Rent regulation

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"Rent control" redirects here. 

from ’Rent Control’ show at FringeNYC 2016

Overview[edit]

Rent regulation is a system of laws, administered by a court or a public authority, which aim to ensure the quality and affordability of housing and tenancies on the rental market for land. Comprehensive rent regulation is common in Commonwealth and European Union countries, including Canada, Germany, Ireland, Cyprus and Sweden, and also some states in the United States. Generally a system of rent regulation involves:

  • price controls: limits on the rent that landlord may charge, with rent control or rent stabilization (rents can change more flexible and/or upon change of tenant). 
  • standards by which a landlord may terminate a tenancy (an equivalent of unfair dismissal from employment in tenancies)
  • obligations on the landlord or tenant regarding adequate maintenance of the property
  • a system of oversight and enforcement by an independent regulator and Ombudsman

The classic objective is to limit the price that would result from the market, where an inequality of bargaining power between landlords and tenants produces continually escalating prices without any stable market equilibrium.[1]

Price regulation variant forms[edit]

The price regulation aspect of rent regulation can be done in varying ways and degrees, with likely different effects. Therefore studies or or conclusions about "rent control" need to carefully consider what forms of regulation were in effect for the study subject, and to what degree they are generalizable to other systems. Three main factors in how price may be regulated: 

1) Control of permitted rent change for a current tenant:  

    a) fixed. (rare, but exists e.g. in old New York City rent control on some remaining buildings). 

    b) fixed increase per year.

    c) change based on objective metric such as CPI (consumer price index) 

    d) change based on political/regulatory decision, e.g. municipal Rent Board decision.
   [when permitted rent change is adjustable this way, and/or it is unregulated upon vacancy, the system is sometimes called 'modern' or 'second-generation' rent controls.]

    e) possibly (and typically), other changes are permitted by landlord petition or e.g. to "pass through" expenses such as tax increase or renovation costs.

2) Control of permitted rent change during change of tenant

   a) same as within a tenant's tenure, in one of the ways above.
 [sometimes referred to as 'strong' rent control]. 
   b) unregulated, i.e. "resets to market rate," aka there is vacancy decontrol. 

3) Regulation of which and when units may fall under or exist price regulation. Price regulation may apply: 

    a) Only to units built before a certain date; and/or
    b) Only to units in buildings that reach a certain age (see "Deferred rent stabilization" below).  [This is uncommon (unknown?) in practice but often proposed].
    c) Only to units in buildings above a certain size. 
    d) not when a building is allowed to exit regulation for specified reasons, possibly including: 
    e) owner move-in. (as permitted by the "Ellis Act" in California). 
    f) conversion of unit from rental to ownership housing
        i. "condo conversion" - from rental apartment to owned apartment, i.e. condominium
        ii. Conversion to "Tenancy in Common" (TIC) unit, i.e. shared ownership.  
    g) when unit rent increases above a certain point. (called "luxury decontrol" in NYC rent stablization law). 
        i. Condemnation (?) 
        ii. Demolition
        iii. Landlord buy-out of tenant.
 

Rent control vs Rent stabilization[edit]

In stricter usage, rent control and "strong rent control" are typically used to refer to rental price regulation that is:

  1. fixed price, and/or
  2. applies equally within and between tenancies, i.e. does not have vacancy decontrol

Rent stabilization typically refers to price regulation in which:

  1. permitted rent adjusts variably, e.g. based on a price index, and/or
  2. permitted rent for new tenants is unregulated, i.e. there is vacancy decontrol. 

In common parlance, when people say “rent control,” they often mean “rent stabilization.”

Vacancy control or decontrol[edit]

A key difference between different rent-regulation regimes is whether, or how, they regulate rent of an apartment after it is vacated by a tenant.  The rent might be allowed only the same increment as if still occupied, it might be allowed a higher increment (e.g. as in New York City), or it may be allowed to revert to full market rate (as in San Francisco). 

Deferred rent stabilization [edit]

The idea that a unit may come under rent-stabilization guidelines only a certain length of time after it is built, for example 10 or 20 years. 

