As rental rates rise in markets around the country, one of the most popular discussion topics is rent control. Rent control usually accompanies sharp increases in housing prices, a shortage of affordable rentals, or both. From a tenant’s viewpoint, the idea of freezing or putting a cap on how much rent they pay may seem engaging. What is rent control, which cities have it, and how does it affect Liberty rental property owners and landlords? These are issues that all rental property owners need to know the answers to in order to take an educated stance.
What is Rent Control?
By interpretation, rent control laws are government regulations that limit how much a rental property owner or landlord can charge to lease a home. The primary purpose behind rent control is to keep living costs affordable for a specific city or state’s population, especially lower-income residents.
Who Has Rent Control?
Rent control was in place for so long now, originating in the 1920s and seeing a resurgence in the 1970s. One of the most consistent and the best examples of rent control in action is New York City, which has two various rent control programs dating from the early 70s. The first program applies only to renters who have resided in their rental homes since 1971, and the other restricts the number of times rents can be increased. This second regulation refers to around 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.
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 its own approach to rent control, from capping rental rates to limiting increases and paying a renter to move. However, there are numerous other localities 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. Probably, if a renter understands that their rent will remain the same for a given period, they are much more committed to staying 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 simpler to discover and retain tenants for their rentals.
Indeed, these benefits include several downsides for landlords, as well. As an illustration, by imposing limits on rent increases or rental rates, rent control laws may discourage property owners from maximizing their profit potential. Another possible difficulty to rent control is that bad tenants won’t want to move. If they are problematic but not quite in violation of their lease, this might be a source of long-term misery interacting with them month after month. Even if they have clear lease violations, a lengthy eviction process is to be expected if a tenant chooses not to move.
The incapacity to raise rents could make it more complicated for property owners to meet rising expenses, including property taxes or insurance. Critics argue that such problems are commonly 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 count on Real Property Management Principles 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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