Opinion: Limit the Term Length of Rent Control

The State of California recently enacted a State-wide rent control program that caps rent increases to 5 percent above the rate of inflation, according to the New York Times. California’s new rent control program is part of a growing national focus on policies that limit the impact of increasingly expensive housing. Nationally, about a quarter of tenants pay more than half their income in rent, according to the Joint Center for Housing Studies at Harvard University.

However, is the new push for rent control an adequate response to the emerging housing crisis, or will it actually exacerbate the situation?

Pros and Cons of Rent Control
The topic of rent control is a contentious one. On the one hand, the cost of housing is becoming out of reach for a significant segment of the population, including educated professionals such as teachers, nurses, police officers, artists, landscapers, restaurant servers and other groups needed to help maintain a cohesive and solid community. On the other hand, rent control seems to have a host of unintended consequences. A restrictive rent control policy serves as a disincentive for real estate developers to build more housing. Rent control also discourages small-time property owners from offering their units on the rental market and even discourages some owners from properly maintaining their rental units, as the price of maintaining a rent-controlled property can often exceed the rental returns from said property. Lastly, rent control unfairly places the burden of housing policy on the back property owners instead of government agencies. Would a similar policy ever considered on restaurant owners or supermarkets to ensure everyone is properly fed?

Ironically, cities with strict rent control policies such as San Francisco and Los Angeles happen to have the worst homeless crisis in the nation.

Termed Rent Control
One proposal that might strike a balance between the needs of renters and owners is that of termed rent control. For instance, tenants would be afforded rent control for a specified time, say 5-10 years. This termed rent control has several benefits to owners, tenants and the greater community:

1. Turnover: Current rent control policies discourage housing turnover as tenants are reluctant to abandon their rent-controlled units. Termed rent control will open up new housing stock for new entrants into the market.

2. Tenant Protections: Tenants will be protected from steep rent increases for a lengthy amount of time (5-10 years) during which they can advance themselves professionally and financially and ultimately buy their own homes, or be able to rent at current market rates.

3. Incentives for Developers: Real estate developers and owners will have an incentive to build and maintain their properties with the knowledge that they will ultimately be able to reap fair returns on their assets.

4. Fairness: Termed rent control will ensure that tenants are not abruptly uprooted from their residences, while allowing landlords the ability to have more control over their hard-earned assets.