1. History
    New York  California  Mobile homes 

2. Law
    Federal law  State law 

3. Arguments for
    Economic  Moral 

4. Arguments against
    Economic  Social  Moral 

5. See also

6. Notes

7. References

8. External links

Rent control in the United States refers to laws or ordinances that set price controls on the renting of American residential housing. They function as a price ceiling.{{ r | GPG }}

The loose term "rent control" can apply to several types of price control:

• "strict price ceilings", also known as "rent freeze" systems, or "absolute" or "first generation" rent controls, in which no increases in rent are allowed at all (rent is typically frozen at the rate existing when the law was enacted)
• "vacancy control", also known as "strict" or "strong" rent control, in which the rental price can rise, but continues to be regulated in between tenancies (a new tenant pays almost the same rent as the previous tenant) and
• "vacancy decontrol", also known as "tenancy" or "second-generation" rent control, which limits price increases during a tenancy, but allows rents to rise to market rate between tenancies (new tenants pay market rate rent, but increases are limited as long as they remain).{{ r | GPG }}

As of 2018, four states (California, New York, New Jersey, and Maryland) and the District of Columbia have localities in which some form of residential rent control is in effect (for normal structures, excluding mobile homes).{{ r | NMHC | Landlord_com }} Thirty-seven states either prohibit or preempt rent control, while nine states allow their cities to enact rent control, but have no cities that have implemented it.{{ r | NMHC | Landlord_com }}

For the localities with rent control, it often covers a large percentage of that city's stock of rental units: For example, in some of the largest markets: in New York City in 2011, 45% of rental units were either "rent stabilized" or "rent controlled", (these are different legal classifications in NYC)

in the District of Columbia in 2014, just over 50% of rental units were rent controlled,

in San Francisco, as of 2014, about 75% of all rental units were rent controlled,

and in Los Angeles in 2014, 80% of multifamily units were rent controlled.{{ r | LA_RC_percent | p=1 | q=Eighty percent of the 880,581 multifamily units in the city of Los Angeles are covered by rent control, according to the Los Angeles Housing and Community Investment Department.}}

In 2019 Oregon's legislature passed a bill which made the state the first in the nation to adopt a state-wide rent control policy. This new law limits annual rent increases to inflation plus 7 percent, includes vacancy decontrol (market rate between tenancies), exempts new construction for 15 years, and keeps the current state ban on local rent control policies (state level preemption) intact.{{ r | NPR_Oregon_RC | p=1 | q=The bill would limit rent increases to 7 percent each year, in addition to inflation. Subsidized rent would be exempted, as would new construction for 15 years. If tenants leave their residences of their own volition, landlords would be able to increase the rent without a cap. }}

History

In the United States during World War I, rents were "controlled" through a combination of public pressure and the efforts of local anti-rent-profiteering committees. Between 1919 and 1924, a number of cities and states adopted rent- and eviction-control laws. Modern rent controls were first adopted in response to WWII-era shortages, or following Richard Nixon's 1971 wage and price controls. They remain in effect or have been reintroduced in some cities with large tenant populations, such as New York City, San Francisco, Los Angeles, Washington, D.C., and Oakland, California. Many smaller communities also have rent control — notably the California cities of Santa Monica, Berkeley, and West Hollywood^[1] — along with many small towns in New Jersey. In the early 1990s, rent control in some cities, such as Boston and Cambridge, Massachusetts, was ended by state referenda.^[2]

