Housing affordability and the cost of living for Americans of all income levels have captured the attention of legislators and community leaders across the country. The introduction of rent-control policies is one way that states are addressing residents’ cost-of-living concerns. Even though these policies are well-intended, they can have a detrimental effect on lower-income families’ quality of life.
Rent Control – 2020
Similar to the post-WWII era, many metropolitan areas currently face significant housing shortages, especially in the affordable and workforce housing categories. As a result, leaders have resurrected the idea of rent control as a potential solution. Earlier this year, California passed legislation providing rent controls capped at 5% plus inflation.
During its 2019 session, the New York legislature updated its rent control regulations, tightening them even further. In 2019, Oregon also passed rent-control legislation. As the need for affordable housing increases, other states could raise the discussion of rent control even though it is the equivalent of sticking a bubblegum to fix a leak in a stranded boat.
The rent control policy isn’t solving any problems but rather, emphasizing on the core issue-a lack of housing and the wage gap that holds people back from ever being able to buy a house. Leaders, however, need to understand the implications of this policy, as well as alternatives to increase housing supply while keeping the cost of housing affordable. To understand the extent of this policy, let’s explore 12 reasons why rent control is damaging housing opportunities for US citizens.
14 Reasons Rent Control Hurts Housing
Not An Investment Opportunity
Just as Alexandria Ocasio-Cortez said, “It’s time that we stop commodifying the housing market because it is not a speculative investment, it is a basic right for all Americans. “You can and should invest in a house because it is your shelter. Rent control, on the other hand, disregards the two reasons why housing isn’t affordable. These include a wage gap between the different sections of society and also, the lack of housing opportunities available for the middle class.
Rent control also puts a limit on how much you can charge for rent, regardless of the situation. So, if your property is in a desirable location or has unique features, you cannot charge more for it. As an investor, this takes away any opportunity to make a return on investment and could even lead to losses.
Reduces Housing Options
Rent control doesn’t just reduce investment opportunities, it also decreases the number of housing options available. This is because landlords have no financial incentive to maintain or improve their properties when they cannot charge more for rent. In some cases, landlords may even choose to stop renting out their units altogether. This takes much-needed housing off the market and reduces the number of available options for tenants, driving up prices even further.
Reduces Housing Quality
In addition to reducing the number of housing units available, rent control also decreases the quality of those units that are still on the market. This is because landlords have less incentive to maintain or improve their properties when they cannot charge more for rent. Over time, this lack of maintenance and investment will lead to a decline in the quality of housing units, making them less desirable and further reducing the number of options available.
Increased Evictions
Rent control can actually lead to an increase in evictions, because landlords have less incentive to work with tenants who fall behind on rent. Under rent control, landlords cannot charge more for rent, so they have less flexibility to work with tenants who fall behind. As a result, landlords may be more likely to evict tenants who fall behind on rent, further reducing the number of housing units available.
Creates a Black Market for Housing
Rent control can actually create a black market for housing, as landlords look for ways to circumvent the rules. For example, some landlords may start offering housing units only to those who are willing to pay above the legal rent amount. Others may start charging for amenities that are normally included in the rent, such as parking or laundry facilities. Either way, this creates a two-tiered system where only those who can afford to pay more have access to the best housing options.
Drives Up the Cost of Housing
Rent control may seem like it would help keep the cost of housing down, but in reality, it can actually drive up the cost of housing. This is because rent control can lead to a decrease in the quality and availability of housing units, making it more difficult for people to find affordable housing. As a result, people may end up paying more for housing than they would have without rent control.
Leads To Gentrification
Rent control can actually lead to gentrification, as landlords look for ways to circumvent the rules. For example, some landlords may start offering housing units only to those who are willing to pay above the legal rent amount. Others may start charging for amenities that are normally included in the rent, such as parking or laundry facilities.
A Disadvantage For Minority Groups
Rent control can actually have a disproportionate impact on minority groups, as they are more likely to rent than own their homes. This is because rent control can lead to a decrease in the quality and availability of housing units, making it more difficult for people to find affordable housing. As a result, minority groups may end up paying more for housing than they would have without rent control.
Displacement
Rent control can actually lead to displacement, as landlords look for ways to circumvent the rules.
For example, some landlords may start offering housing units only to those who are willing to pay above the legal rent amount. Others may start charging for amenities that are normally included in the rent, such as parking or laundry facilities.
This can create a situation where low-income tenants are forced to move out of their homes and into less desirable areas, further exacerbating the problem of affordable housing.
In conclusion, rent control is not an effective way to address the issue of affordable housing. It can actually lead to a decline in the quality and availability of housing units, and may even drive up the cost of housing. It is also important to keep in mind that rent control can have a disproportionate impact on minority groups. If you are concerned about the issue of affordable housing, there are better ways to address it than rent control.
