitations for types of housing protected under the Costa-Hawkins Rental Housing Act and allow greater discretion to local governments to adopt these detrimental policies. If the ballot measure is successful, all types of rental housing could be subjected to rent control and housing providers could be stripped of vacancy decontrol protections which allow rents to reset after previously rent-controlled units become vacant.
“This is the third attempt in four election cycles where voters will be asked to vote on a flawed initiative that will only increase the cost of housing and decrease the supply of rental housing,” says Earle Vaughn of the California Rental Housing Association (CalRHA). Learn more about the industry’s advocacy and how to get involved on CalRHA’s website.
In the next phase of their years-long campaign to eliminate Illinois’ rent control preemption, the “Lift the Ban” coalition announced the introduction of HB4104 which would allow municipalities the option to pass rent control via ballot initiative.
Industry advocates remain strongly opposed. “Our collective efforts need to be focused on developing more housing options, and specifically, more housing that is affordable to local residents in need,” says Michael Mini, Executive Vice President of the Chicagoland Apartment Association. “There are other policy alternatives to rent control that advocates, developers and affordable housing providers agree will help the housing issues impacting people throughout the state.”
The Chicagoland Apartment Association and its coalition partners in the SHAPE Illinois coalition are committed to legislation that attracts more multifamily housing to be built, which translates to lower rents while delivering desperately needed housing supply. The Illinois General Assembly will take up these efforts when session begins in January 2024; little movement on the HB4104 is expected until then.
In July, the Montgomery County Council approved legislation which will cap rent increases at either 3% over inflation or 6% of the base rent, whichever is lower, on “regulated rental units.” The ordinance’s price controls have limited exceptions including new construction less than 23 years old or substantially renovated housing. The law also allows the Director of the Department of Housing and Community Affairs to impose limitations on fee increases or new fees charged by housing providers in the county. The new law will go into effect on October 23.
The industry’s leading advocate in the Washington, D.C. metro area, the Apartment and Office Building Association of Metropolitan (AOBA) Washington, fiercely advocates against rent control and highlighted the negative effect on the supply and quality of housing before the county council.
"The law is so burdensome that even developers that build and operate long-term will have less incentive to do so,” says Brian Anleu, Vice President of Government Affairs of AOBA. “The vacancy control provision alone means that no property will ever be able to obtain market rate rents… because members in rent-controlled markets have no flexibility to raise rents in years when operating costs far exceed existing rents. “
While this law was billed as “anti-rent gouging” legislation, rent control by any name continues to have devastating impacts on communities.
After another failed attempt to lift the 1994 Massachusetts rent control preemption, a statewide ballot initiative has been filed to allow municipalities to enact price controls over rent and broker fees, as well as to set their own rules on evictions. Under state law, the petition must first be approved by the Attorney General’s office, and then must gather at least 90,000 valid signatures in order to qualify for the November 5, 2024, ballot.
While signature collection has yet to begin, the Massachusetts Apartment Association and their coalition partners launched the “Rent Control Hurts Housing” campaign. “This proposal is actually more far reaching than rent control and is an attempt at extreme local governmental control of all multifamily residential housing in the Commonwealth,” says Patricia Baumer, Director of Government Affairs for the Greater Boston Real Estate Board. Proactively, the coalition is leading the charge in advocating against this harmful petition which will neither decrease the cost of housing, nor address the underlying challenges of shortages in housing supply.
Federal Efforts on the Horizon
The National Apartment Association (NAA) has been hard at work pushing back on attempts to consider federal rent control. Last month, the FHFA opened a Request for Input on increasing requirements for federal-backed financing. In response, NAA joined both the National Multifamily Housing Council in filing a joint comment letter as well as our real estate coalition partners in a sending a statement expressing strong opposition to the proposed requirements.
Additionally, in a call to action, NAA members and affiliate partners submitted over 3,000 comment letters to the FHFA voicing opposition to these requirements. The comment window for the request for input closed on July 31, 2023, but the FHFA is expected to announce next steps this fall after they digest public feedback.
On August 23, 2023, House Financial Services Committee Ranking Member Maxine Waters (D-Calif.) led a group of committee Democrats in sending a letter to FHFA Director Sandra Thompson to “propose key recommendations for the FHFA to implement in order to stabilize housing costs, protect renters, and ensure the safety and soundness of the Enterprises.”
NAA will continue to seek out opportunities to engage with FHFA to help them understand the industry’s perspective as well as potential unintended consequences of their policy proposals.
As policymakers and regulators at all levels of government are pushing for rent control, the data remains clear that curbing housing instability falls in expanding housing supply, not market interference.
NAA will continue to advocate for solutions to address the root causes of an instable housing market – the absence of sufficient supply to meet a growing population’s demand, prohibitive maintenance costs to existing stock, problematic zoning laws, and more.
To learn more or to get involved, reach out to Ben Harrold, NAA’s Manager, Public Policy.