Current rent regulations[edit]

 Colorado[edit]

In Colorado, under the Town of Telluride vs. Lot Thirty-Four Venture (2000), inclusionary zoning is also considered to be rent control, as opposed to land use policy. This prevents any Colorado cities from enacting policies traditionally considered rent control, and also prevents inclusionary zoning ordinances.

The incapability of the state or municipalities to impact rent in any fashion has been a point of discussion amidst the COVID-19 fallout, as citizens and advocacy organizations learn that emergency rent forbearance/moratoriums could not be enacted, even if there were sufficient political will to do so.

Common perspectives[edit]

Market-favorable writers generally take a negative outlook on rent stabilization, and argue that resurgent demand for such policies is merely a symptom of an underlying distortion in the housing market. See this Freakonomics episode for a fair summary of “why”. In this view:

  • Pros:
    • It does provide benefit to renters in apartments at the moment rent control is implemented.
    • If used correctly, as a short-term policy to allow construction of housing supply to catch up to demand), the benefits of rent control will arise with nearly no negative externalities.
    • Rent stabilization reduces mobility: when viewed through the positive lens, this means reduced displacement. However, data isn’t clear on how much of this reduced mobility is a reduction of involuntary displacement, and how much is a reduction in financially viable moves (as persons cannot leave their controlled apartment and find another for similar rates, if a move is desired)
      • “We find that rent control increased the probability a renter stayed at their address by close to 20 percent.”[2]
  • Cons:
    • A permanent policy of rent stabilization restricts the construction of new apartment buildings, because potential investors realize that their revenues on such apartments will be artificially capped. This reduces overall apartment supply, increasing prices for those who were not already in a controlled apartment at the time of rent control’s passage.
    • A permanent policy of rent stabilization also encourages the conversion of apartment buildings to condos, again because potential investors realize that their revenues on such apartments will be artificially capped. This reduces overall apartment supply, increasing prices for those who were not already in a controlled apartment at the time of rent control’s passage.
    • The pool of residents who initially received stabilized housing at the time of policy passage shrinks over time, meaning fewer and fewer persons are receiving the benefits of the policy, while the situation worsens for the modern “class” of persons in need
    • Rent stabilization reduces mobility: when viewed through the negative lens, this means reduced capability for renters to make moves they desire, as persons cannot leave their controlled apartment and find another for similar rates. However, data isn’t clear on how much of this reduced mobility is a reduction in financially viable moves vs. a reduction of involuntary displacement.
      • “We find that rent control increased the probability a renter stayed at their address by close to 20 percent.”[2]
    • Incentives for property maintenance and improvements by landlords are largely removed by rent stabilization, as an apartment with a low rent ceiling, in any condition, will have a long list of eager tenants. This leads to degradation of stabilized properties over time.
    • Permanent stabilization of some units tends to create a black market for rent of those units.
    • Overconsumption and misallocation of space is encouraged with stabilized units. Instead of persons continually right-sizing their homes, they are likely to keep overly-large spaces for themselves, as they could not depart the unit without a significant increase in rental fees, even if downsizing.

Advocates for rent control respond to these assertions by the following means:

  • The conversion of apartments to condos is a political issue, not an academic one[3]. It is argued that this impact on supply, at least, could be eliminated through sound policymaking.
  • The relationship between rent control enactment and reductions in supply are not well-supported in data[3], and that studies like the Stanford paper[2] over-index benefits to certain groups and underindex benefits to others.
  • Most modern implementations of rent control aren’t a hard freeze on rent. Rather, profits to landlords are guaranteed through:
    • cost pass-through provisions which permit landlords to apply for rent increases above the automatic rent increase, if justified by cost increases;
    • hardship provisions, which allow discretionary increases to assure that landlords do not have cash-flow problems;
    • and rate-of-return provisions, which permit discretionary rent increases to ensure landlords a "fair" or "reasonable" rate of return.[4]
  • In some jurisdictions, rent control includes vacancy decontrol, whereby the unit becomes completely decontrolled when it is vacated. This allows landlords to “catch up to market profits” whenever a tenant leaves a property.
  • Traditional economic analyses of rent control’s impacts fail because housing is not a perfectly competitive market.