New York

California

In California, municipal enactment of rent controls followed the high inflation of the 1970s (causing rents to continually rise){{ r | Birth_of_RC_in_SF | p=1 | q=Inflation averaged 8 percent in the Bay Area during the 1970s; renters were forced to pay rents that were changing monthly as the dollar devalued and the demand for hard assets, especially real estate, grew. Deinstfrey called it mailbox roulette, for tenants never knew what kind of huge rent increase might be waiting for them in the mail.}} and the 1979 statewide Proposition 13, which set property tax rates at 1%, and capped yearly increases at 2%. Leading the campaign to enact Proposition 13, California politician Howard Jarvis tried to get tenants to vote for Prop 13 by claiming that landlords would pass tax savings along to tenants; when most failed to do so, it became an additional motivating factor for rent control.{{ r | Birth_of_RC_in_SF | p=2 | q=Proposition 13 threw fuel on the fire. One of Howard Jarvis' arguments for rolling back and rapidly freezing escalating property taxes (an inflation-induced mess, too) was that the savings would be passed onto tenants. Although several large San Francisco property owners passed Proposition 13 savings on to some 7,000 tenants, most landlords did not. In jurisdictions with large tenant populations like San Francisco, the empty promises became a rallying cry for activists.}}

In 1985, California adopted the Ellis Act, eliminating municipalities' ability to prohibit the removal of properties from rental activities after the California Supreme Court in Nash v. City of Santa Monica^[6] ruled that municipalities could prevent landlords from "going out of business" and withdrawing their properties from the rental market. 

"Strong" or "vacancy control" rent control laws were in effect in five California cities (West Hollywood, Santa Monica, Berkeley, East Palo Alto, and Cotati) in 1995, when AB 1164 (known as the Costa-Hawkins Rental Housing Act) preempted some elements of municipal rent control ordinances and completely eliminated strong rent-control in California (except in special cases like mobile home parks).^[7][8][9]

In 2018, a statewide initiative (Proposition 10) attempted to repeal the Costa-Hawkins law, which, if passed, would have allowed cities and municipalities to enact "strong" or "vacancy control" systems, allowed rent control to be applied to buildings built after 1995, and would have allowed rent control on single-family homes. All are currently prohibited by Costa-Hawkins.{{ r | SJMN_RC_failed | p=1 | q=Prop. 10 took aim at a decades-old state law that prohibits cities from enforcing certain types of rent control. Without that law, cities would have had the power to place price caps on rented single family homes, condominiums and apartment buildings constructed after 1995 — or in the case of cities with older rent-control policies, such as Oakland and San Francisco, apartments built after the late 1970s or early 1980s. Under current state law, those units cannot be subject to rent control. ... In addition to expanding the types of properties that would fall under rent control, Prop. 10 would have let cities permanently cap the price of an apartment, allowing only modest increases even after tenants move out. That policy, known as vacancy control, was used decades ago in a handful of cities including Berkeley, East Palo Alto and Santa Monica before California passed the Costa-Hawkins law banning it. Currently, landlords can raise prices to market rates after a tenant in a rent-controlled unit leaves. Vacancy control would have immediately taken effect in Berkeley if Prop. 10 passed, as it has remained on the books, unenforced, for more than two decades.}} The proposition failed 59% to 41%.^[10][11]

Mobile homes

In some regions, rent control laws are more commonly adopted for mobile home parks. Reasons given for these laws include residents owning their homes while renting the land the home sits on, the high cost of moving mobile homes, and the loss of home value when they are moved. California, for example, has only 13 local apartment rent control laws but over 100 local mobile home rent control laws.{{citation needed|date=September 2018|reason=Statements are very likely true, but need references to back up the numbers.}} No new mobile home parks have been built in California since 1991.{{citation needed|date=July 2018|reason=Statements may be true, but need references to prove the claims, and a reference to prove that the non-building of mobile home parks is BECAUSE OF rent control; otherwise this statement is irrelevant to this article.}}

Law

Rent control laws define which rental units are affected, and may only cover larger complexes, or units older than a certain date. To attempt to not disincentivise investment in new housing stock, rent control laws often exempt new construction. For example, San Francisco's Rent Stabilization Ordinance exempts all units built after 1979.^[12] New York State generally exempts units built after 1974 anywhere in the state (although owners can agree to rent stabilization in exchange for tax benefits).^[13]

The frequency and degree of rent increases are limited, usually to the rate of inflation defined by the Consumer Price Index or to a fraction thereof. San Francisco, for example, allows annual rent increases of 60% of the CPI, up to a maximum 7%.^[14]

