California Rent Control: No Panacea For A Housing Crisis But Some Positives

An Ontario Provincial Government form section from a landlord rent increase notice
The image shows part of an Ontario Provincial Government form requesting a 5.1% increase for 2020. This is above the 2020 guideline of 2.2% (pegged at inflation). The Landlord will need to prove that capital improvements have been made to justify such a high increase over inflation.

Characteristic of proposed regional rent control laws are fevered arguments from opposite sides of a debate on their value. Activists, apparently with their hearts and minds closer to the plight of housing burdened renters, are all for controls on annual rent increases, the more stringent the better.

Landlords and developers are predictably against any attempts to limit their free market profits. Their pronouncements on rent control proposals forecast higher rents, counter-intuitively triggered by rent controls, as well as new rental housing construction falling by the wayside when rental profits are reduced.

The article linked below suggests that economists traditionally support the landlord/developer side of the argument.

The authors, both economists, would seem to be cut from different cloth. They explain that their recent research indicates positive outcomes from rent control, not only for individuals lucky enough to have their rent capped, but for the industry as a whole. They do so while explaining how rent controls alone will not solve California’s housing crisis.

For a clearly explained and reasonably dispassionate view of the pros, cons and limitations of rent control, read more in the Los Angeles Times (paywall1): Rent Control Is Better Than Nothing, But It Can’t Fix California’s Housing Crisis

The authors have certainly tackled a complex issue: the operation of the real estate market and consumer preference. See the Columbia Business School Research Paper: Affordable Housing and City Welfare

Footnotes

  1. The LA Times currently has a flexible paywall. From across the continent and in a another nation, it seldom seems to click in. Locally, we would guess you need to be a subscriber, or have fewer free reads