Rent regulation (rent control)

Rent regulation (rent control) is a term used to describe laws that place limits on how much landlords can legally charge their tenants. Rent regulation is designed to help renters by making it possible for them to live in places where it would otherwise be economically infeasible for them to reside because of excessive rent costs. In function, rent regulation serves to protect renters from unreasonable rent increases that would likely force them out of their homes. Rent regulation laws are typically enacted at the municipal level and can vary significantly from city to city.

While the concept of rent regulation has existed for some time, it is not a widespread phenomenon in the United States. In fact, rent regulation laws only exist in a limited number of cities and are even banned in many states. That being said, by the 2020s there had been increased calls for rent regulation in some states and it had slowly spread into more municipalities.

Background

According to historians, the idea of rent regulation dates to ancient Rome. During his reign 46–44 BCE, Julius Caesar is said to have created a law that put a cap on how much landlords could charge a tenant annually for a home in Rome. Caesar’s decision came on the heels of an appeal from a senator who claimed that he was at risk of losing his home after his landlord tried to double his rent.

In the United States, rent regulations first began to appear around the time of World War I (1914–18). By that time, rapid urbanization meant that renters accounted for more than half of all American households. This, in turn, led realty operations to become a major source of income for the landlords and real estate companies who owned property in America’s urban centers. As the war effort ramped up, more people were drawn to the urban areas at the heart of the nation’s military-industrial complex. Before long, many local governments were overwhelmed with complaints about housing shortages and the growing trend of rent profiteering among landlords. Such problems eventually led to the passage of early rent regulation laws in several states and Washington, DC. Although many of these laws were scrubbed after the war’s end, rent regulation continued to be a matter of public debate for many years.

Rent regulation measures were adopted once more as the national housing market again grew strained in the lead-up to World War II (1939–45). At first, such measures were established on federal and local levels alike. Federal controls eventually came to a close with the end of the Korean War (1950–53). Federal controls were replaced by rent regulation laws enacted by a number of states and cities. While many state controls were ultimately short-lived, some city controls remained intact for longer periods. Still, most of these laws were eventually dropped as interest in rent regulation fell in the 1970s and 1980s due to declining urban populations. However, as urban populations gradually rose, in the early twenty-first century rent control yet again became an increasingly popular response to rapidly rising housing costs in America’s urban communities.

Overview

At its core, rent regulation is a means of managing housing costs by limiting the amount landlords can require tenants to pay to live in rental properties. Rent regulation laws are usually created and enforced by municipal governments, but they can also be enacted at the state or federal level. Such measures remained relatively uncommon, however. In fact, more states instituted laws outlawing rent regulation than allowing it. In 2019, Oregon became the first state to adopt a statewide rent regulation law. That same year, California passed statewide rent control legislation while New York saw the passage of a rent reform bill that both strengthened stabilization rules and made them permanent.

The two main types of rent regulation are rent control and rent stabilization. Rent control is an older approach to rent regulation that has been slowly disappearing for many years. Rent control places strict limits on the price landlords can charge tenants living in their rental properties. Rent stabilization started to become the norm in the 1970s. Instead of placing a firm cap on rental rates, rent stabilization programs allow for limited annual rent increases based on percentages determined by a housing agency.

Even as rent regulation grew increasingly popular at both the city and state levels into the 2020s due to a housing affordability crisis exacerbated by the economic impacts of the COVID-19 pandemic that began in 2020 and subsequent periods of inflation, those involved continued to debate its effectiveness. Opponents of rent regulation were quick to point out that rent prices remained remarkably high even in cities that adopted regulatory measures. Supporters, on the other hand, argued that despite some high prices, rent regulation does translate into savings for the population such measures are designed to target. These populations mainly included people with moderate-level incomes and older people living on fixed incomes. Rent regulation often allows such individuals to stay in their homes even as housing prices in the surrounding area gradually rise as a result of gentrification. By 2022, several states' and cities' lawmakers had proposed adding, returning, or strengthening existing rent regulation laws as an immediate means to combat consistently high rents, greater numbers of evictions, and stagnant wages during a time of inflation; however, such proposals typically faced uphill battles for passage. Some advocated more emphatically for federal intervention.

Questions about the effectiveness of rent regulation remained only the beginning of arguments for and against the practice. Most arguments for rent regulation center on the idea that establishing rent limits prevents these costs from outpacing the typical wage-rate. Those who support rent regulation also note that rent-regulated neighborhoods are often safer and have a stronger base of long-term residents than other neighborhoods. Arguments against rent regulation generally focus on the idea that rent control ultimately diminishes the housing market because it encourages landlords to convert their buildings to condominiums or turn them into commercial properties simply because these actions are easier than adhering to regulations that restrict their profits. Similarly, rent regulation can also lead landlords to become negligent when it comes to performing maintenance and ensuring the proper upkeep of their properties.

While rent regulation on the surface seems to primarily benefit tenants, it can also have some advantages for landlords. In most cases, a given property only remains regulated as long as it is occupied by the existing tenant. As a result, the property is automatically deregulated if the current occupant leaves; the landlord is free to charge the next tenant at free-market prices. Landlords also have the option to deregulate a property by evicting or buying out an existing tenant. Properties can also become deregulated once they reach a certain monthly rent or if the tenant makes more than a certain amount of money per year.

Bibliography

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