With the soaring rents and an ever-widening gap between income and expenditure, the concept of national rent control is gaining traction. The Biden administration recently hinted at an interest in such measures.
Understanding Rent Control
Rent control is a method of capping the amount landlords can increase rent, typically annually. The objective is to make housing more affordable and protect tenants from arbitrary rent hikes. It sounds simple, but the reality is more complex.
Why Rent Control?
From 2019 to 2021, nearly half of all renters were spending over 30% of their income on rent, a threshold that defines housing affordability. For many, rent control appears to be a viable solution, especially with rents increasing by a staggering 25% since 2019.
The Debate: Pros and Cons
Protection for Tenants: By capping rent increases, tenants can have more predictability in their housing costs and financial planning.
Preservation of Communities: Rent control may prevent displacement and encourage a diverse mix of residents to stay in gentrifying neighborhoods.
Immediate Relief: For many struggling with rising costs, rent control offers a swift solution.
Supply Reduction: There's a worry that landlords, particularly small-scale "mom and pop" landlords, might exit the rental business due to reduced profitability.
Deferred Maintenance: With capped income, some landlords might forgo maintenance, leading to deteriorating housing conditions.
Misalignment with Market Realities: Critics argue that rent control doesn't address the core issue: the demand and supply gap in housing.
But what does the research say?
A Stanford University study from 2019 suggests that San Francisco's housing shortage was aggravated by rent control as landlords converted apartments to condos or left the rental business. This led to a 15% reduction in apartment availability.
An Alternative Approach
While rent control debates rage on, some experts, including Sharon Wilson Geno of the National Multifamily Housing Council, advocate for increasing the housing stock. This could be achieved by repurposing existing structures or by creating new housing communities. Another significant aspect is the improvement of transit infrastructure.
The Role of Federal Agencies
The Biden administration is not only focusing on rent. Its proposed renters bill of rights suggests a host of measures to protect tenants. These range from examining unfair rental practices to ensuring better eviction notice periods.
Cities and states have already started implementing rent control policies. Places like St. Paul, Minnesota, and Oregon have witnessed these efforts first hand. With the Federal Housing Finance Agency (FHFA) now considering such measures for government-backed housing, there is potential for an even wider impact.
The debate surrounding national rent control is intricate. While it presents an attractive solution to the current housing affordability crisis, it's crucial to consider its long-term effects on the rental market's health. The nation awaits the Biden administration's next steps, hoping for policies that ensure housing affordability while maintaining a robust rental market.