Rent Control: Wrong Solution for Affordable Housing

Posted on October 20, 2021

rent control wrong solutionRapidly rising housing costs have put increasing pressure on cost-burdened renters, which in turn has led in recent years to growing calls for rent control. However, rent control is counterproductive because it doesn’t address underlying causes of affordability, according to housing experts.

Rent control may alleviate pressure on some renters, but it makes the problem worse to the degree that it hinders the ability to do what is needed to solve the problem long term. “The problem with rent control is that it doesn’t fix the underlying problems,” says Jenny Schuetz of the Brookings Institute’s Metropolitan Policy Program.

Schuetz of the and Lane Freeman, a professor in the urban planning program at Columbia University, spoke recently at an event sponsored by the Rappaport Center for Law and Public Policy at Boston College Law School and the Rappaport Institute for Greater Boston at Harvard University’s Kennedy School of Government. As housing costs rise more rapidly than inflation or household income, an increasing number of families are spending more than 30 percent of income on housing, especially in high-cost coastal markets such as Los Angeles, New York and San Francisco.

Schuetz identified three critical areas of failure for rent control. One is the need for more housing stock, where the U.S. has a long-term undersupply relative to growth in the number of households. Rent control suppresses development to the extent developers can’t meet targeted returns.

Another issue with rent control is that by limiting property owners’ income, it takes away the incentive to renovate older properties, Schuetz said. That contributes to decaying and obsolete housing stock in poor neighborhoods. Plus, to the degree it disincentivizes repairs and upgrades of energy efficient systems, it contributes to the climate change problem.

What’s more, rent control doesn’t do anything to solve the income part of the equation, the growing gap between market-rate rents and incomes of lower-wage workers, Schuetz said. Studies show that lower-income households are more likely to be burdened by rental costs.

The most efficient solutions to housing affordability would be to extend use of housing vouchers and direct subsidies to renters, and for policies that increase the development of more housing. Schuetz and Freeman noted, however, that solutions that involve spending by cash-strapped governments and unpopular development are difficult to implement.

“There is a lack of political will to implement these solutions,” Freeman said. “It’s easy to say we need to allow more housing to be built, but that tension is not easy resolvable because people want to live in communities where people feel connected and safe.”

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