As rental rates rise in markets around the country, one of the more prominent discussion topics is that of rent control. Rent control often accompanies sharp increases in housing prices, a shortage of affordable rentals, or both. From a tenant’s point of view, the idea of freezing or putting a cap on how much rent they pay may sound attractive. What is rent control, which cities have it, and how does it affect Toano rental property owners and landlords? These are questions all rental property owners need to know the answers to in order to take an educated stance.
What is Rent Control?
By definition, rent control laws are government regulations that limit how much a rental property owner or landlord can charge to lease a home. The most important concept behind rent control is to keep living costs inexpensive for a certain city or state’s population, especially lower-income residents.
Who Has Rent Control?
Rent control has been around for some time now, starting in the 1920s and seeing a resurgence in the 1970s. One of the most consistent and interesting examples of rent control in action is New York City, which has two different rent control programs dating from the early 70s. The first program is limited to renters who have stayed in their rental homes since 1971, and the other restricts the number of times rents can be increased. This second regulation applies to about half of the rentals in the city. However, critics argue that the high cost of rent in New York City (rent is typically close to $3,000 a month for a small apartment) is proof that rent control doesn’t work out.
Pros and Cons for Landlords
Today, about 180 municipalities in the U.S. currently have rent control regulations, including but not limited to New York, New Jersey, California, Maryland, Oregon, and Washington, D.C. Each city has a slightly different approach to rent control, from capping rental rates to limiting increases and paying a renter to move. However, there are countless other areas where the merits of rent control laws are being debated.
From a landlord’s perspective, the advantages of rent control center around tenant turnover and decreasing competition in the rental market. For example, if a renter knows that their rent will remain the same for a given period, they are much more expected to stay in their rental home long-term. This can help reduce turnover costs for property owners. Rent control also tends to discourage the development of multifamily rental units in certain areas, which could help existing rental property owners. Without the competition of new apartments in the area, single-family rental property owners may find it easier to find and keep tenants for their rentals.
Of course, these benefits come with a list of downsides for landlords, as well. For example, by putting limits on rent increases or rental rates, rent control laws may prevent property owners from maximizing their profit potential. Another potential drawback to rent control is that bad tenants won’t want to move. If they are tough but not quite in violation of their lease, this could lead to some long-term misery dealing with them month after month. Even if they do have clear lease violations, a lengthy eviction process is much more likely if a tenant doesn’t want to move.
The inability to raise rents could make it harder for property owners to meet rising expenses, including property taxes or insurance. Critics argue that such issues are often not taken into account when cities start thinking about passing rent control laws.
Whether your rental properties are subject to rent control laws or not, you can rely on Real Property Management VA Peninsula to help you keep your rental income competitive and profitable. To learn more about what we have to offer, contact us online today!
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