Rent Control Is Not The Answer

The problem, however, is that many public services such as schools, libraries, and parks are funded by property taxes, so wealthy areas have the best services while poorer areas are left with none. The answer to this is mixed development. Rather than simply putting a universal cap on rents, a better solution is to create laws that create a sliding scale for rents. In other words, the owners or developers of an individual development must set aside a certain number of units for low-income residents, a certain amount for median-income residents and then they can offer the rest to high-income residents at appropriate prices. In this way, instead of having all the poor housed in one area with no services, they can be scattered among the wealthy to be able to take advantage of the services their higher property taxes pay for.

5. Rental caps actually decrease the number of available rentals

There is any number of ways that landlords and property owners can get around rental control laws when they are enacted. Two of the most popular ways are simply to convert existing apartment buildings to condos and sell them or to raze the building and build a new one simply. In either case, this harms the poor more than it helps them. While rent control may not decrease the amount of available housing, it changes the type of housing available and the demographic it is available too. Rental pricing caps are meant to help the poor, but in the end, will generally only end up doing them more harm than good. On the other hand, as rental prices skyrocket, so do property taxes. This means owners, developers, and landlords raking in higher profits are also paying higher taxes. The answer then is not to limit the amount they can charge in rent, but rather to take the increased taxes they are paying and use those monies to offer supplements or subsidies to lower-income renters.

There is any number of instances in which the way things work on paper is not the way things work in real life. There is any number of ideas that sound good in theory but entirely fall apart in practice. Rental caps are one of these things. There is no doubt that it looks like a brilliant idea in theory and seems like it would go far to help the poor. In reality, however, it only ends up further harming the very people that in theory, it would seem to protect. No matter how great of an idea it may look, in truth, its flaws far outweigh its potential.

As of 9/11/2019, the Bill know as Ab1482 has passed and is on the way to the Governors desk to be signed. He has already said that he would sign the Bill. We expect it to go into effect 1/1/2020. You can read our lattes Blog post here — California Rent Control and Why it Sucks for Renters.