Rent control offers significant benefits to tenants: namely, a stable rent price with strict limits on rent increases year-to-year. But there are some drawbacks as well, and you’ll want to think carefully before committing to a lease.
Rent Control
Rent control is a law that limits how much landlords can either charge for rent. Generally, rent control laws feature hard upper limits, formally dictating the maximum amount a landlord can charge for a certain kind of dwelling. Landlords can’t charge more than the maximum base rent if the apartment is legitimately subject to rent control laws. If they did, it would be illegal.
However, when people think of rent control, some may be focusing on laws that outline how much landlords can raise a tenant’s rent at the end of their lease. Technically, legislation that dictates how much a tenant’s rent can be increased is referred to as rent stabilization, not rent control.
The purpose of the law is to keep rent reasonable and to ensure tenants aren’t subjected to unexpected large increases that could destabilize their financial security. Additionally, unlike with actual rent control, the legislation doesn’t set a hard maximum on how much a landlord can charge.
In some cases, the limit is tied to economic markers, like inflation. In others, it’s a specific percentage or other metric outlined in the law.
The Rent Control Pros and Cons
Rent control pros and cons vary depending on the perspective you examine. However, there are benefits and drawbacks at every level, including for tenants and the communities where the units are located.
With that in mind, here is a look at the pros and cons of rent control.
Rent Control Pros and Cons for Tenants
Pro: Predictable Rent Amounts and Increases
Generally, the main benefit of a rent-controlled apartment is that your rent can only get so high. The maximum amount a landlord can charge is dictated by local law, making it incredibly predictable.
Now, this doesn’t mean that your rent will never rise in a rent-controlled apartment, as it certainly can. If the local law raises the maximum allowed amount, your rent can then go up to that amount. However, those increases tend to be highly metered, ensuring the rise in rent isn’t dramatic.
Predictable and limited rent increases are also the main benefit of rent-stabilized apartments. Again, how much your rent can go up when it comes time to renew your lease is restricted based on local law, giving you the ability to anticipate the change. Additionally, the maximum increase amount tends to be modest, preventing large rises in your monthly rent.
Con: Hard to Secure
When it comes to cons, the biggest issue with rent-controlled apartments is getting into one in the first place. Generally, when a person in a rent-controlled – not rent-stabilized – apartment vacates the property, it doesn’t have to stay a rent-controlled unit. Often, only family members (including some non-traditional family units, like some live-together unmarried couples) who live in the property prior to the main renter’s leaving or passing have any succession rights.
Now, rent-stabilized apartments are different. Generally, you don’t need a relationship with the last tenant or to live in the unit before that person leaves to secure the rent stabilization benefits. However, that doesn’t mean getting into one is easy. Competition for those properties can still be fierce, depending on the city, so you do need to keep that in mind.
Pro: A Sense of Stability
When you’re in a rent-controlled or rent-stabilized apartment, you may have a greater sense of security. You don’t have to worry that you’ll wake up one morning to a notice stating that your landlord wants to raise the rent by $1,000.
Additionally, many rent control and rent stabilization laws outline how often a landlord can levy and increase, further protecting you against the unexpected. Usually, this can lead to a significant amount of peace of mind.
Con: Landlord Isn’t Incentivized to Upgrade Your Unit
When a unit is subject to rent control legislation, there’s very little incentive for your landlord to improve the property. While they are certainly still required to make necessary repairs, extras like upgraded appliances, smart home features, or similar updates won’t provide them with any notable return on their investment.
Even if the landlord turned your unit into the nicest one on the block, they can still only charge as much as local law allows. As a result, some landlords may only update something when it’s absolutely necessary.
For example, if an appliance breaks, the landlord probably won’t replace it with a top-of-the-line model. Instead, they may opt for a lower-cost (or even previously used) appliance over a new one with the latest features, as they don’t experience a financial benefit for going the extra mile.
The same can go for repairs. Landlords might do the bare minimum based on local law in an attempt to save money. At times, this is purely based on trying to keep profitability high. However, if the amount being collected in rent is small enough to make better repairs impossible to shoulder financially, it could also be out of necessity.
In the worst-case scenario – even though it’s technically illegal – some landlords may attempt to withhold repairs in a bid to get a rent-controlled tenant to leave. If they do, the landlord might not have to keep the apartment at the current price, depending on local law, so they are essentially incentivized to drive tenants out of units that are renting for less than the going market rate.
Rent Control Pros and Cons for Communities
Pro: Less Renter Churn
When an apartment is rent-controlled or rent-stabilized, tenants are often less likely to move when their lease is over. Instead, they are incentivized to renew, keeping them in the unit for longer.
This can be incredibly beneficial to communities. It allows families to establish roots and connections in an area. That can give them a greater sense of ownership, causing them to become more invested in the welfare of their neighborhood and the people in it.
Con: Declining Housing Conditions
As mentioned above, when an apartment is rent-controlled, landlords have little incentive to do more than the minimum to keep a unit livable. This is especially true if the property has been rent-controlled for some time and is renting for far below the going rate for non-rent-controlled apartments in the area.
Declining housing conditions don’t just harm tenants; they can also hurt communities. Property values fall, businesses may be inclined to open or operate in the area, development projects may focus on other neighborhoods, and more.
Pro: More Money to Spend Locally
When rent prices are lower, many individuals and families have more money to spend on other needs and wants. This can benefit the local community, as those who live there may spend more at area businesses.
If spending is solid enough, this may encourage new development. For example, it may make the area look more attractive to new retailers, restaurants, or small businesses, increasing the odds that they’ll choose that neighborhood for their first or next location.
Con: Less Renter Mobility
While the rent predictability is undoubtedly beneficial, less renter mobility can create drawbacks. At times, rent control encourages older renters to stay in an apartment when – if rent control weren’t a factor – they would typically downsize. This can make it harder for younger families to find larger units in certain neighborhoods or for young professionals to find reasonably priced units near their jobs.
Should You Move into a Rent Controlled Apartment?
Ultimately, whether moving into a rent-controlled or rent-stabilized apartment is the right move for you depends on several factors. You need to consider the unit’s location, as this impacts your work commute, access to amenities, and more.
Additionally, you should take the apartment’s condition into account. This is especially if the monthly rent is far below the market value for a similar unit that isn’t subject to rent control or rent stabilization, and if it appears that maintenance has been lax.
Finally, familiarize yourself with the nuances of your local landlord-tenant laws. Not all areas treat rent control or stabilization the same way, so you need to understand what protections are (and are not) offered. That way, if you decide to go forward, you have a solid idea of what to expect.
