I believe housing is a human right, and that we are facing a housing crisis that will impoverish a generation if we do not act quickly and aggressively. I would support nearly any policy that would increase access to affordable housing, reduce the number of rent-burdened households, and reduce or eliminate displacement.
But I am desperately opposed to rent control. Rent control laws do not work to make housing affordable for everyone. In the long run, everyone is worse off under rent control, because rent control is a cruel bargain; stability and subsidies for some renters in exchange for the exclusion and exploitation of others.
I believe in something different. I believe we can build enough housing to make it affordable for all, and that we can organize the political will to fund social and public and subsidized housing to help those the market cannot. I know we can do this because we have done it before. But even if you disagree with those remedies to our housing crisis, rent control is no answer.
Let’s take a moment to acknowledge that no matter where a person stands on the issue of rent control they have likely come to that position out of a desire to make housing more affordable for everyone, and especially for renters. Neither supporting nor opposing rent control means you care more or less about the critical issue of affordable housing and those it affects.
Because we all care so deeply about this issue we should ground our discussion in the extensive body of empirical research on this topic. Being concerned about potential illness is not evidence in support of vaccinations; the fact that vaccines can and do measurably prevent illness is. Likewise, concerns about displacement or increasing rents are not evidence in support of rent control; only evidence that displacement is reduced or rents are more affordable means we should support rent control. If we are to prioritize renters and those who are desperate to work their way into becoming renters it means we can’t give weight to arguments about giveaways to landlords or to the ideological evils of capitalism, because those arguments say nothing about the harms and benefits to renters directly. The rent won’t wait for a revolution. The only question before us is whether renters are better off in measurable ways with rent control than they are without.
What Is Rent Control?
Rent control is a law or set of laws that sets rent levels or controls the amount and frequency of rent increases through regulation. From their introduction in Europe after World War I, where rents were frozen at certain levels, to second generation rent control laws enacted in the United States in the 1970s, where rents are allowed to increase at certain rate or by reference to external factors such as inflation, rent control is one of the most studied issues in economics.
Arguably, inclusionary zoning is also a form of rent control. Inclusionary zoning is a mandate that new developments set aside a number of units to be rented at certain rates. Many of the same shortcomings of rent control apply to inclusionary zoning.
Note: The studies cited throughout are generally the most recent or highest quality I could find, and very representative of research on rent control generally. For further reading, check out this literature review.
What Are the Effects of Rent Control?
- Reduced Supply of Rental Housing
Rent control incentivizes landlords to convert property away from rental housing (because they aren’t making as much money under rent control) either by making the units condos or by moving into the units themselves. In San Francisco, the cumulative effect of the imposition of rent control in 1994 was to reduce the supply of available rental housing by 15%, reduce the number of renters in buildings subject to rent control under the 1994 law by 20%, and reduce the number of renters in all rent controlled buildings by 30%. Rent control is an effective strategy if your goal is to reduce rental housing and drive renters out of a city, but it’s far more pro-renter to encourage an abundance of rental housing.
- Existing Rental Properties Redeveloped for Higher Income Renters
If landlords don’t want to convert the property away from rental status but do still want to increase their incomes from the properties, they often can evade rent control requirements by renovating the properties. Because many rent control policies exclude new developments or redeveloped properties (to mitigate the supply-restricting effects of rent control) landlords can increase their income by renovating properties and then raising rents. Along with condo conversions and increased owner occupancy these renovations increased the housing available for higher income individuals at the expense of lower income individuals, especially in pricier neighborhoods. The shorter version: rent control gentrifies, the opposite effect many rent control advocates hope for in pushing rent control.
- Incumbent Renters in Rent-Controlled Units Receive Monetary Benefits
Those lucky enough to get a rent controlled unit receive large benefits from the protections. In San Francisco, those in rent controlled units received between $2,300 and $6,600 a year in benefits between 1995 and 2012, including protections against rent increases, direct transfers from landlords, and lower moving costs. Overall, the benefits of rent control to incumbent renters was $7.1 billion.