Rent control laws are often administered by nonelected rent control boards. Officers in city government assign members of the board, which will ensure mixed numbers of tenants and property owners to balance out their benefits. As stated in Goodman's research, a typical rent control board in New York is structured by two tenants, two landlords, and one homeowner.(Gilderbloom & Markham,1996).^[15]

Federal law

Rent regulation in the United States is an issue for each state. In 1921, the US Supreme Court case of Block v. Hirsh^[16] held by a majority that regulation of rents in the District of Columbia as a temporary emergency measure was constitutional, but shortly afterwards in 1924 in Chastleton Corp v. Sinclair^[17] the same law was unanimously struck down by the Supreme Court. After the 1930s New Deal, the Supreme Court ceased to interfere with social and economic legislation, and a growing number of states adopted rules.{{Citation needed|date=December 2015}} In the 1986 case of Fisher v. City of Berkeley,^[18] the US Supreme court held that there was no incompatibility between rent control and the Sherman Act.

State law

As of 2018, four states (California, New York, New Jersey, and Maryland) and the District of Columbia have localities in which some form of residential rent control is in effect (for normal structures, excluding mobile homes).{{ r | NMHC | Landlord_com }} Thirty-seven states either prohibit or preempt rent control, while nine states allow their cities to enact rent control, but have no cities that have implemented it.{{ r | NMHC | Landlord_com }}

Arguments for

Economic

The rental-accommodation market suffers from information asymmetries and high transaction costs. Typically, a landlord has more information about a home than a prospective tenant can reasonably detect. Moreover, once the tenant has moved in, the costs of moving again are very high. Unscrupulous landlords could conceal defects and, if the tenant complains, threaten to raise the rent at the end of the lease. With rent control, tenants can request that hidden defects, if they exist, be repaired to comply with building code requirements, without fearing retaliatory rent increases. Rent control could thus compensate somewhat for inefficiencies of the housing market.{{ r | GPG | p=1 | q=Another justification is to correct market inefficiencies such as information asymmetry and high transaction costs. Because of the high cost of moving, tenants can arguably be pressured by landlords to accept rent increases. Tenants may also be unaware of the real condition of units until they move in. If the tenant complains, the landlord may threaten to increase the rent.}} ^[19]

In older buildings, rent control may broaden incentives to renovate individual units: tenants may invest sweat equity and their own money to improve their homes if they are protected from landlords trying to capture the added value,^[20][21]{{citation needed|date=August 2018|reason=The second source does not support the statement; these tenants improved their units even though they had no rent-control; technically they were living there illegally.}} while vacancy decontrol preserves landlords' financial incentive to renovate vacant units because it allows them to re-rent at market value.

Moral

Tenants' rights activists argue that rent control is necessary in times of long term housing shortages (See California housing shortage) to reduce the human suffering caused by increasing rents and the homelessness which results when people who can no longer afford the rent increases get evicted.{{r | SD_RC_Tenant_Union | p=1 | q= ... the projections show that even building at maximum capacity, the county will not be able to catch up and there will still be a 152,000-housing-unit shortage in 2050. ... Unless San Diego gets rent control, greedy landlords and government officials will be directly responsible for the rampant creation of homelessness and increased worker suffering.}}

Arguments against

Writing in 1946, economists Milton Friedman and George J. Stigler said: "Rent ceilings, therefore, cause haphazard and arbitrary allocation of space, inefficient use of space, retardation of new construction and indefinite continuance of rent ceilings, or subsidization of new construction and a future depression in residential building."^[22]

Although those paying lower than market rent are "protected," most economists argue that newer residents actually pay higher rent due to reduced supply.

