Rent control in the United States

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In the United States, rent control refers to laws or ordinances that set price controls on the rent of residential housing to function as a price ceiling.[1] More loosely, "rent control" describes several types of price control:

  • "strict price ceilings", also known as "rent freeze" systems, or "absolute" or "first generation" rent controls, in which no increases in rent are allowed at all (rent is typically frozen at the rate existing when the law was enacted);
  • "vacancy control", also known as "strict" or "strong" rent control, in which the rental price can rise but continues to be regulated in between tenancies (a new tenant pays almost the same rent as the previous tenant); and
  • "vacancy decontrol", also known as "tenancy" or "second-generation" rent control, which limits price increases during a tenancy but allows rents to rise to market rate between tenancies (new tenants pay market rate rent but increases are limited as long as they remain).[1]

As of 2022, seven states (California, New York, New Jersey, Maryland, Maine, Oregon, and Minnesota) and the District of Columbia have localities in which some form of residential rent control is in effect (for normal structures, excluding mobile homes).[2] Thirty-seven states either prohibit or preempt rent control, while seven states allow their cities to enact rent control but have no cities that have implemented it.[3][4] For localities with rent control, it often covers a large percentage of that city's stock of rental units. For example, in New York City as of 2017, 45% of rental units were "rent stabilized" and 1% were "rent controlled" (these are different legal classifications in NYC).[5] In the District of Columbia as of 2019, about 36% of rental units were rent controlled.[6] In San Francisco as of 2014, about 75% of all rental units were rent controlled,[7]: 1  and in Los Angeles in 2014, 80% of multifamily units were rent controlled.[8]: 1 

In 2019, Oregon's legislature passed a bill which made the state the first in the nation to adopt a state-wide rent control policy. This new law limits annual rent increases to inflation plus 7 percent, includes vacancy decontrol (market rate between tenancies), exempts new construction for 15 years, and keeps the current state ban on local rent control policies (state level preemption) intact.[9]: 1 [10]: 1  In November 2021, voters in Saint Paul, Minnesota, passed a rent control ballot initiative that capped annual rent increases at 3 percent, included vacancy control, and did not exempt new construction or allow inflation to be added to the allowable rate increase.[11][12] This resulted in an 80% reduction in requests for new multifamily housing permits, while in neighboring Minneapolis, where voters authorized the city council to craft a rent control ordinance which might exempt new construction, permits were up 70%.[11][13]

There is a consensus among economists that rent control reduces the quality and quantity of rental housing units.[14][15][16][17][18][19][20][21] Other observers see rent control as benefiting the renter, preventing excessive rent increases and unfair evictions. Rent control may stabilize a community, promoting continuity, and it may mitigate income inequality.[22][23][24]

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