Comparative analyses[edit]

It can be useful to look to other countries’ actions regarding rent control to learn what works well and poorly under different market conditions.

The Netherlands[edit]

  • Affords tenants rent stabilization across all units, after signing a market contract at market rates. In other words, the initial price is market rate, but the rate of increase in subsequent years is stabilized.
  • Strong eviction protections in place, including free representation.
  • All publicly-supported units built by Housing Associations have rent caps based not on age, but rather on a points system representing the quality of the unit.
    • Housing Associations provide for around 60% of the country’s population.  Social housing accounts for 37% of the total stock across the country, and as much as 75% of the total rented stock.[5]

SF rent control study by Diamond, McQuade, Qian (2017)[edit]

Diamond, Rebecca, Tim McQuade, & Franklin Qian (2017). “The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco.”

Key total benefit/loss figures from this paper seem to have changed by large factors across the three versions of this working paper so far released, which are linked and excerpted below. 

from: Joe Rivano Barros‏ @jrivanob 10:38 AM - 30 Jan 2018
"Can someone who's paid closer attention to this than I tell me why Stanford study changed results from $5B in losses from rent control to $2.9B & from $7B in gains from rent control to $2.9B? That change makes the losses and gains cancel out where they didn't before. c/@tmccormick." 

We reviewed the paper versions he cites from September 26 and November 29, and also one from October 11. It appears to me, that the change results from a recalculation of both the estimated welfare benefits and welfare losses into the same Present Discounted Value terms. (Whereas before people were e.g. taking a figure of $423M/yr benefit and multiplying by 17 years of study period to get $7.19B in benefit). 

We emailed the three paper co-authors on Tues 30-1-2018 to ask them if this explained the difference or if there was another explanation. 

  • 26 September, 2017 version. PDF.
    Abstract
    "In this paper, we exploit quasi-experimental variation in the assignment of rent control due to a 1994 ballot initiative to study the welfare impacts of rent control on its tenant beneficiaries as well as the impact on landlords' responses and the rental market as a whole. Leveraging new micro data which tracks an individual's migration over time, we find that rent control increased the probability a renter stayed at their 1994 address by close to 20 percent. At the same time, using data on the history of individual parcels in San Francisco, we find that treated landlords reduced their supply of available rental housing by 15%, by either converting to condos/TICs, selling to owner occupied, or redeveloping buildings. This led to a city-wide rent increase of 7% and caused $5 billion of welfare losses to all renters. We develop a dynamic, structural model of neighborhood choice to evaluate the welfare impacts of our reduced form effects. We find that rent control offered large benefits to impacted tenants during the 1995-2012 period, averaging between $3100 and $5900 per person each year, with aggregate benefits totaling over $423 million annually. The substantial welfare losses due to decreased housing supply could be mitigated if insurance against large rent increases was provided as a form of government social insurance, instead of a regulated mandate on landlords."

    "We find that rent control offered large benefits to impacted tenants during the 1995-2012 period, averaging between $3100 and $5900 per person each year, with aggregate benefits totaling over $423 million annually. These effects are counterbalanced by landlords reducing supply in response to the introduction of the law. We conclude that this led to a city-wide rent increase of 7% and caused $5 billion of welfare losses to all renters."
     
  • 11 October, 2017. NBER working paper. http://conference.nber.org/confer//2017/PEf17/Diamond_McQuade_Qian.pdf.
    "Abstract: 
    In this paper, we exploit quasi-experimental variation in the assignment of rent control in San Francisco to study its impacts on tenants, landlords, and the rental market as a whole. Leveraging new micro data which tracks an individual’s migration over time, we find that rent control increased the probability a renter stayed at their address by close to 20 percent. At the same time, we find that landlords whose properties were exogenously covered by rent control reduced their supply of available rental housing by 15%, by either converting to condos/TICs, selling to owner occupied, or redeveloping buildings. This led to a city-wide rent increase of 7% and caused $5 billion of welfare losses to all renters. We develop a dynamic, structural model of neighborhood choice to evaluate the welfare impacts of our reduced form effects. We find that rent control offered large benefits to impacted tenants during the 1995-2012 period, averaging between $2300 and $6600 per person each year, with aggregate benefits totaling over $390 million annually. The substantial welfare losses due to decreased housing supply could be mitigated if insurance against large rent increases was provided as a form of government social insurance, instead of a regulated mandate on landlords."

