Rent Control: Who Really Benefits?

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Rent Control: Who Really Benefits?

Staff Writer · Apr 5, 2010

Rent control laws regulate or prohibit a landlord of residential property from raising rent. The concept, however, is not universally supported, and the debate over whether landlords or tenants are the true beneficiaries of rent control laws is heated and multi-sided.

Rent Control Defined

A landlord of a rent controlled apartment is prohibited from raising rent beyond a prescribed amount, meaning that there is a price ceiling for rent on that specific unit. Typically, only residential properties are subject to the laws, and in all circumstances the apartment must have been built prior to February 1947. State or county legislatures enact the specific state rent control guidelines for the state, but some states have chosen to preempt or prohibit rent control. To determine if your rent control is available in your state, check with the local realtor’s association.

Rent Control vs. Rent Stabilized

Regardless of their differences, the terms rent stabilized and rent controlled are sometimes combined into the term “rent regulation.” A rent stabilized apartment is governed by a set of laws that guarantee tenants three basic protections: the right to tenure, or the possibility of eviction based only on a limited number of specific grounds; security against steep rent increases; and the right to basic services and repairs. Tenants are additionally entitled to lease terms and renewals of one to two years at their choice. There are vastly fewer rent controlled than rent stabilized apartments.

Rent Control Benefits and Drawbacks for Tenants

A tenant of a rent controlled apartment has a set maximum to the amount of rent they will ever be charged for as long as the landlord maintains the property according to the laws and receives the accompanying tax benefit. Additionally, the tenant is entitled to receiving a year’s notice should the status of being a rent controlled unit be scheduled to change.

Rent control, however, is not without its drawbacks for tenants. Because they pay cheaper rent, very few tenants move out of rent controlled apartments, meaning that there is less turnover and therefore less available units. Lack of availability is further hampered by builder’s disinterest in building new units because their profits will be lower. Cheaper rent also means less income for landlords, often meaning that there is less maintenance on both the apartment unit and entire building. Rent controlled buildings may remain in disrepair while other residential buildings are experiencing revitalization.

Rent Control Benefits and Drawbacks for Landlords

A landlord of a rent controlled apartment is all but assured of having full occupancy in the apartment building. Because rent is less expensive there will never be a shortage of tenants to fill vacant units. A manager of a rent controlled apartment usually also receives a significant tax benefit from the government.

At the same time, the landlord is often receiving less income from the individual units. This means that there is less money to maintain or reinvest in the property and that they may be unable to collect the full value of the units. Cheaper rents also mean less affluent tenants, and sometimes after many years the landlord of a rent controlled apartment finds that their building is no longer in a desirable part of town.

The debate over whether a tenant or a landlord benefits the most from rent control is filled with multiple, double-sided arguments. While rent control laws undoubtedly provide cheaper rent, they do so to the absolute detriment of landlords and sometimes also tenants.

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