As rental rates rise in markets around the country, one of the most common discussion topics is rent control. Rent control often leads to significant increases in housing prices, a shortage of affordable rentals, or both. From a tenant’s standpoint, the conception of freezing or putting a cap on how much rent they pay may seem advantageous. What is rent control, which cities have it, and how does it affect Fresno rental property owners and landlords? These are inquiries that all rental property owners need to know the answers to in order to take an educated stance.
What is Rent Control?
By definition, 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 specific city or state’s population, especially lower-income residents.
Who Has Rent Control?
Rent control has existed for decades, starting in the 1920s and seeing a resurgence in the 1970s. Probably the most consistent and fascinating instance of rent control in action is New York City, which has two different rent control programs since the early 70s. The first program is exclusive to renters who have been living in their rental homes since 1971, and the other restricts the number of times rents can be increased. This second regulation relates to approximately half of the rentals in the city. Yet, 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 effective.
Pros and Cons for Landlords
Nowadays, approximately 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. Each city has a slightly different approach to rent control, from capping rental rates to limiting increases and paying a renter to move. But there are several other regions where the merits of rent control laws are being debated.
From a landlord’s perspective, the advantages of rent control center around tenant turnover and decreasing competition in the rental market. For example, if a renter knows that their rent will remain the same for a given period, they are much more likely to stay in their rental home long-term. This can assist in decreasing turnover costs for property owners. Rent control also tends to restrict the development of multifamily rental units in certain areas, which could help existing rental property owners. Without the competition of new apartments in the area, it is simpler for single-family rental property owners to locate and keep tenants for their rentals.
These benefits surely have a list of downsides for landlords, as well. For example, by putting limits on rent increases or rental rates, rent control laws may prevent property owners from maximizing their profit potential. Another potential downside to rent control is that bad tenants won’t want to move. If they are problematic but not quite in violation of their lease, this could result in some long-term misery dealing with them month after month. Even if there are clear lease violations, a long eviction process is much more expected if a tenant does not like to move.
The incapacity to raise rents could make it difficult for property owners to meet rising expenses, particularly property taxes or insurance. Critics argue that such issues are often 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 count on Real Property Management Platinum to assist you in keeping your rental income competitive and profitable. To learn more about what we have to offer, contact us online today!
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