Rent Control: What Is It And How Does It Work?
In the U.S., the cost of housing continues to rise, often outpacing increases in wages. According to RentCafe, the average cost to rent an 897-square-foot apartment is $1,702. And these costs are even higher in the most expensive cities in the U.S.
That’s why many state lawmakers are considering rent control policies. Rent control laws vary depending on the state and city you live in, but most exist to protect tenants from out-of-control rent prices.
What Is Rent Control?
Rent control refers to legislation that limits the amount a landlord can charge for leasing an apartment in a certain city or state. It also limits how much the rent can increase each year.
Rent control laws are designed to keep housing affordable for low- and moderate-income residents. These laws are more common in cities with a highly competitive real estate market and high cost of living.
Rent Control Today
The first U.S. rent regulations were established in the 1920s and continued to gather steam until World War II when growth in several cities caused rent to increase. New York City has the longest history of rent regulations, which begin in 1943.
Currently, only six states and the District of Columbia have rent regulations in place at the state or local level. Meanwhile, 33 states have regulations in place to prevent local governments from adopting rent control policies.
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How Does Rent Control Work?
A rent-controlled apartment limits how much landlords can charge tenants. State or local governments regulate the program, and any rent increases must fall within their rules and regulations. And within these laws are different types of rent control:
- Vacancy control: If a tenant moves out of their apartment, there are rules in place about how much the landlord can raise the rent. And rent can only be raised by a certain amount each year.
- Vacancy decontrol: If a tenant moves out of their apartment, the landlord can raise the rent to whatever the market will bear. In some cases, the new rent can’t exceed a certain percentage of the previous rent.
Some cities and states enact additional rent control laws and regulations to protect tenants. For example, some rent control laws put specific parameters around what landlords can do with security deposits. And some states require that landlords provide relocation assistance after evicting tenants.
Evictions From Rent-Controlled Properties
One of the benefits of rent control laws is that they can protect tenants from being evicted without cause. Here are some examples of acceptable reasons for ending a tenant’s lease:
- The tenant violates a term of the rental agreement.
- The tenant engages in illegal activities or causes intentional damage to the property.
- The landlord wants to move into the rental property themselves or rent it to an immediate family member.
- The landlord plans to remodel the property and it can’t be done with tenants living there.
Pros And Cons Of Rent Control
Rent control is a controversial topic, and there are pros and cons for both landlords and tenants. Here are some of the biggest advantages and disadvantages of rent regulations.
Rent Control Pros For Renters
- Rent control helps low- and moderate-income families access affordable housing, especially in cities with a high cost of living.
- Rent control leads to more long-term tenants, creating a safer and more stable neighborhood.
Rent Control Cons For Renters
- Rent control can reduce the supply of adequate housing since landlords are more likely to use properties for commercial use.
- Maintenance is often lacking in rent-controlled buildings since it's a poor return on investment for landlords.
Rent Control Pros For Landlords
- Rent control laws lead to more stable, long-term tenants, reducing vacancies and turnover costs for landlords.
- Landlords who own rent-controlled buildings may have a more predictable source of income.
Rent Control Cons For Landlords
- Landlords don’t have the option to adjust rent prices to account for market conditions or higher operational costs.
- Rent control policies often create additional administrative tasks for landlords, like documentation and compliance regulations.
Rent Control FAQs
What does rent control mean?
Rent control will mean different things depending on the city and state you’re living in. But in general, it means landlords are limited in how much they can increase rent for a new tenant.
Is there a difference between rent control vs. rent stabilization?
Rent control and rent stabilization regulate the cost of apartments to protect tenants from excessive rent increases. Both policies regulate the cost of residential buildings in certain cities.
How do I know if my apartment is rent controlled?
If you live in a city with rent control laws, you can find out whether your apartment is rent controlled by contacting the landlord. Most local ordinances require landlords to let tenants know the apartment is rent controlled. You can also contact your local government to see if this information is public.
Which states have rent control?
Currently, only six states and the District of Columbia have rent control laws in place. California, Maryland, New Jersey, New York, Oregon, Minnesota and the District of Columbia all have rent control regulations.
What is the most a landlord can raise rent?
In most states, landlords are free to set their own rent and there’s no limit to how much they can raise it. But certain states do limit how much a landlord can raise rent each year.
The Bottom Line
Rent control policies will continue to be a point of discussion in the U.S. These policies come with advantages and disadvantages to both renters and landlords. If you’re tired of paying rent and ready to take the next step toward homeownership, you can start the approval process online today.