As rental rates rise in markets around the country, one of the most prominent discussion topics is rent control. Rent control commonly results in 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 appear to be favorable. What is rent control, which cities have it, and how does it affect Cape Cod rental property owners and landlords? These are questions 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 key point behind rent control is to preserve living costs economical for a specific city or state’s population, especially lower-income residents.
Who Has Rent Control?
Rent control has existed for quite a long time, beginning in the 1920s and seeing a reappearance in the 1970s. Probably the most consistent and interesting instance of rent control in action is New York City, which has two particular rent control programs dating back from the early 70s. The first program is only accessible to renters who have dwelled in their rental homes since 1971, and the other restricts the number of times rents can be increased. This second regulation applies to around half of the rentals in the city. Yet, 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
As of now, roughly 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. Every city took a different approach to rent control, from capping rental rates to limiting increases and paying a renter to move. Nevertheless, there are a few other places where the merits of rent control laws are being debated.
From a landlord’s perspective, the advantages of rent control concentrate around tenant turnover and decreasing competition in the rental market. For instance, if a renter comprehends that their rent will remain the same for a given period, they are much more willing to live in their rental home long-term. This can help mitigate turnover costs for property owners. Rent control also tends to prevent the expansion of multifamily rental units in certain areas, which could help existing rental property owners. Without the competition of new apartments in the vicinity, single-family rental property owners may find it uncomplicated to locate and keep tenants for their rentals.
These benefits unquestionably have a list of downsides for landlords, as well. As an illustration, by setting limits on rent increases or rental rates, rent control laws may discourage property owners from maximizing their profit potential. Another common disadvantage of rent control is those bad tenants won’t want to move. If they are problematic but not quite in violation of their lease, this could give rise to long-term misery dealing with them month after month. Regardless of whether there are clear lease violations, an extended eviction process is much more possible if a tenant doesn’t like to move.
The incapability to raise rents could make it tougher for property owners to meet rising expenses, including property taxes or insurance. Critics argue that such concerns are most of the time 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 Associates 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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