     
  • 29 November 2017 version. PDF
    Abstract:
    "In this paper, we exploit quasi-experimental variation in the assignment of rent control in San Francisco to study its impacts on tenants, landlords, and the rental market as a whole. Leveraging new micro data which tracks an individual's migration over time, we find that rent control increased the probability a renter stayed at their address by close to 20 percent. At the same time, we find that landlords whose properties were exogenously covered by rent control reduced their supply of available rental housing by 15%, by either converting to condos/TICs, selling to owner occupied, or redeveloping buildings. This led to a city-wide rent increase of 5.1% and caused $2.9 billion of total loss to renters. We develop a dynamic, structural model of neighborhood choice to evaluate the welfare impacts of our reduced form effects. We find that rent control offered large benefits to impacted tenants during the 1995-2012 period, averaging between $2300 and $6600 per person each year, with the present discounted value of aggregate benefits totaling $2.9 billion. The substantial welfare losses due to decreased housing supply could be mitigated if insurance against large rent increases was provided as a form of government social insurance, instead of a regulated mandate on landlords."

    "We find that rent control offered large benefits to impacted tenants during the 1995-2012 period, averaging between $2300 and $6600 per person each year, with aggregate benefits totaling over $214 million annually, with present discounted value of $2.9 billion. These effects are counterbalanced by landlords reducing supply in response to the introduction of the law. We conclude that this led to a city-wide rent increase of 5.1%. At a discount rate of 5%, this has a present discounted value of $2.9 billion dollars lost by tenents."

California 'Costa-Hawkins' law repeal initiative[edit]

See main article: Costa-Hawkins Rental Housing_Act reform

Resources[edit]

  • Ambrosius, Joshua D. et al [2015]. “Forty years of rent control: Reexamining New Jersey’s moderate local policies after the great recession,” Cities, 49, pp. 121–133. December 2015. https://doi.org/10.1016/j.cities.2015.08.001.
     
  • Arnott, Richard. “Time for Revisionism on Rent Control?” The Journal of Economic Perspectives, 1995: Vol. 9, №1: 99–120.
    https://www.aeaweb.org/articles?id=10.1257/jep.9.1.99.
    Abstract: "Economists' traditional hostility to rent contols is based on models that treat the housing market as perfectly competitive and on the experience with 'hard' controls in New York City and many European countries following World War II. The current 'soft' rent control systems in North America are varied and qualitatively different from earlier hard controls. The theoretical case against them is weak, particularly when the housing market is viewed as imperfectly competitive. The empirical case against them is weak, too. Economists should reconsider their blanket opposition to current rent control systems and evaluate them on a case-by-case basis."
     
  • Autor, D.H. , and C J Palmer, P A Pathak [2014]. "Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge, Massachusetts." Journal of Political Economy, volume 122, p. 661-717. June 2014
    https://doi.org/10.1086/675536. 
     
  • Barton, Stephen. "The Economics of Residential Rent Control." Dollars and Sense, Jan/Feb 2019. http://dollarsandsense.org/archives/2019/0119barton.html.
     
  • Chew,  Amee, and Sarah Treuhaft. "Our Homes, Our Future: How Rent Control Can Build Stable, Healthy Communities." PolicyLink, February 2019. https://www.policylink.org/resources-tools/our-homes-our-future. 