4. Renters in Uncontrolled Units Pay Higher Rents
As rent control decreases housing supply it increases rents. The recent study from San Francisco shows that the six percent decrease in the supply of available rental housing increased rents in the uncontrolled sector by seven percent. From 1994 to 2012, the cumulative loss to renters attributable to increased rents under rent control was $5.1 billion. (Note that this is the loss only to increased rents; increased commuting costs, housing mismatch, the cost to renters not able to move to the city, reduced productivity, etc., are not included in this calculation). This shows that the benefits of rent control for the lucky renters are offset by losses to other renters who aren’t so lucky.
Maybe this tradeoff is worth it to you, but if you’re a supporter of rent control you should ask yourself if you’re willing to impose a tax on a random selection of renters to subsidize the rents for the remaining renters. For me, I consider it unconscionable to pit renter against renter; we can and should create enough housing for everyone to have affordable rental housing.
Of course, at this point an advocate of rent control could argue that the lesson of points three and four is that rent control should be applied to all rental housing. Unfortunately, expanding rent control to cover all rental housing exacerbates the shortages caused by reduced supply of existing and new rental units discussed in points one and two. With less housing overall under-the-table deals, wait lists, and lack of opportunity to move to the city would become the rule, as in Sweden.
- Rental Units Are Mismatched to the Needs of Renters
In college I lived in a one bedroom apartment with three roommates, in law school a two bedroom apartment with one roommate, and now I live in the upper unit of a duplex apartment with my wife and two dogs. Each of the places I lived was perfect for me at the time, but each was unsuited for my next stage in life. Looking forward to if and when my wife and I decide to have kids, when we decide to retire, and when we may need assisted living, the homes I imagine us in change based on our needs. All of our housing needs change over time, but your choices are circumscribed under rent control. Because rent control increases rents in the uncontrolled sector, those in rent controlled units are less likely to move. Because rent controlled units are unlikely to come on the market, those in the open market have reduced options. All this adds up to housing misallocation: people staying in housing they otherwise wouldn’t because of rent control, even if it means longer commutes or overcrowding. Longer commutes have clear effects on carbon emissions, and space mismatch is a non-monetary cost to rent control for those subject to it.
- Rent Control doesn’t effectively target people who need help the most.
Ideally, rent controlled units would go to the rent-burdened or those who would otherwise be priced out of the market. However, the beneficiaries of rent control are very likely to be wealthier households; in Massachusetts, 30% of rent controlled units were occupied by those in the top half of the income distribution. In weighing the costs and benefits of rent control this windfall for wealthier households counts as a clear cost. How would you feel if 30% of Section 8 vouchers were going to those in the top half of the income distribution? (Now imagine the higher income households getting Section 8 vouchers were being funded by low income renters unlucky enough not to win the housing lottery).
Unlike Section 8, which can impose income limits, rent control runs into practical problems with targeting the right beneficiaries. If landlords are allowed to charge those with higher incomes market rates then landlords will prefer to rent to those with higher incomes, and low income renters will always be last in line for housing. If landlords are required to rent to those with lower incomes first then they will be aggressive in finding a cause to evict tenants. Imposing rent control means assistance for some renters at the expense of everyone else, with no guarantee that those receiving assistance are those who need it most. Worse, of those receiving rent controlled units, similarly situated renters do not receive similar benefits. White renters receive larger benefits than similarly situated people of color, and married renters receive larger benefits than similarly situated single renters. Rent control may be an anti-racial equity policy.
Conclusion
Gunnar Myrdal, a socialist economist and politician who helped build the Swedish welfare state, claimed that, “Rent control has in certain Western countries constituted, maybe, the worst example of poor planning by governments lacking courage and vision.”
Another Swedish socialist, Assar Lindbeck, was even more blunt, saying, ““In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.”
In the end, rent control succeeds, to the extent that it does, by raising costs for many renters to benefit a random assortment of other renters. Overall, the costs of rent control exceed the few benefits. It’s an affordable housing lottery where the ticket is the certainty that if you don’t win, your rent will go up. Renters deserve better.