As rental rates rise in markets around the country, one of the interesting discussion topics is rent control. Rent control typically accompanies major increases in housing prices, a shortage of affordable rentals, or both. In a tenant’s opinion, the idea of freezing or putting a cap on how much rent they pay may appear to be enticing. What is rent control, which cities have it, and how does it affect Valley Stream 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 description, rent control laws are government regulations that limit how much a rental property owner or landlord can charge to lease a home. The important aspect behind rent control is to keep living costs cheap for a certain city or state’s population, especially lower-income residents.
Who Has Rent Control?
Rent control has existed for a long period, commencing in the 1920s and seeing a renaissance in the 1970s. One of the most consistent and popular instances of rent control in action is New York City, which has two separate rent control programs dating back to the early 70s. The first program is reserved for renters who have been located 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. Nevertheless, 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
Right now, 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. Every city has a different approach to rent control, from capping rental rates to limiting increases and paying a renter to move. On the other hand, there are lots of other localities 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. To give an example, if a renter identifies that their rent will remain the same for a given period, they are much happier to stay in their rental home long-term. This can significantly lessen turnover costs for property owners. Rent control is also aimed at preventing the development of multifamily rental units in certain areas, which could help existing rental property owners. Without the competition of new apartments in the neighborhood, single-family rental property owners can quickly locate and keep tenants for their rentals.
Definitely, these benefits have a number of potential downsides for landlords, as well. As an example, by putting limits on rent increases or rental rates, rent control laws may prohibit property owners from maximizing their profit potential. Another big drawback to rent control is that bad tenants won’t want to move. If they are troublesome but not in violation of their lease, this could generate some long-term misery working with them month after month. Despite the fact that they have clear lease violations, an extensive eviction process is much more possible if a tenant won’t move.
The inability to raise rents may cause problems for property owners to meet rising expenses, such as property taxes or insurance. Critics argue that these issues 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 depend on Real Property Management Innovation 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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