Economic

In a 1992 stratified, random survey of 464 US economists, economics graduate students, and members of the American Economic Association, 93% "generally agreed" or "agreed with provisos" that "A ceiling on rents reduces the quantity and quality of housing available."{{ r | 1992_poll | p=204 | q=76.3% generally agreed, 16.6% agreed but with provisos }} {{ r | Krugman_NYT | p=1 | q=The analysis of rent control is among the best-understood issues in all of economics, and -- among economists, anyway -- one of the least controversial. In 1992 a poll of the American Economic Association found 93 percent of its members agreeing that "a ceiling on rents reduces the quality and quantity of housing." }}

A 2009 review of the economic literature{{ r | 2009_econ_lit_review | p=106 | q=If rent-control is such a "no-brainer," why bother to scrutinize the literature? The cluster of restrictions persists in roughly 140 jurisdictions in the United States as of 2001. As Hazlett (1982) notes, "economists have been notoriously thorough in convincing themselves of the destructive effects of rent control and notoriously inept at convincing anyone else" (278). Better understanding of the issue might help correct the error, prevent other governments from falling into it, and promote an understanding among more than just economists. Also, better understanding is an end in itself.}} by Blair Jenkins through EconLit covering theoretical and empirical research on multiple aspects of the issue, including housing availability, maintenance and housing quality, rental rates, political and administrative costs, and redistribution, for both first generation and second generation rent control systems, found that "the economics profession has reached a rare consensus: Rent control creates many more problems than it solves".{{ r | 2009_econ_lit_review | p=105 | q=My review of the rent-control literature indexed by EconLit (or cited by such indexed articles) finds that economic research quite consistently and predominantly frowns on rent control. ... As Navarro (1985) notes, "the economics profession has reached a rare consensus: Rent control creates many more problems than it solves" (90).}} {{ r | 2012_Urban_Inst | p=1 | q=In a comprehensive overview of the research literature, Blair Jenkins examined studies of different aspects of first-generation rent control (strict price ceilings) and second-generation (limits on increases, also referred to as rent stabilization). The upshot is that, at best, rent control does little harm but probably not much good and, at worst, it has negative impacts on landlords and tenants. There is near universal agreement that strict price ceilings, such as the kind imposed in New York City in the 1940s, are always bad because they severely inhibit housing production and investment. Even those most sympathetic to rent control seem to agree with this.}} {{ r | Forbes_RC_cities | p=1 | q=Bad ideas die hard, and rent control is no exception. For several decades, there has been near-consensus [the author links to the Blair Jenkins study on the words "near-consensus"] among economists that laws which cap or regulate rents are counterproductive, and most cities have ended them.}} {{ r | Forbes_RC_Valdez | p=1 | q=Rent control is one of those policies that feels good—who doesn't want to set price by fiat (I only want to pay $3.00 for this sandwich)—but it is fundamentally flawed. It has been a few years now, but Blair Jenkins has written a review of the economics literature and quotes an economist who says, "the economics profession has reached a rare consensus: Rent control creates many more problems than it solves" }}

In a 2013 analysis of the body of economic research on rent control by Peter Tatian at the Urban Institute (a think tank described both as "liberal"^[23] and "independent"^[24][25]), he stated that "The conclusion seems to be that rent stabilization doesn't do a good job of protecting its intended beneficiaries—poor or vulnerable renters—because the targeting of the benefits is very haphazard.", and concluded that: "Given the current research, there seems to be little one can say in favor of rent control." {{ r | 2012_Urban_Inst | p=1 | q=Given the current research, there seems to be little one can say in favor of rent control. What, then, should be done to help renters obtain affordable, decent housing? A better approach may be adopting policies that encourage the production of more diverse types of housing (different densities, tenure types, unit sizes, etc.), implementing strong regulations and practices to ensure housing quality and to protect tenants from abuses; and providing targeted, direct subsidies to people who need help paying their rents.}} {{ r | SFChronicle_RC_1 | p=1 | q=In 2013, Peter Tatian of the Urban Institute reviewed academic research on rent control and found "very little evidence that rent control is a good policy." }} {{ r | CityLab_RC_NYC | p=1 | q=Then again, as Peter Tatian of the Urban Institute recently wrote here, [the author hyperlinks to the Peter Tatian analysis on the words "recently wrote here"] there's "very little evidence that rent control is good policy." Studies have found that landlords with rent-controlled units often inflate the rent on other units to make up the loss, and that rent-stabilization programs don't do a great job targeting the poor residents they're supposed to protect.}}