    "Multiple longitudinal studies of rent control in New Jersey have found no discernible impact on construction rates.(73) After the repeal of rent control in Boston, construction rates decreased for multifamily buildings, even as rents nearly doubled in eight years.(74)

    (73)"As have studies in the Bay Area, Berkeley, Los Angeles, Washington DC, and elsewhere.  
    Ambrosius et al., “Forty Years of Rent Control”; 
    Gilderbloom and Ye, “Thirty Years of Rent Control”; 
    Gilderbloom, “Moderate Rent Control”; 
    Zuk, “Rent Control: The Key to Neighborhood Stabilization?”; 
    Planning & Development Department, “Rent Control in the City of Berkeley, 1978 to 1994”; 
    Baar, Burns, and Flaming, “San Jose ARO Study,” 177; 
    Keating, Teitz, and Skaburskis, eds., Rent Control.'

    (74)Chen, “When Rent Control Just Vanishes; Both Sides of Debate Cite Boston’s Example”; 

    Collins, “Rent Regulation in New York”; 
    Dreier, “Rent Deregulation in California and Massachusetts.”
     
  • Diamond, Rebecca, Tim McQuade, & Franklin Qian (2017). “The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco.”
  • Early, Dirk, and Jon Phelps (1999).  "Rent Regulations' Pricing Effect in the Uncontrolled Sector: An Empirical Investigation." Journal of Housing Research: 1999, Vol. 10, No. 2, pp. 267-285. DOI: 10.5555/jhor.10.2.j11873517nq95773.  
     
  • East Bay For Everyone. "RE: AB 1506 - Residential Rent Control: Costa-Hawkins Rental Housing Act." (letter). 2017. https://www.scribd.com/document/350029454/Ab-1506-Support#from_embed.
     
  • Favilukis, Jack Y and Mabille, Pierre and Van Nieuwerburgh, Stijn. "Affordable Housing and City Welfare." (May 24, 2019). Columbia Business School Research Paper No. 18-77.  Available at SSRN: https://ssrn.com/abstract=3265918 or http://dx.doi.org/10.2139/ssrn.3265918.

    "We model rent control (RC) as mandatory inclusionary housing, a policy that requires developers to set aside a fraction of rental housing to low-income households at below market rates and is allocated by lottery. "

    "We also find a lower housing stock and higher rents from a RC expansion, but an aggregate welfare gain for the entire MSA in spatial equilibrium."

    "Direct measurement on the number of mandatory inclusionary housing units is not available. Nor is it appropriate given that there are many more af- fordable housing units from a range of programs. We de ne RC housing as all housing units that are (i) rent controlled, (ii) public housing, (iii) Mitchell Lama housing, (iv) all other government-assisted or regulated housing."
     
  • Gilderbloom, John I. [1981]. "Moderate Rent Control: Its Impact on the Quality and Quantity of the Housing Stock." Urban Affairs Quarterly 17, no. 2 (Dec 1981).
     
  • Gilderbloom, John I., and Richard P. Appelbaum. [1988]. Rethinking Rental Housing (Temple University Press, 1988).
     
  • Gilderbloom, John I., and Lin Ye. [2007]. "Thirty Years of Rent Control: A Survey of New Jersey Cities." Journal of Urban Affairs 29, no. 2 (2007): 207–20. DOI: https://doi.org/10.1111/j.1467-9906.2007.00334.x. PDF: https://drive.google.com/open?id=1cBR_YmIhhljXBWF2nm2W09TOPBxQn6s3.
     
  • Gordon, Leslie. “Strengthening Communities through Rent Control and Just-Cause Evictions: Case Studies from Berkeley, Santa Monica, and Richmond.” Urban Habitat (Oakland, CA), January 2018. 
    http://urbanhabitat.org/sites/default/files/UH%202018%20Strengthening%20Communities%20Through%20Rent%20Control.pdf.
     
  • Heskin, Allan D., Ned Levine & Mark Garrett. “The Effects of Vacancy Control: A Spatial Analysis of Four California Cities.” Journal of the American Planning Association, Volume 66, 2000 - Issue 2, Pages 162-176. DOI: 10.1080/01944360008976096. 
    https://doi.org/10.1080/01944360008976096
    “Abstract: 
    This article examines changes between 1980 and 1990 in the number of rental units and the demographic composition of tenants in four California cities that adopted rent control with vacancy control provisions. Six border areas within the four cities were compared to border areas of adjoining cities that did not have vacancy control. A spatial lag regression model was constructed to estimate the changes in regional and neighborhood components in addition to vacancy control policies. Vacancy control contributed to lower rents and longer tenure by tenants compared to non-vacancy-controlled areas. There were also fewer rental units in part because of a shift from rental housing to owner-occupied housing.”

