Rent Regulation: The Clash Of Housing As Investment vs. Housing As Shelter

a group of activists hold signs saying
Rent-Control-Rally-4 photo by Seattle City Council is licensed under CC BY 2.0
Activists at a Seattle rent control rally.

Changes to renting regulations are becoming a hot topic in nations where the rental housing is growing scarce. Landlords without curbs on their free market ‘right to profit’ are taking advantage of the rental housing shortage by raising rents.

For those lower income citizens without recourse to buying a home, the lack of rental housing and its high cost mean homelessness is a growing reality, as many individuals and families are ‘housing-cost-burdened:’ spending as much as half or more of their income to put a roof over their heads.

While a few jurisdictions have years of experience with rent regulations in their many forms, a great many have not. For those considering the politics of rent restrictions, the range of different kinds of regulations and their possible impact can be a source of confusion.

Two recent articles in Shelterforce deal with the need for clarity, first from a historical perspective focused on New York City experience: Not All Rent Regulations Are Created Equal

The second article proposes standardizing rent regulation terms, based on New York’s past experience:  Q: What Do All These Rent Regulation Terms Mean?

What do rent regulations mean for truly affordable housing?

Forms of truly affordable housing, such as social housing, are held away from the free market by their government or non-profit ownership and often excluded from rent regulation.1

‘Naturally occurring’ affordable housing still exists in the free market, and rental regulations can have an important role in keeping that housing as truly affordable, particularly if rents are not permitted to rise more rapidly than individual or family income rises.

As well, government voucher programs for low income citizens top up the amount they have to pay for free market, uncontrolled rents. This is an ever-increasing cost to taxpayers if rents are unregulated. Governments have used a variety of strategies to control program costs. Examples include capping the total number of allowances, the amount of assistance provided, and the units that are eligible for assistance.

Rental regulations can help control this ever-increasing government expense, holding out the possibility (if not the practice) that more people who absolutely need vouchers to put a roof over their heads will actually receive them.

For more exploration on what kinds of rent controls can be legislated, and how each kind can impact on the housing market, try: Rent Controls — Panacea Or Pariah?

Footnotes

  1. It should possibly be argued that this exclusion is not justified when social housing rents are allowed to rise to market levels. In England, rents in housing owned by the social rented sector were historically geared to tenant income. Beginning in 2010, local authorities were permitted to raise rents to 80% of market levels. Extreme housing burden, forced evictions and homelessness are among the consequences for sitting tenants. You can read about this in the Executive Summary and the Macro drivers of housing exclusion sections of this new publication from the UK Collaborative Centre For Housing EvidenceForms and mechanisms of exclusion in contemporary housing systems