As rental rates rise in markets around the country, one of the most prevalent discussion topics is rent control. Rent control regularly goes with sharp increases in housing prices, a shortage of affordable rentals, or both. From a tenant’s perception, the idea of freezing or putting a cap on how much rent they pay may appear enticing. What is rent control, which cities have it, and how does it affect Riverhead 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 main concept behind rent control is to keep living costs reasonable for a particular city or state’s population, especially lower-income residents.
Who Has Rent Control?
Rent control has been available for years, dating back to the 1920s and seeing a resurgence in the 1970s. Probably the most consistent and fascinating illustration of rent control in action is New York City, which has two unique rent control programs beginning from the early 70s. The first program is only accessible 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 almost half of the rentals in the city. But 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 ineffective.
Pros and Cons for Landlords
Presently, around 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. But there are many other locations 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 realizes that their rent will remain the same for a given period, they are much more likely to remain in their rental home long-term. This can help lessen turnover costs for property owners. Rent control limits the development of multifamily rental units in certain areas, which might benefit 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 downside to rent control is that bad tenants won’t want to move. If they are worrisome but not in violation of their lease, this could lead to some long-term misery engaging with them month after month. Even if they do have clear lease violations, a lengthy eviction process is much more likely if a tenant declines to move.
The lack of ability to raise rents could make it more challenging for property owners to meet rising expenses, such as 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 depend on Real Property Management Landmark to assist you in retaining your rental income competitive and profitable. To learn more about what we have to offer, contact us online today!
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