Two economists from opposing sides of the political spectrum, Nobel Laureate Paul Krugman (who identifies as an American liberal or European social democrat),^[26] and Thomas Sowell, (who stated that "libertarian" might best describe his views){{ r | Sowell_Salon | p=1 | q=What would your preferred label be? I prefer not to have labels, but I suspect that "libertarian" would suit me better than many others, }} have both criticized rent regulation as poor economics, which, despite its good intentions, leads to the creation of less housing, raises prices, and increases urban blight.{{ r | Krugman_NYT | p=1 | q=Sky-high rents on uncontrolled apartments, because desperate renters have nowhere to go -- and the absence of new apartment construction, despite those high rents, because landlords fear that controls will be extended? Predictable.}} {{ r | Sowell_EF&F | p=4 | q=Rent control, for example, has been imposed in various cities around the world, with the intention of helping tenants. Almost invariably, landlords and builders of housing find the reduced range of terms less acceptable and therefore supply less housing. ... In other words, while landlords and builders simply lost an opportunity to make as much money as they could have otherwise, many tenants lost an opportunity to find a decent place to live.}} {{ r | Sowell_Salon | p=1 | q=You aren't a fan of rent control? No, I'm not. A figure I ran across recently that struck me as illustrating the moral bankruptcy of rent control is this: The number of boarded-up housing units in New York City is four times the number of homeless people on the streets. To think of that! On winter nights there are people sleeping on the cold pavement and dying of exposure, when there are these buildings that are boarded up as a consequence of economic protectionism.}}

Price ceilings can create shortages and reduce quality when they are less than the equilibrium price. By capping the price of housing, rent control can increase demand and reduce available supply, causing a shortage.^[27]{{Irrelevant citation|date=October 2018}} It is argued that rent control also reduces the quality of available housing, deters investment, and raises rents on tenants who are excluded from its protections (for example, in jurisdictions with vacancy decontrol, tenants who move or arrive later).{{Verify source|date=September 2011}} When property owners are restricted in the rents they can charge, they are less willing to construct more housing (a form of capital strike).{{ r | SJMN_RC_new_housing | p=1 | q=David Shulman, an economist and expert on California housing, agreed that housing trends in California follow economic cycles, but said there could be trouble on the horizon should voters clear the way for strong rent control, he said. "All the rent control laws that passed previously always exempted new construction, even Berkeley and Santa Monica. Therefore it's credible to say that housing construction would continue under rent control," Shulman said. "Until now." Shulman said repeal of Costa-Hawkins could send a message to developers that California is an unpredictable place to do business, and that could have an unprecedented chilling effect on development of new apartments. "That's a legitimate fear," Shulman said. "Cities could go back and change their laws anytime they want ... This could lead to a collapse of new apartment construction."}} Since supply is low, landlords worry less about tenants leaving and have little incentive to maintain the property.{{Citation needed|date=October 2018}} For example, unless owners can reasonably expect that punitive action will be taken against them, they might let building maintenance deteriorate in order to mitigate the lower rental income.{{Verify source|date=September 2011}} People moving into the city have difficulty finding housing because of the shortage created by rent control.^[28]

When housing is limited, it must be rationed in some way. After the San Francisco earthquake of 1906, the number of houses relative to the number of people who needed housing fell by 40%, but a shortage was avoided because the market price mechanism effectively rationed housing and provided an incentive for new housing to be built. In 1946, however, a far less extreme situation was dealt with via chance and favoritehood.^[22]

Social

Some, such as William Tucker of the Cato Institute, a leading libertarian thinktank,^[29] have argued that rent control laws are a textbook example of the problems that arise in trying to artificially reduce prices. The natural consequence in a free-market economy is a reduction in supply and consequent shortages. Tucker has argued that rent control has the perverse effect of creating less affordable housing.^[29]

Areas with rent-controlled housing are blamed for difficulty of finding vacant housing and the resulting power imbalance between landlords and tenants as tenants may "game the system" to impose onerous conditions on the landlord, forcing long cycles of judicial action, leading to considerable economic hardship for the landlord. Likewise, new tenants have serious difficulty finding housing, so they are seriously disadvantaged if they must move. As a result, landlords can impose numerous conditions and requirements.^[28]

Moral

Rent control restricts the property rights of property owners,^[22] as it limits what they may do with their property, requiring petitioning and other processes by law, prior to taking action against a renter.

