As rental rates rise in markets around the country, one of the widely known discussion topics is rent control. Rent control often accompanies sharp increases in housing prices, a shortage of affordable rentals, or both. From a tenant’s position, the perception of freezing or putting a cap on how much rent they pay may seem attractive. What is rent control, which cities have it, and how does it affect Millboro rental property owners and landlords? These are concerns that 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 primary concept behind rent control is to make living costs economical for a particular city or state’s population, especially lower-income residents.
Who Has Rent Control?
Rent control has been popular for decades, beginning in the 1920s and seeing a rise in popularity in the 1970s. One of the most consistent and interesting examples of rent control with regards to action is New York City, which has two different rent control programs commencing from the early 70s. The first program is limited to renters who have existed in their rental homes since 1971, and the other restricts the number of times rents can be increased. This second regulation pertains 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 is not working.
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 specific approach to rent control, from capping rental rates to limiting increases and paying a renter to move. However, there are many other zones where the merits of rent control laws are being debated.
From a landlord’s perspective, the advantages of rent control focus on tenant turnover and decreasing competition in the rental market. For example, if a renter perceives that their rent will remain the same for a given period, they are much more motivated to stick in their rental home long-term. This can help diminish the turnover costs for property owners. Rent control also tends to restrict the progress of multifamily rental units in certain areas, which could help existing rental property owners. Since there is no competition for new apartments in the area, single-family rental property owners believe that it is easier to find and maintain tenants for their rentals.
Undoubtedly, these benefits contain a list of downsides for landlords, as well. For instance, by implementing limits on rent increases or rental rates, rent control laws may prevent property owners from maximizing their profit potential. Another possible hindrance to rent control is that bad tenants won’t want to move. If they are troublesome but not quite in violation of their lease, this could leave some long-term misery dealing with them month after month. Even if there are clear lease violations, a long eviction process is much more possible if a tenant chooses not to move.
The inability to raise rents could make it challenging 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 begin 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 Diamond 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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