The bigger picture of rent control

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A recent letter to the editor about my column (see The unrepentant tenant, “Rent control: Why or why not?”  March 24, 2022) raised some points I want to address, along with some examples of real-life rent control (RC). 

There are different kinds of rent stabilization laws and proposals throughout the country, and thus far, I have intentionally avoided detailing them or advocating for one kind or another. I wanted to first lay the ground work in terms of the history and context of RC in Colorado (see The unrepentant tenant, ‘Boiling Frogs,’ March 10, 2022), and then address a few of the standard arguments thrown against all RC in my March 24 column. I fully intend to delve into the intricacies and myriad forms of RC in future columns, since there are many iterations to discuss.

It is important to again emphasize that in urban areas, the housing market is inelastic—prices don’t respond to supply and demand. There is so much demand for affordable housing that we can never build our way out of this crisis. Boulder, Longmont and Denver, along with other Front Range cities, have been adding housing supply at a fast clip, but rental prices have never gone down—they only continue to rise. And now, some landlords are using the Marshall fire as a despicable excuse to raise rents even more. This is not because their costs are rising in any significant way, but because they choose to exploit the situation and charge “what the market will bear”—a well-worn justification for increasing profits while tenants suffer. A number of rent gouging cases have been reported to the Colorado Attorney’s Office. RC would specifically disallow large and often unjustified rent increases. 

By the way, you’ll see that I use the terms rent stabilization and rent control interchangeably. While rent stabilization is more of an umbrella term that includes rent control, there are some differences between them. But for the purposes of this column, I’ll continually use them interchangeably, unless otherwise noted.

To review and expand: There are no federal laws nor policy concerning rent control—it is controlled by states. Thanks to a concerted effort by powerful landlord/realtor/homebuilder lobbies, the majority of states ban RC from being enacted, although within those states there are some efforts to overturn those bans (Colorado is one of them, along with New Mexico and Illinois). A few states take no position on RC, and a handful of states allow cities to enact RC under certain conditions. There is no one type of rent control—specific policies vary quite a bit city by city, even within a state. 

Where RC does exists, it generally does not reduce or freeze rents, but caps the amount of rent increases, so that tenants can know (and plan) for the maximum amount of rent raises. That rent cap varies from city to city. When possible, RC is coupled with eviction controls, so landlords aren’t incentivized to evict or not renew leases merely so they can raise rents.

In most cases, repairs, maintenance and improvement costs—along with tax increases—can be incorporated in rent increases. So landlords have no excuse to blame RC for poorly maintained housing stock. Reasonable returns are allowed within the rent increases.

So what does this look like in real life? Let’s look at some examples.

A particularly strong renters movement (New Jersey Tenant Organization, NJTO) resulted in New Jersey having the largest number of rent controlled cities of any state—about 100 as of this year, and growing. Since 1971, New Jersey has allowed cities to enact their own form of rent stabilization, resulting in between 750,000-1,000,000 tenants having their rent increases limited to about 2-5%, according to Mitch Kahn, vice-president of NJTO.

California has a basic state law that says no landlord can increase rent by more than 5% plus inflation as measured by the Consumer Price Index, or 10%—whichever is lower. Rents can’t be raised more than twice per year, and there are a number of exemptions (i.e., single family homes, condos, etc.). That’s a rather low floor, but fortunately cities are free to enact stricter regulations, and a number have passed tougher laws with lower rent caps. About 24 municipalities enacted RC for tenants—in addition to many cities restricting rent increases in mobile home parks (see The unrepentant tenant, “The downward mobility of owning a mobile home,” April 7, 2022). 

In a major victory for tenants everywhere, St. Paul, Minnesota, voters passed the strictest rent control measure in the country last year. They limit rent increases to 3% on all rental units, with no exemptions for new construction, scheduled to go into effect next month. Minneapolis may well be next. There’s a lot to say about their three-year battle to stabilize rents, and I’ll be writing more about that in a future column.

Hopefully what’s emerging is a picture of a very doable public policy that needs to be part of the affordable housing discussion.  

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This opinion column does not necessarily reflect the views of Boulder Weekly. 

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