Renting an apartment can be prohibitively expensive. According to Rent Cafe, the average rent is $1,420. But in some areas, the cost of a modest apartment can be three or four times that number.
Earlier this month, Oregon tackled the problem by passing Senate Bill 608, instituting a statewide limit on how much landlords can raise rent.
Under the new law, rent increases will be capped at 7 percent plus inflation in buildings built more than 15 years ago. It also bars no-cause evictions after a tenant’s first year in a building.
It’s the first state to implement rent control; many cities have instituted it, but not states. Nationwide, tenant advocates lauded the new law and talked about how to spread rent control laws to other states. Illinois and New York have introduced similar rent control bills. Cities such as Philadelphia, Los Angeles, and Providence, R.I., are considering similar measures, too.
Skyrocketing rental prices pose a major problem across the country. Three-quarters of the nation’s mayors said that lack of affordable housing is a significant concern in their cities. In many areas, even middle-class families struggle to pay for housing.
But is rent control really the right fix? Not according to economists. Swedish economist Assar Lindbeck said rent control was “the most efficient technique presently known to destroy a city — except for bombing.”
Multiple studies have shown that rent control only exacerbates the problem over the long term. That’s because rent control tends to reduce the quality and quantity of homes on the market. With caps on how much landlords can charge for rent, there’s less incentive to build or improve rental units since there’s a smaller return on their investment and less money to spend on such repairs.
Research has shown that when rent control is instituted, property owners are more likely to convert their rental units into condominiums. Developers revise plans to build fewer units to stay under the rent control rules, decreasing the amount of available housing, and landlords sometimes resort to aggressively screening out certain tenants, particularly low-income families with small children. In effect, rent control hurts households that need help the most.
Over the past 40 years, the U.S. hasn’t built enough housing in the locations where people most want to live, such as Portland, Seattle, Washington, D.C., and Boston. With such few units on the market, housing prices have skyrocketed.
Rent control is flawed, but other measures are more difficult to institute, and take time. However, they provide long-term relief.
First and foremost, there needs to be better public transportation. With improved access to transportation, people can commute from different areas to their workplaces, expanding their housing options.
Zoning laws need to be changed to accommodate new housing structures, such as micro-units or tiny houses. Modular construction, where prefabricated structures are assembled on-site, also helps to keep costs low, making them profitable for landlords and affordable for renters. In cities that have these communities, the number of applicants is high and vacancy rates are extremely low, demonstrating the demand for alternative housing.
Developers also need additional incentives to continue to build new, multifamily structures. In areas where housing is in hot demand, zoning laws often prohibit large structures from being built, worsening the housing crisis. Areas where tax abatement was traded for a percentage of new units to be available solely to lower-income households have seen success for both builders and renters.
Finally, households that experience rent increases could be made eligible for tax credits or housing vouchers, helping to offset the cost. The money for this program could be generated from taxes on landlords, spreading out the cost.
There are solutions to affordable housing crises. But rent control isn’t among them.
Kat Tretina is a freelance finance writer based in Orlando.