Rent Control’s Dirty Little Secrets

Timothy L. Coyle
Consultant specializing in housing issues

The debate over rent control has been predictable.  On one side, lower-income activists (proponents) argue it’s the only counter to soaring, increasing, unaffordable rents.  They insist on arbitrary caps on rents, regardless of the consequences.  On the other side, housing providers (opponents) assert damage to their bottom line and their diminished ability to offer adequate shelter.

But, what about tenants?  How are they helped by a policy as harsh and absolute as rent control?  Not well, according to California’s and the nation’s experience with rent control.  Advocates of rent control assert they need the policy to help people of color and lower-income households.  But, what do the data show?  Let’s take a look.

First, the argument goes, rent control – by limiting what a property owner can charge for rent – delivers a benefit to lower-income residents.  Is that true?  No.  Despite suggestions by advocates that the “equity” of the policy, rent control is not means-tested.  That is, nowhere are rents set as affordable to families based on their incomes.  Rents are simply and arbitrarily held below the market.  And, due to the policy’s chill on new rental housing construction – and a vanishing supply of housing – choices are made fewer for lower-income families. 

Second, the beneficiaries of rent control aren’t necessarily poor people.  In Manhattan, for example, stories abound featuring well-to-do renters – lucky enough to win the decades-old lottery there – are subletting their rent-controlled units to friends, not the poor.  Indeed, in other cities like Berkeley and Santa Monica, gentrification has taken root in rent-controlled neighborhoods.  Meanwhile, populations of lower incomes have declined in both cities.

Third, the argument goes that rent control doesn’t lead to a decline in housing.  Yeah?  Says who?  According to a 1994 study by Sacramento State’s Real Estate and Land Use Institute, communities which had rent control actually lost rental units while their host counties (without rent control) gained.  Those statistics fail to account for the lost opportunities for new housing brought on by rent control.

Fourth, according to the same study, elderly renters were severely (negatively) affected by rent control.  Declines in the elderly populations in rent-control cities were matched by increases in host counties.

Finally, people of color were hurt most by rent control.  In the City of Berkeley, for example, Black populations declined while they rose in surrounding Alameda County following the onset of rent control.

Rent control also has a serious impact on the quality of housing – for two main reasons.  First, arbitrary caps on rents mean less income for the property and, correspondingly, a reduced chance that regular and deferred maintenance will be performed.  Secondly, properties in need of capital improvements – like new roofs or seismic retrofit – aren’t guaranteed the pass-through’s necessary to make such improvements.  In both cases, the quality of the housing suffers.

Rent control is hardly the panacea its advocates say it is.  Indeed, as the above shows, the only beneficiaries of rent control are rich or well-off people who game the system.  And, as the above demonstrates clearly, rent control makes a pretty crummy housing policy.

Politicians like Richard Bloom of white and wealthy Santa Monica will claim his AB 1506 – which would authorize wholesale rent control statewide – is the answer to California’s housing affordability problems.  But, if you’re Black or Hispanic, elderly or lower income, forget about rent control delivering relief.  Only new housing will do that.

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