Giving Compass' Take:

• Prasanna Rajasekaran explains that the impact of rent control policies differs based on the way that legislation is structured.

• How can funders help to create useful data around the impact of rent control on housing supply, particularly in California, New York, and Oregon?

• Read more about rent control. 

This year alone, California, New York, and Oregon passed statewide rent control laws, a stark break from the nationwide trend of states preempting local rent regulation.

Research shows that rent control benefits current tenants by decreasing their rent burden and protecting them from eviction and displacement. But there are concerns regarding its ability to target low-income tenants. Rent control may also have unintended negative consequences on the broader housing market, specifically in its impact on housing supply, quality, and overall rents.

Our review of the research finds that rent control’s impact on housing supply depends on laws’ specific elements. Effects can vary widely depending on how laws deal with provisions such as condominium conversions, vacancy control, code enforcement, and regulatory loopholes. That’s why we need more research that engages with the diversity of existing policies and explores their effects.

The supply argument against rent control rests on two premises. First, it assumes rent control discourages developers from building new housing. And second, it assumes rent control creates disincentives to retain or maintain existing rental housing. But the evidence on these assumptions is mixed.

All three statewide laws passed this year address concerns about negative effects on new housing construction by exempting new buildings from rent control. But their impacts on the conversion of rental housing may differ.

New York’s law effectively prevents conversion of rent-stabilized units into condominiums or cooperatives by requiring 51 percent of current tenants to agree to buy a unit in the new property. New York City lost nearly 50,000 rent-stabilized units (PDF) to condo or co-op conversion from 1994 to 2017, so the new regulation will likely protect many rent-stabilized units that would otherwise be converted.

In contrast, neither California nor Oregon attempt to limit conversions. The allowable rent increases in both states are large, so there may not be an increase in conversions. But policymakers and researchers should keep an eye on this possibility.

Read the full article about rent control by Prasanna Rajasekaran at Urban Institute.