Affordable housing continues to be a pressing problem in many communities, both urban and rural. One attempt to retain and increase the supply of affordable housing has been to impose rent controls. Rent controls vary according to the jurisdiction in which they are applied. No matter how and where they are imposed, rent controls have both advantages and disadvantages. In all instances, the supply of rent-controlled apartments is very scarce, especially in affluent areas.
In 1942, President Franklin Delano Roosevelt instituted the Emergency Price Control Act, which put a universal system of price controls in place during World War II. This measure was allowed to expire in 1947. Since then, a number of measures designed to get a grip on escalating prices have been put into place by municipalities and other jurisdictions, including attempts to control housing prices.
Among the most well-known rent-control regulations are in place in New York City. In spite of these regulations, New York City has some of the highest rent rates in the country, if not the world. In other areas, such as Cambridge, Massachusetts, where rent controls were in place between 1971 and 1994, rent control has given way to deregulation. In other areas, rent control remains a hotly disputed topic, whether rent control laws are in place or not.
Rent Control vs. Rent Freezes
Rent freezes are measures that prohibit increases in rent without explicitly granted permission by the municipal, state or federal government that instituted the rent freeze. Rent freezes are often meant to be temporary measures. Rent controls, on the other hand, allow landlords to increase rents, but only within specified limits and usually only once per year. Rent controls are usually designed to be long-term measures to control rents, especially in areas with a high cost of living.
Advantages of Rent Controls
The advantages of rent controls for tenants are obvious: lower rents and more controlled increases of rents. This is especially beneficial in the center city, where rent controls can allow low-income workers or artists to live in areas that are well-served by public transportation, which can also reduce household expenses. Rent controls can make it possible for workers such as teachers and firefighters to live within a reasonable distance of their schools and fire halls when the housing prices would otherwise be out of reach.
Perceived Disadvantages of Rent Controls
Many landlords and others opposed to rent controls claim that they provide a disincentive for landlords to maintain their properties. According to these detractors, rents that are kept artificially low prevent landlords from making a profit. As a result, the properties become run-down, which attracts less desirable tenants and results in lower property values for the entire neighborhood. Experience with rent-control regulations has proven that many of these perceptions are unfounded.
Actual Disadvantages of Rent Controls
While rent controls do not usually prevent landlords from realizing a profit, landlords who do have properties in rent-controlled districts may employ bullying tactics to force tenants to move, especially if rent increases are allowed only with new tenants. Additionally, many municipalities enact zoning ordinances that favor big-box stores as opposed to rent-controlled residential districts, because of the increased tax revenues they can collect. Tenants who actually secure rent-controlled apartments are often resistant to moving, despite the possibility of career prospects or better living conditions elsewhere, for fear of having to pay sharply higher rents.