     
  • Initiative on Global Markets (at University of Chicago Booth School) [IGM 2012]. “Rent Control” [poll of economic experts]. 
    February 7th, 2012. http://www.igmchicago.org/surveys/rent-control. 
    Poll statement:  “Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.” 
    40 respondents. 
    0 Strongly Agree
    2% Agree
    7% Uncertain
    49% Disagree
    32% Strongly Disagree
    2% No Opinion

     
  • Jenkins, Blair [2009]. "Rent Control: Do Economists Agree?" Econ Journal Watch [American Institute for Economic Research], Vol 6, No 1, January 2009. pp 73-112. 
    https://econjwatch.org/articles/rent-control-do-economists-agree.
     
  • Keating, Teitz, and Skaburskis, eds. Rent Control: Regulation and the Rental Housing Market. Center For Urban Policy Research, 1998.
    Available for online line from Internet Archive: https://archive.org/details/rentcontrolregul00keat. 
     
  • Kurtek, Sanela. "Why Rent Controls are Such a Problem for Toronto." Torontoism, December 18, 2017.
    https://torontoism.com/toronto-news/2017/12/rent-controls-toronto.
     
  • Legislative Analysts Office (California). Review of proposed statutory initiative pertaining to rent control (A.G. File No. 17-0041). 12 Dec 2017. http://www.lao.ca.gov/ballot/2017/170629.pdf.
     
  • McFarlane, Alastair. “Rent stabilization and the long-run supply of housing.” Regional Science and Urban Economics, Volume 33, Issue 3, May 2003, Pages 305-333. DOI: 10.1016/S0166-0462(02)00031-5
    https://doi.org/10.1016/S0166-0462(02)00031-5.
    "Abstract: 
    This paper examines the impact of moderate rent controls on the construction and replacement of urban housing. It studies a common form of rent regulation that limits rent growth to below-market increases but permits landlords to set the base rent at free market levels and allows them to re-set rents when the incumbent tenant vacates, after which rents are re-controlled (‘vacancy decontrol–recontrol’). One of the primary insights is that neither the timing nor the density of construction is affected by rent stabilization when base rents are perfectly flexible. Allowing landlords to set the initial contract rent lets them capture the benefits to the renter of rent stabilization. Perfect capitalization of rent stabilization into a higher base rent provides the landlord with a free market rate of return and thus does not distort development activity. However, redevelopment of land will be hastened because rent stabilization complemented by vacancy decontrol–recontrol increases the difference between rents before and after redevelopment, increasing the opportunity costs of postponing redevelopment. Extensions include an analysis of other common rent regulations and the impact of rent stabilization on the urban rent gradient."

     
  • Montojo, Nicole, Stephen Barton, and Eli Moore, “Opening the Door for Rent Control: Toward a Comprehensive Approach to Protecting California’s Renters,” (Haas Institute for a Fair and Inclusive Society, 2018). 
    https://haasinstitute.berkeley.edu/opening-door-rent-control.
    "numerous empirical studies, as well as housing production trends in cities with rent control, show no negative effect on housing production." (111)(112).

    111 Zuk, Miriam. “Rent Control: The Key to Neighborhood Stabilization?”  
    https://haasinstitute.berkeley.edu/rent-control-key-neighborhood-stabilization.   (September 2015).  


    112 Arnott, Richard (1995). “Time for Revisionism on Rent Control?” The Journal of Economic Perspectives 9(1), pp. 99–120. 

    Ambrosius, Joshua D. et al. “Forty years of rent control: Reexamining New Jersey’s moderate local policies after the great recession,” Cities, 49, pp. 121–133. 

    Gilderbloom, John and Richard Appelbaum (1988) Rethinking Rental Housing, pp. 134-136. 