Because enacting rent control on a building reduces the investment return that can be expected from that building, it thereby reduces the present value of the building, which can be viewed as a partial expropriation of private property.^[30]

See also

• Affordable housing
• Price ceiling
• Just cause eviction controls
• Subsidized housing
• Rent control in New York
• Rent control in California

• Don A. Allen, member of the California State Assembly and of the Los Angeles City Council in the 1940s and 1950s, urged lifting of wartime rent controls in Los Angeles

Notes

References

• Baar, Kenneth K. (1983). "Guidelines for Drafting Rent Control Laws: Lessons of a Decade." Rutgers Law Review, Vol. 35 No. 4 (Summer 1983).
• Baar, Kenneth K. (1992). "The Right to Sell the "Im"mobile Manufactured Home in Its Rent Controlled Space in the "Im"mobile Home Park: Valid Regulation or Unconstitutional Taking?" The Urban Lawyer, Vol. 24 pp. 157–221.
• {{cite encyclopedia |last1=Block |first1= Walter |authorlink=Walter Block|editor= David R. Henderson (ed.) |encyclopedia=Concise Encyclopedia of Economics |title=Rent Control |url=http://www.econlib.org/library/Enc/RentControl.html |year=2008 |edition= 2nd |publisher=Library of Economics and Liberty |isbn=978-0865976658 |oclc=237794267}}
• Downs, Anthony (1996). A Reevaluation of Residential Rent Controls. Washington, D.C. : Urban Land Institute, {{ISBN|0-87420-801-7}}.
• Friedman, Milton, and George J. Stigler (1946). Roofs or Ceilings? The Current Housing Problem. Irvington-on-Hudson, N.Y.: Foundation for Economic Education.
• Gilderbloom, John I., editor (1981). Rent Control: A Source Book. Center for Policy Alternatives; 3rd edition, June 1, 1981. {{ISBN|0-938806-01-7}}.
• Keating, Dennis, editor (1998). Rent Control: Regulation and the Housing Market. Center for Urban Policy Research, {{ISBN|0-88285-159-4}}.
• McDonough, Cristina (2007). "Rent Control and Rent Stabilization as Forms of Regulatory and Physical Taking." Boston College Environmental Affairs Law Review, Vol. 34 pp. 361–85.
• Niebanck, Paul L., editor (1986). The Rent Control Debate. University of North Carolina Press, {{ISBN|0-8078-1670-1}}.
• Tucker, William (1991). Zoning, Rent Control and Affordable Housing. {{ISBN|0-932790-78-X}}.
• Turner, Margery Austin (1990). Housing Market Impacts of Rent Control. Washington, D.C.: Urban Institute Press, {{ISBN|0-87766-443-9}}.
• Gilderbloom, J. I., & Markham, J. P. (1996). Moderate rent control: sixty cities over 20 years. Journal of Urban Affairs, 18(4), 409-410. {{doi:10.1111/ j.1467-9906.1996.tb00388.x}}

External links

• Rent Control Around the World: Pros and Cons
• California cities with rent control
• additional California cities with rent regulation
• New York communities with rent control
• Pro-rent control article from tenant.net
• New York Magazine article on Rent Control including interviews with tenants
• Rent Control in the New Millennium by Dennis Keating
• Almanac of Policy Issues – Rent Controls
• Rent Controls and Housing Investment
• Pro-rent control article from Dollars & Sense magazine
• Four Thousand Years of Price Control – Mises Institute
• Rent Stabilized Apartments Go Up Again! – Best Rents NYC

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