What's Wrong With Rent Control?

Rent Control and Just Cause Eviction cause more harm than good

REALITIES OF RENT CONTROL AND JUST CAUSE EVICTION POLICIES

Imagine you neighbor commits a crime next door, is witnessed, prosecuted and convicted. But everyone else in that unit gets to stay and add whomever they want to the lease without the property owner’s approval – including that evicted criminal once they are let out of prison.

Imagine also that due to restrictions on rent increases the complex next to you cancels their yard maintenance, delays outside repairs, and decreases security in order to constrain costs.

Last imagine the complex on the other side of you turns all of the units into short term rentals to avoid any of the restrictions – resulting in a constant stream of visitors bringing noise, traffic and parking problems.

These are the realities of Rent Control and Just Cause Eviction policies – regardless of their intents.

Pitfalls of Rent Control and Just Cause Evictions

Rent control is intended to be a way to help stabilize costs for renters. However in examining what the policy actually does when enacted – any benefits made to renters are overshadowed by its impacts.

Rent Control is bad policy. Simply put it is bad policy.

  • Not just because it accelerates gentrification – SOURCE 
  • Not just because it damages surrounding housing values - SOURCE 
  • Not just because it expands inequality – SOURCE 
  • Not just because it limits new development – SOURCE 
  • Not just because it is overwhelmingly opposed by Americans – SOURCE 
  • Not just because it makes housing more expensive – SOURCE 
  • Not just because it is opposed nearly universally by economists – SOURCE 
  • Not just because it forces cuts in maintenance – SOURCE 
  • Not just because it distorts the housing market – SOURCE

But because it doesn’t solve the problem – in fact it actively HURTS renters – SOURCE

Simple Answers Bring Unintended Consequences

Despite countless reports about how rent control does more harm than good – SOURCE - cities choose to pursue it because it is a simple answer to a complex problem that is easy to make and you can pretend like you did something to address a problem. Beyond the countless examples above, it also comes with significant unintended consequences.

  • Like deteriorating conditions for housing – SOURCE 
  • Like decreased investment in existing units – SOURCE 
  • Like making many rental units more expensive – SOURCE 
  • Like decreasing the number of available affordable units – SOURCE 

Rent Control policies lead to a worsening of housing conditions – maybe not immediately, but as studies have recently shown, these impacts are not far behind when rent control is enacted.

Even those few researchers who find benefits in Rent Control are quick to point out that if it is a policy that is selected that it cannot stand alone. Instead, it needs to be part of a multi-pronged approach to addressing inequity – SOURCE 

Existing Policies Should Be Tried FIRST

In 2019 California enacted AB 1482 which effectively implemented rent controls statewide.  What’s more the rent caps implemented were even lower than recommended by a UC Berkeley Terner Center research paper – SOURCE 

In short, the statewide policies enacted in California establish:

  • Rent increases capped at 5% plus up to 3% CPI adjustment annually
  • 60 day notices on most rent increases
  • Eviction protections after 1 year of tenancy

However shortly after being enacted, COVID 19 and the rent and eviction moratoriums were implemented – so the outcomes of these laws are yet to be seen as housing providers have not collected rent – let alone raised rent or enacted evictions as a result.

Researchers from Berkeley also examined the state laws and concluded that enacting stricter versions of the California law would have a large impact on property valuation resulting in lower bank loans on properties, decreased interest by developers, and a stagnation or decline in housing stock – SOURCE

Santa Ana Proposes a Disastrous Policy

The city of Santa Ana however is proposing policies that radically impact even the already restrictive policies that California has implemented, including:

  • Cap annual rent increases at 3%, or 80% of CPI (whichever is less).
  • Extend "just cause" eviction protections after 30 days, instead of 1 year.
  • Establish a city council-appointed rent control board with broad authority.
  • Require rental-property owners to provide tenant relocation assistance equal to three (3) months rent, if the owner intends to move back into their rental.
  • Allow tenants to add occupants without owner approval.
  • Enable squatting without recourse for rental-housing providers.
  • Impose additional administrative and operational obligations on rental-housing providers.

Remember the initial scenarios of serial tenants re-renting to criminals without property owner approval? Or property owners not being able to afford standard maintenance practices? Or properties being converted from affordable housing units to party-dens?

That is exactly what every policy promoted by Santa Ana leads to.

Rent Control and Just Cause Eviction Ordinances are bad policy.

What Santa Ana is proposing is a disaster - If that is what local cities are seeking to model, their destiny is a future where affordable housing is dilapidated housing.