Our Case Against Rent Control
October 2, 2016
With rent control continuing to gain traction at the state and local levels, I feel compelled to unpack my argument against it. First, let me make this clear – rapid gentrification is an issue that should be addressed, not just because we have a moral obligation to protect those being priced out of their homes, but also because of the economic destabilization that can occur when a region loses its low-wage workforce. With that being said, the issue should be addressed in a thoughtful and collaborative manner that takes into account 1) who should be responsible for providing housing assistance to low-income families, and 2) how to give that assistance directly to those who need it. Rent control, however, is a short-sighted approach to tackling gentrification. It puts little thought into either of these two questions, and leaves a host of new problems in its wake.
Rent control subsidizes affordable housing by placing a ceiling on how much a property owner can charge for rent. When that ceiling is below market rate, the difference essentially becomes a tax payed by landlords to their tenants. This puts a large amount of risk on landlords, as their only real insurance against losing money (when for example the rental market is down, or maintenance costs become too burdensome), is having the ability to raise rents when the market is up. This added risk is enough to scare some landlords out of the business.
Rent control creates a welfare program, only unlike most welfare programs it isn’t funded by state or federal taxes and you don’t have to qualify for it. Instead, it’s privately funded by landlords and all you have to do to reap the benefits is live in a rent-controlled building. This means the 26 year-old web developer living alone making $150,000+/year has the same access to subsidized rent as a single mother of four working two jobs to make ends meet. It also means this web developer will stay in their unit for longer than they would were their rent not subsidized, keeping that unit off the market and unavailable to those who actually need it. Once people are locked in to their rent-controlled units, they tend to stay there. This restricts the available supply of rentals and makes what is available more expensive (look to San Francisco for evidence of this trend). If that sounds counter-productive, that’s because it is. Subsidizing housing costs for low-income families is fine, but do it with government money (which we all pay into), and actually give that money to low-income families through programs they apply and qualify for (i.e. Section 8). Don’t hand it out to every renter regardless of their income, simply because they live in an expensive rental market.
Whether or not you agree with anything I just said, it’s important to understand this – when people buy rental property, they buy it as an investment, not as a public service. If a rent control ordinance threatens to cut too deeply into profit margins, property owners will do whatever is in their power to protect their investment. This means evicting current tenants to raise rents before the ordinance is passed, or selling their units and moving their money elsewhere. Keep this in mind before casting your vote on rent control.