Rent Control Legislation Heats Up Amid Affordability Concerns

Filed in Affordability, Multifamily by on June 12, 2019 5 Comments

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Rents for apartments and single-family homes are rising nearly as fast as home prices. As already high rents climb higher, frustrated renters may move further away from employment centers or look for smaller apartments.

But that doesn’t solve the larger problems of low supply for a growing number of renters and would-be renters choosing to remain in their parents’ homes.

Exacerbating the issue is increased legislative interest in rent control — which, rather than addressing affordable housing issues, often creates more challenges, including reduced supply of available units and reduced income to states and municipalities because of slowed or halted development.

Last year in California, a statewide rent control initiative was narrowly defeated, but the issue remains on the legislative agenda. And many additional cities and states are exploring legislation in this arena as an intended affordable housing solution.

New York has reached a deal and is expected to vote on legislation this week that would include provisions to:

  • Permanently alter rent-control provisions in New York ahead of the current law’s June 15 expiration date. Such laws had previously come up for review every few years;
  • Extend rent control beyond select localities, such as New York City, to allow municipalities across the state to construct their own regulations; and
  • Remove vacancy decontrol provisions, which have allowed landlords to remove units from regulation once they reach a certain threshold.

Any legislation passed is expected to be signed into law by Gov. Cuomo.

Oregon also made headlines in February for a statewide rent control bill that:

  • Caps rental rates to 7% over inflation, as measured by the Consumer Price Index (CPI), in any 12-month period;
  • Requires conversion to month-to-month tenancy after a year; and
  • Prohibits termination of month-to-month leases without cause after one year of occupancy.

Other jurisdictions are introducing comparable legislation:

  • California delegates introduced six new bills to address affordability through rent control. The final bill put forward, AB 1482, places a cap of 5% over inflation on rent across the state, with a 10-year exemption for new construction and a 10-year sunset.
  • The Colorado legislature considered a bill in April to repeal a ban on rent control and allow local jurisdictions to set rent limits. The legislation failed, but proponents plan to reintroduce similar measures next year.
  • A Massachusetts rent control bill proposed this year would authorize municipalities to enact rent control and tenant protections. This would overturn a 1994 ban on rent control.
  • A party-line vote on Nevada’s SB 398 has kept the legislation moving forward. The bill would promote municipalities’ ability to explore local housing solutions, including rent control.
  • An Illinois representative introduced the first of several statewide rent control bills (HB 255), but it did not pass in the Commercial Law Subcommittee.

Several 2020 presidential candidates have taken positions on rent control as well:

  • Sen. Bernie Sanders (D-Vt.) has endorsed both increased housing production and rent control.
  • Sen. Elizabeth Warren (D-Mass.) has introduced a bill that includes rent control elements.
  • Sens. Kamala Harris (D-Calif.) and Cory Booker (D-N.J.) have endorsed direct rental relief assistance, and
  • Sen. Kirsten Gillibrand (D-N.Y.) has advocated for continued partnerships between HUD and local community development groups to produce housing. She has also endorsed Sen. Warren’s bill.

There is no single “silver bullet” solution to the challenge of making housing more affordable. The effort requires comprehensive strategies and a variety of tools to reduce costs, boost supply and empower aspiring home buyers and renters.

A new report, “Rent Control in Illinois: Consequence and Alternatives for Expanding Affordable Housing,” offers insights into how rent control can affect supply and quality of housing. The National Multifamily Housing Council (NMHC) also provides a map indicating how each state currently legislates rent control and inclusionary zoning.

Additional resources on housing affordability are available at nahb.org/housingforall.

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Comments (5)

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  1. Christine Kempa says:

    Controlling rent will seriously damage the real estate market. Investors will lose Billions and at some point will leave the sector one way or the other for better returns. They will either convert rentals to condominiums and sell (leaving a potential mass shortage in rental properties) or sell off for what they can get and take their money out of that portion of the American economy. There are many small investors who rely on rental income as part of their retirement/financial plans who may be impacted the most. Of course, this leaves an ideal opportunity for the government to grab onto and control the majority of rental units. But perhaps that is the ultimate goal…..

  2. Bill says:

    This is not good news NAHB. Please do society a favor and help keep the government out of real estate. They want to control everything and in turn destroy it. The free market always balances itself out. Well said in the comment above.

  3. Kelsey Negileisen says:

    This is terrifying. This would literally halt construction across the country, not a single investor would put a dime into any new projects for years. If only the NAHB would fight it, and fight it very hard instead of report the information on it and then sit down and watch what happens.

    • NAHB Now says:

      Kelsey: NAHB has been an active contributor in defeating rent control in California, Colorado and Illinois during the 2019 legislative sessions. We remain active in the areas noted above, as well as other counties and states such as Florida and Nevada where rent-control legislation is a concern, and are helping to lead the charge at a national level through a number of coalitions dedicated to this issue.

      Dedicated members in the Multifamily Council and across the Federation are also active in this fight. NAHB continues to ensure they have the resources necessary to advocate at the local and state level, including the commission of an affordability study, “Affordability Requirements Ordinance (ARO) Pilot Study,” to educate lawmakers on the impact of rent control and inclusionary zoning. This report and other materials can be found on our website: https://www.nahb.org/advocate/state-and-local-advocacy.aspx

  4. Gregory Peek says:

    We were able to kill the referenced Nevada rent control and mandatory inclusionary zoning bill (NV SB398) at the last minute. Unfortunately, SB151, which extends the eviction process, caps late fees at 5%, and prohibits considering fees and charges as rent for purposes of collection passed and signed into law. We are grappling with implementation and the long-term, wide-ranging consequences.

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