Rent control seems like a good idea from a renter’s perspective, especially if you’ve never lived in a rent-controlled city. However, it has serious complications, and even an anti-market person like me is deeply opposed to it. Allow me to explain.
Rent control purports to protect residents from being priced out of their homes when the cost of living rises faster than their wages, usually framed as an effect of gentrification. Also, Americans have a strong attachment to the “I was here first” mentality, except when applied to indigenous people.
However, with something complex like a housing market, controlling one aspect of it has massive effects in other ways, some predictable, some less so. The main problem with it, that researchers have studied, is that it greatly restricts the housing supply. Tenants have an incentive to not move, one that tends to grow over time. This means that a city like S.F. has approximately one percent of its units available at any time. Try finding an apartment in that situation.
In addition, here are the actual effects of rent control that I see:
- A couple wants to take six months off of work to travel and their lease forbids subletting, so they give up their apartment. When they come back, they have to move into a much smaller apartment because they are shopping in the aforementioned artificially restricted supply
- Wealthy long-term residents can be paying as little as 25% of market rent
- Landlords can make little money off long-term tenants so they have no incentive to make improvements. In fact, the more uncomfortable they make you (within the law), the more likely you’ll leave and allow them to make a lot more rent
- In SF, new construction is exempt from rent control so there is a massive push for investors to try to build new buildings to serve an elite clientele
- More of your income goes towards rent and less is available to spend in the local economy. Most property owners are not local in any sense of the word. They are corporations that may not even be in the same state.
Now, a place like San Francisco has lots of housing problems and is one of the most economically unequal cities in the U.S. However, rent control actually makes the effects of the inequality worse, not better.
And the worse part about rent control? Like the military-industrial complex, it is self-perpetuating. Once in place, it’s extremely difficult to dismantle. After all, why would those people paying 25% of market rents want to start paying more just so some new arrival can pay a more fair amount?