What Is Rent Control And Does It Still Exist?

Over 30% of Americans rent their home, while that number is up to 80% in some cities. With so many renters, it’s important to stay updated on why people rent, how to rent, and any new rent laws that may be implemented. 

With that said, we’re going to talk about rent control. You’ve heard it mentioned on tv shows from the 70s, 80s, and 90s, but that doesn’t mean it doesn’t exist today. Let’s take a look at what rent control is and how it affects the country today.

What Is Rent Control?

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Rent control is a government program that puts a cap on the amount of money that landlords can ask for new leases. The point of rent control is to keep housing affordable for those living in apartments or homes.

This sounds like a dream and if you don’t think about it too much, there doesn’t appear to be any reason not to make it widespread. But if you do enough research, you’ll find out that there are good things and bad things about it.

Rent control can affect both tenants and landlords. But it can also affect those around the apartment, the economy, and the general interest of people living in the states where rent control is still legalized. 

As with any government program, there are both pros and cons. There are parties fighting for rent control with others fighting against it. As of now, those fighting against rent control are winning, forbidding it in many states.

Is Rent Control Illegal?

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While illegal is a strong word, there are 37 states that have laws forbidding landlords from enacting rent control. There are only five states and areas that have real rent control in action today. These areas are New York, New Jersey, California, Maryland, or Washington, D.C. 

While rent control makes it where tenants won’t see large increases in their rent, it doesn’t affect new tenants. Landlords can charge new tenants significantly more than they can charge existing tenants.

There are also two different ways to have rent control. You can either cap the total amount that a landlord can charge for rent or you can have them work with a percentage. There are two ways to do this.

One way is to only have them be able to increase the rent a certain percent with each lease, which may backfire, as they can continuously increase every time they get a chance. Most won’t do this, but it would work for them.

Another way is to go with the market. They have to be within a certain percentage of the standard within their district. This is harder to gauge but is a fairer way to do it. Then again, no strategy is perfect. 

Of course, this is just one of the reasons that rent control is controversial and banned in so many states and cities. Sure, it makes affordable living spaces for those with low incomes, but it also comes with many risks.

Where Did Rent Control Come From?

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Rent controls started in the 1920s following World War I. During the war, rents were “controlled” by the people and local committees. The government was not involved. Then, between 1919 and 1924, rent-control eviction-control laws were implemented in some cities.

It wasn’t until The Great Depression that modern laws were enforced regarding rent control. Due to the financial crisis the country was undergoing, the government responded by restricting the amount of money that tenants had to pay. 

In the 1970s, new laws were created, some for and some against rent control. Most rent control laws still in effect are leftover from the 1970s, meaning that most tenants under rent control are paying what they paid in the 1970s, or close to it.

In 2020, due to COVID-19, the government implemented a new eviction-control law that prevented any evictions in some states from happening. This kept those affected by the pandemic from losing their homes. 

The laws for 2020 were implemented in the Spring and Fall of 2020, but they vary in how long they will last. In California, most of these will be in effect until February 2021. 

Who Does Rent Control Benefit?

Via Jennifer Giersbrook

Ask most economists and they will tell you that rent control usually doesn’t benefit anyone in the long run. But there are always arguments against every other argument. Both can be equally vouched for. 

After all, rent control is no different than any other economical debate. There are economists, politicians, and activists arguing for each side. But with these arguments comes one question. What is each side fighting for? 

Pros Vs. Cons For Tenants

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Should tenants or landlords have more benefits? Some argue tenants because there are more of them and they represent the greater good. They represent America and the lower-middle class people.

Pro: No Rent Spikes

This is by far the best thing about rent control. Tenants don’t have to worry about horrid rent spikes each year. They know that next month will be the same as this month. Rent control was implemented for this reason.

Con: If The Landlord Loses, You Lose Too

Although it seems great for you, the landlord may struggle with rent control. If they can’t keep up, they may lose the place. Most likely when this happens, tenants will see a ripple effect that won’t benefit them.

Pro: Predictable Future Rent

Not only will you know that your rent won’t increase next month, but you also know that in ten years, you’ll still be able to afford your current home. This makes it easier to raise children in your home, knowing they will be able to stay.

Con: The Neighborhood May Change

Because there is rent control in the area, you may notice the neighborhood start to change. There is a certain type of people that prefer rent-controlled areas, and this is forever changing.

Pro: Stability

Stability is important. So knowing that even if you never get a raise at work or a better job, you can still afford your home, is a relief. It’s things like this that make one think that rent control should have never been banned.

Con: No New Apartments

Because rent control is implemented, new apartments won’t appear nearby. So if you’re looking for an upgrade, it likely won’t happen. Even if the laws change, the neighborhood has already set the pace.

Pro: Won’t Be Forced To Move

People are evicted all of the time because they can’t pay their rent. This is a horrible thing that no one, even the landlord, wants to happen. But this isn’t something that happens in rent-controlled apartments. 

Con: Worse Maintenance 

Because the landlord isn’t getting as big of a turnout as he normally would, he can’t keep up with the maintenance like other landlords. So you may notice that the apartment is staying in the past instead of moving forward. 

Pros Vs. Cons For Landlords

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Should landlords receive more benefits? They do own the complexes they are managing and they should make the rules, right? Many argue this case and believe they should have the same rights at other business owners have.

Pro: Alluring To Renters

Of course, this is the most important pro for landlords in rent-controlled apartments. They will appeal to renters and tenants who are looking for something they can afford. Try keeping prices for new tenants close to that of old tenants. 

Con: Lower Investment Turnout

Your tenants are getting paid more and more as the economy changes. But as a landlord, you won’t. This is because, in a rent-controlled apartment, you can’t increase the rent as the cost of living increases. 

Pro: Keep Tenants Long Term

You may not just keep one tenant for decades, but their heirs for decades more. People don’t move out of rent-controlled apartments very often. Most of your tenants will probably be elderly people that have been there since the 1970s. 

Con: Area May Deteriorate

Because the cost of living in the area is cheaper, companies won’t put in new stores and buildings as they fear the people won’t be able to afford them. This affects landlords who want a nicer setting.

Pro: Less Competition

As new stores aren’t often added in the area, new apartments won’t be added either. If someone works nearby, and you’re the only option, that’s where they will rent. So you will either have a full house or no one at all.

Can You Rent A Rent-Controlled Apartment Or House?

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Via Abelow Sherman Architects LLC

Unfortunately for renters, it’s nearly impossible to find a rent-controlled apartment. Partly because it’s banned in most areas and partly because rent control only affects tenants already living there.

In fact, some rent-controlled areas only affect those who have been living in the house or apartment since the 1970s. If you inherit a home from a family member, the law may stay in-tact, but otherwise, it is nearly impossible. 

Is Rent Control Good Or Bad?

As stated, there are pros and cons to renting control, but most professionals agree that it doesn’t work in America. Prices everywhere are raised all the time, so why should rent be any different? However, there are exceptions.

For example, when there is a crisis, like the pandemic, there will be different rules. The unemployment rate drops, people can’t pay their bills, and the first priority is to keep everyone fed, housed, and safe. 

Other than that, the general consensus is that rent control will never return for good. It will always be a memory from the 1970s and a way that people in the early 2000s got away with paying $30 a month for fifty years.