What is rent control?
Rent control is an initiative taken by the government to limit the rent charged by landlords. The landlord can not charge a rent higher than the amount set while leasing a home. The federal government or municipalities make rent control laws, which differ widely. The main aim of rent control laws is to keep homes affordable for people living on low incomes. However, sadly rent control laws are not widespread in the United States. According to research carried out by the Urban Institute, only 182 municipalities have rent control laws, and all of these belong to either New York, New Jersey, Maryland, California, or Washington. In contrast, 31 states in the country have laws that prevent the rulers from making rent control laws or setting a rent limit, according to a new bill passed in 2022. However, recently due to the rising prices of houses and increased unemployment, there has been a greater move toward rent control laws. Buy a house in Lahore Smart City.
How it works
The first rental laws in the United States were made around 1920 and often called for rent freezes. However, these laws proved to be unworkable from time to time. Around 1970, people started advocating for rent control again; however, the laws pushed toward rent stabilization instead of rent freezing. These laws were more moderate and proved to be more effective than those in the 1920s. New York City, the state with the highest rent rates, has two rent control programs. The first rent control program passed in New York City is being phased out and is hardly used. The program placed several severe limits on the rent of residential and commercial buildings.
However, the catch was that the renters covered by the law lived in buildings and houses made in 1947 or even older hence the rule did not apply to them. It only placed limits on the rent of buildings or homes made after 1972. The second rent control program emphasized rent stabilization. The rent stabilization program initiated in the 1970s was used to regulate the rents of more than half of the properties in the city of New York. According to this program, the rent can only be increased for the first two or three years and only by an allowable percentage. The Rent Guidelines Board sets the allowable rent increase percentage, consisting of around nine members that the mayor appoints. However, the extremely high cost of living in New York City proves that rent controls don’t work. Despite having two rent control programs, New York City properties’ rents are soaring high. Also invest in Kingdom Valley Islamabad.
Pros and Cons of rent control
Rent control has always been controversial, especially among real estate investors and tenants. Most cities have rent control laws, but they only control the rent increase during a lease renewal and play no role in limiting the rent when a new lease is drafted. The absence of laws that limit the rent charged is beneficial for the landlords as they are free to increase the market rates of rent to a high price. The main con of rent control laws is that they discourage investor incentives and negatively impact the supply of rental properties in the market. The rental market suffers recessions, and investments in rental properties almost come to a halt as the landlords’ profit margins go down. There are several advantages to rent control laws as well. The biggest argument supporting rental control laws is that the rent is increasing at a faster rate than the wages of the people, increasing the burden on people living on limited incomes. Moreover, it allows people from low-income households to live in decent houses without worrying about unexpected rent increases.
The argument surrounding rental control laws is very controversial and hence been going on for several years. The government must consider the needs of both the landlords and the tenants before they pass any laws. Buy residential properties in 1947 Housing.
Ramza Zahra is a Karachi-based freelance content writer who uses her life experiences and curious nature to research and pen it down and make a living. Currently, she is working with Sigma Properties as an Snr. Content Writer.