What Actually Is Rent Control, Anyway?
Rent control and rent stabilization are two terms that are often confused with one another. In fact, you’ve probably heard the two used interchangeably. Rent control and rent stabilization are both methods of limiting the amount a landlord or management company can increase rent, but there are a few key differences.
What does rent control mean, exactly?
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Rent control is when a governmental body limits how much a property owner can charge in rent. With rent control, the rent caps out at a certain amount, and a landlord can’t ask for more money than that, no matter what. Tenants in rent-controlled units have also unique eviction protections, as they’re allowed to continue living in their apartments indefinitely.
Rent-controlled properties are extremely hard to come by. In fact, only a handful of U.S. states have rent control laws: California, Maryland, New Jersey, New York, and Washington, D.C. The biggest cities with rent control include New York City, San Francisco, Oakland, and Los Angeles. A total of 37 U.S. states have prohibited rent control outright. But even in places where rent control exists, those units are dwindling. As longstanding tenants age out of their apartments in New York, for example, landlords can transfer their units to rent stabilization policies, or remove them from rent regulation completely. Many rent-controlled apartments have been—and will continue to be—phased out.
Rules and conditions vary from city to city. If you’re looking into rent control laws in New York City, for instance, you’d need to refer to the Office of Rent Administration (ORA). In Washington D.C., consult the Department of Housing and Community Development.
Rent control vs. rent stabilization
When people say “rent control,” they often actually mean rent stabilization, which is much more common. Rather than capping rent at a specific price, rent stabilization is when rent increases are based on a set percentage. This percentage depends on where the tenant lives as well as market rates and the health of the economy.
How does rent control work?
The way rent control works is based on where you live and what kind of building you live in. Different cities will have different rent control restrictions, usually based on construction dates. In LA, for example, multi-family residential buildings built and occupied before Oct. 1, 1978 can be rent-controlled. (You can find out if your building is rent-controlled here.) In New York, rent control only applies to tenants living continuously in their apartment since July 1, 1971, in a building constructed before 1947, according to Curbed New York.
Similarly, rent stabilization applies to apartment buildings built before 1974 that have six or more units, per Curbed New York. Property owners are allowed to increase rent by a percentage that is calculated by the Rent Guidelines Board, and that amount can change every year. Rent hikes can fluctuate based on how quickly the apartment has re-rented in the past, and if any renovations have been made.
What’s the most common result of rent control laws?
While rent control laws were designed in part to protect tenants from surprise rent increases, they have their critics. Beatrice de Jong, a consumer trends expert at real estate startup OpenDoor, points to studies that have found rent-controlled cities ended up with higher housing prices because “developers have to focus on the much wealthier clientele in order to profit from the building,” she says.
De Jong argues rent control can also impact a building’s condition. “As rent-controlled tenants often stay in their homes for extreme lengths of time, landlords can end up losing money on not being able to keep up with maintenance costs,” she says.
Steven Goldschmidt, senior vice president and managing director of marketing at Warburg Realty says that the small rent increases “often fail to keep up with the cost to landlords for operating a building and keeping it in good repair and upgrading capital systems. As a result, the building and apartments often suffer from deferred maintenance.”
Rent control pros and cons
Rent control laws do protect tenants from unfair or surprising hikes in rent, which is definitely a pro. Pros for landlords and tenants, according to Avail, a management tool for landlords, include:
1. Rent control combats a high tenant turnover rate.
It makes sense: If tenants aren’t burdened with skyrocketing rent year over year, they’re more likely to stay in one place. This is a benefit for renters (being forced to move out of a community they love is an emotional hardship and costly one, considering how expensive it is to move and start over somewhere else) as well as landlords, who don’t have to deal with the cost of cleaning and repairing the unit after the renter leaves, possibly going months without income, and then having to grapple with new tenants who may or may not be reliable.
2. Rent control means less competition for landlords.
Rent control has been shown to be a form of disincentive for development companies to construct brand new, shiny apartments in the neighborhood. “With less development, the demand for existing units goes up, meaning lower vacancy rates and a larger pool of potential tenants,” Avail reports.
3. Tenants want consistency—and rent control laws provide that.
When a renter knows how much they need to pay every month—and exactly how much their rent will go up the next year–it allows that renter to financially plan for this. Especially in larger, more expensive cities like New York, Los Angeles, and San Francisco, this could help combat homelessness (it would also help if these cities weren’t so dang expensive, but hey).
How can I live in a rent-controlled apartment?
It’s next to impossible to move into a rent-controlled apartment. In New York, you’d need to be living in an already rent-controlled apartment with a relative. And only if that relative moves out or dies would you be able to claim the lease (this is how Monica said she was able to live in that unbelievable apartment on “Friends”—it had belonged to her grandmother).
Finding rent-stabilized units is a more realistic goal. To do that, you’ll need to comb over lists of rent-stabilized properties. New York, for example, has PDFs of rent-stabilized buildings in every borough, as well as a tool that lets you check if a certain address is stabilized. If you’re eagle-eyed about staying on top of vacancies, you could squeeze your way in to a rent-stabilized unit.