    Ken Baar, “Facts and Fallacies in the Rental Housing Market”, Western City, Sept. 1986, 49 - 50. as cited by Abood, Maya, Vanessa Carter, and Manuel Pastor (forthcoming) “Rent Regulations: A Literature Summary”. USC Program for Environmental and Regional Equity.
    [apparently not available online]. 
     
  • National Multifamily Housing Council. "The High Cost of Rent Control." [undated]. https://www.nmhc.org/news/articles/the-high-cost-of-rent-control/. 

    "Inhibition of New Construction:
    "By forcing rents below the market price, rent control reduces the profitability of rental housing, directing investment capital out of the rental market and into other more profitable markets. Construction declines and existing rental housing is converted to other uses.

    "Studies have shown, for example, that the total number of rental units in Cambridge and Brookline, Massachusetts, fell by 8 percent and 12 percent respectively in the 1980s, following imposition of stringent rent controls. Rental inventories in most nearby communities rose during
    that period.(2) Similarly, in California the total supply of rental units dropped 14 percent in Berkeley and 8 percent in Santa Monica between 1978 and 1990, even though the rental supply rose in most nearby cities.(3) And in the United Kingdom, which has imposed rent control since the Second World War, the share of all housing provided through privately owned rental units dropped from 53 percent in 1950 to less than 8 percent in 1986, reflecting the flight of investment from the regulated market.(4)


    2. Rolf Goetze, Rent Control: Affordable Housing for the Privileged, Not the Poor. Report prepared for the Small Property Owners Association of Cambridge, 1994.

    3. St. John and Associates, Rent Control in Perspective -- Impacts on Citizens and housing in Berkeley and Santa Monica Twelve Years Later. (Berkeley: Pacific Legal Foundation, 1993).

    4. R.N. Chubb, Position Paper: United Kingdom. Report UP/L(87)28 (Paris: Organization for Economic Cooperation and Development, 1987).
     
  • Niemietz, Kristian. "How Germany Made Rent Control "Work": Rent Control "Works" when It ... Doesn't Control Rents." FEE.org, June 03, 2016. https://fee.org/articles/how-germany-made-rent-control-work/.
     
  • Olsen, Edgar [1972].  An Econometric Analysis of Rent Control. Journal of Political Economy 80(6):1081-100. DOI: https://doi.org/10.1086/259959. PDF: https://drive.google.com/openid=1AKUdayTtyQTObdLRTb7v2r5sOkHj1I-a.
    [an early and seemingly often-cited paper]. 

    "The cost of producing a unit of housing service in a controlled apartment will be higher than the cost of producing a unit in the uncontrolled market.  The argument is as follows. From the viewpoint of technical efficiency in the production of housing service, there is an optimal path of deterioration for each dwelling. The operation of a competitive housing market results in the attainment of this optimal path. Rent control results in a faster-than-optimal rate of deterioration. Therefore, rent control results in a higher unit cost of producing housing service in the controlled market."

    "It seems quite likely that the cost of producing housing service in the uncontrolled market is higher than it would have been had rent control been terminated in New York City shortly after the Second World War.  The existence of rent control in New York City probably makes the owners of uncontrolled rental housing sensitive to the possibility of changes in the rent-control law which would inflict capital losses on them. Indeed, in 1969 a mild form of rent control was extended to more than half of the then-uncontrolled rental stock...Therefore, it is reasonable to expect that investors in rental housing in New York City will demand and receive a higher-risk premium. If this argument is correct, then contrary to one of the assumptions underlying the empirical results in this paper, the long-run supply price of housing service in the uncontrolled market in 1968 was greater than it would have been had rent control never gone into effect in New York City. This implies that the occupants of uncontrolled housing were worse off than they would have been in the absence of rent control."
     
  • Painter, Gary. "Op-Ed: No, rent control doesn’t always reduce the supply of housing." LA Times, Oct 31, 2018. https://www.latimes.com/opinion/op-ed/la-oe-painter-rent-control-economist-20181031-story.html. 
    cites USC Pastor study.
     
