Across the country, various state and local governments are currently considering – or debating – legislative rent control measures.
However, these efforts are misguided. They do nothing to address residential construction deterrents like imprudent local zoning measures and high land costs. What rent control policies really do is help create political battles between landlords and tenants without addressing the root of – and possible solutions to – America’s housing affordability problems.
In response, NAR is working to fight rent control and rent stabilization laws on both residential and commercial properties.
Last year, California voters rejected a statewide measure that would have overturned the Costa Hawkins Act, which establishes limits on local rent control laws. Costa Hawkins ensures that buildings first occupied after 1995 are not subject to rent control regulations. Further, the law provides an avenue for vacancy decontrol, which gives building owners an opportunity to rehab facilities and establish new, fair market rates with new tenants.
From Portland, Maine to Portland, Oregon, several jurisdictions have recently considered rent control regulations. Most states preempt local governments from adopting rent control measures in any form. In the states where rent control is permitted (California, Maryland, New Jersey, New York and the District of Columbia), local jurisdictions are able to regulate rental rates based off specific parameters written within the state law. The aforementioned Costa Hawkins Act in California is an example of this.
Over recent years, Hawaii, Michigan, Minnesota and Washington, among other states, have considered legislation repealing prohibitions of rent control, although, thus far, no prohibitions have been successfully repealed. The most significant concerns are in states whose legislatures revisit rent control laws year after year. California and New York, for example, see regular efforts to expand the reach of rent control to include just cause eviction requirements and/or landlord-tenant relocation fees.
Illinois and Oregon have also revisited legislation to repeal existing bans on rent control and have the political support to pass legislation this year. Oregon will be the first state to enact a statewide rent control law that requires local governments to incorporate rent control regardless of whether or not a housing shortage exists. This is unique, however, as most states allow local governments to decide if rent control is necessary. In Illinois, lawmakers are considering repealing existing rent control prohibitions as well as creating a state regulatory body to oversee rent control regardless of housing supply.
If states are successful in easing rent control restrictions, NAR is concerned that residential rentals in those areas will lose value, while both property tax assessments and bases will decrease, forcing other property owners to eventually pay more in taxes or fees as a result. Ultimately, rent control discourages the production of new rental dwellings in the private sector, and NAR is committed to fighting against these laws across the country.