Is Rent Control Unfair for New Residents?

Many people feel that rent control is unfair for new residents, mainly because long time tenants enjoy lower rents than newcomers. Rent control is controversial at best, which is why most states have done away with it. Despite the controversy, rent control policies remain in force in some urban areas of the United States.

What is Rent Control?

Rent control is a term describing a situation where a state or local government passes laws limiting changes that can be made to the amount of rent charged during the duration of a tenant's stay. The intention of these limits is to help the poor, but the benefits of rent control policies are short term at best. The problems with rent control extend far beyond just being unfair.

Drawbacks of Rent Control

1. Rent control creates slums when landlords cannot afford to maintain properties.
2. Rent control creates a black market for rentals since the rent won't go up if the name on the lease doesn't change.
3. Rent control can harm investors by putting them in a position where they can no longer afford to own properties.
4. Rent control can reduce the number of available properties, causing potential new residents to incur the added expense of a finder's fee.
5. Rent control, like other socialistic policies, tends to reward financial underachievement.

Rent Stabilization

In areas where rent control has been "killed," it still exists in a different form known as "rent stabilization." Rent stabilization is less extreme than rent control, but it is almost as restrictive since it requires that landlords get permission from the government before raising rents. This leads to many of the same problems, including a disparity between the cost of rent for existing versus new tenants.
Economic Implications

When it comes to the economic implications of rent control, one must look at the bigger picture. Although there are perceived short term benefits for those residents whose rents are kept low, capitalism in the housing industry will allow for a better rental market overall. Rental properties will be easier to find, and low income residents will be motivated to better themselves. History has taught us that a free market economy will always do better than a socialistic one.

Rent control is detrimental to both landlords and tenants, as well as the economy as a whole, and it is particularly unfair to new residents. It's already hard to find a decent place to rent these days, and implementing rent control policies will make it that much harder.

Roman Temkin is a New York real estate developer who livens on the Upper West Side.