  • Pastor, Manuel, Vanessa Carter, and Maya Abood. "Rent Matters: What Are the Impacts of Rent Stabilization Measures?" (USC Program for Environmental & Re- gional Equity, 2018), https://dornsife.usc.edu/assets/sites/242/ docs/Rent_Matters_PERE_Report_Final_02.pdf.

    Q: Do rent regulations decrease housing production and supply?
    A: On balance, rent regulations do not impact new housing construction. 

    "Gilderbloom and Ye (2007) used regression analysis of 76 New Jersey cities with rent stabilization and found that there was little to no statistically significant effect of moderate rent control on new construction after controlling for population, racial demographics, population change, income, the percentage of units that were renter occupied, vacancy rates, and unit age. Similarly, Sims (2007), in an analysis of Boston, Cambridge, and Brookline, MA, found that while building construction permits did rise after the repeal of rent stabilization in 1995, multifamily building permits actually reached their height in the mid to late 1980s—during rent stabilization. In short, there is not much evidence to support the notion that moderate rent stabilization impacts new construction."

    "Berkeley Housing Director Dr. Stephen Barton has suggested that rent control could actually boost the construction market noting that in a hot real estate market, without rent stabilization or tenant protection, wealthy incoming tenants will crowd out lower-income renters."
     
  • Sims, D. P. (2007). "Out of control: What can we learn from the end of Massachusetts rent control?" Journal of Urban Economics, 61(1), 129–151.
    Abstract:
    "This paper uses the sudden end of rent control in Massachusetts in 1995 to estimate the effects of rent control. I examine Boston MSA data from the American Housing Survey years 1985–1998 to determine how rent control affected the quantity, price and quality of rental housing. My results suggest rent control had little effect on the construction of new housing but did encourage owners to shift units away from rental status and reduced rents substantially. Rent control also led to deterioration in the quality of rental units, but these effects appear to have been concentrated in smaller items of physical damage. I also examine specifications that allow rent control to affect rent levels both directly through controlled status and indirectly through spillover effects from nearby rent controlled units. These estimates imply that rent control may have small effects on the price of the non-controlled rental housing stock."
     
  • Tenants Together. "Making the Case for Rent Control."  Medium, Jan 22 2018.
    https://medium.com/@tenantstogether/making-the-case-for-rent-control-c598740f5ce8.
     
  • Whitehead, Christine, and Peter Williams. "Assessing the Evidence on Rent Control from an International Perspective." LSE On Housing (London School of Economics), October 2018. http://lselondonhousing.org/wp-content/uploads/2018/10/LSE-International-Evidence-on-Rent-Control-Report-2018-Final.pdf.
     
  • Wikipedia. "Rent regulation.
     
  • Willis, John W. “Short History of Rent Control Laws,” 36 Cornell L. Rev. 54 (1950). http://scholarship.law.cornell.edu/clr/vol36/iss1/3.
     
  • Zuk, Miriam [2015]. “Rent Control: The Key to Neighborhood Stabilization?” Haas Institute, September 2015. https://haasinstitute. berkeley.edu/rent-control-key-neighborhood-stabilization.

 

  1. Wikipedia. "Rent regulation.
  2. 2.0 2.1 2.2 The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco
  3. 3.0 3.1 Dear Business School Professors: You’re Wrong, Rent Control Works
  4. Arnott, Richard. “Time for Revisionism on Rent Control?” The Journal of Economic Perspectives, 1995: Vol. 9, №1: 99–120. https://www.aeaweb.org/articles?id=10.1257/jep.9.1.99. Abstract: "Economists' traditional hostility to rent contols is based on models that treat the housing market as perfectly competitive and on the experience with 'hard' controls in New York City and many European countries following World War II. The current 'soft' rent control systems in North America are varied and qualitatively different from earlier hard controls. The theoretical case against them is weak, particularly when the housing market is viewed as imperfectly competitive. The empirical case against them is weak, too. Economists should reconsider their blanket opposition to current rent control systems and evaluate them on a case-by-case basis."
  5. The Housing Market in the Netherlands