Wednesday, October 16, 2019

Impact of Rent Control - Part 4

All things considered, Rent Control has its purpose, which should be to prevent outlandish rent increases. However, as discussed in this series, the current format enables some landlords and tenants to take advantage of the situation.

Not being able to increase the rent for “current” tenants often leads to lesser living conditions for tenants and savings and tax advantages for landlords. The larger scale impact is often the prevention or limitation of neighborhood growth and/or improved property values.

One solution for Rent Control is to allow for small percentage increases on an annual or bi-annual basis, with specified standards being met in order to do so.

For example, a 10 or more unit apartment building could increase 5% every two years (for continuing tenants) upon proof that landscape upgrades were installed. This concept would help to assure that upgrades and improvements are part of rental facilities. Perhaps meeting specified safety requirements could impact a landlord’s ability to raise the rent.

To take this a step further, a reduction in or maintaining low levels of crime or vandalism statistics could be a reason for a rent increase to existing tenants. Many tenants would be willing to pay extra with the knowledge that their overall safety is a consideration.

As it stands now, this is not always about creating or maintaining affordable housing. This all feeds in to the “renting vs. buying” debate in many communities. Some people look at having a Fixed Rate mortgage as a form of Rent Control, keeping the resident at the same rate for up to 30 years. One important difference is that the home owner chose the monthly payment based on the price of the property and their financial status at or after the time of purchase. Apartment living, however, could be due to geographic, financial, or logistical concerns.

Our hope is that more states or municipalities considering implementation will look at ways to modify existing regulations and learn from other parts of the country. The system needs to be changed before it should be expanded.

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