Report Finds We Need to Open the Door for Rent Control

California’s housing crisis has opened the door for rent control, a Haas Institute Report out of Berkeley found in a September 2018 publication.

“California’s housing affordability crisis is harming communities across the state, stripping people of their incomes, disconnecting families from each other, restricting opportunities, forcing people into homelessness, and generating new patterns of segregation and stratification,” write authors  Nicole Montojo, Stephen Barton, and Eli Moore. “Housing insecurity, unmanageable rent increases, and the threat of displacement carry deep consequences, since having a home is about more than just having shelter.”

They add: “The impacts of the housing crisis in California are intensifying racial and economic inequality. A decade after the Great Recession, many of those who lost their homes to foreclosures are still not able to again become homeowners. The high cost of rent forces Californians to pay for housing with income they could otherwise put toward education, retirement, investments, and other productive uses that increase economic opportunity.”

The report finds that California “is at a tipping point,” as neither the government nor the private market are able to meet the needs of the majority of the state’s estimated 17.5 million renters.  They find, “Skyrocketing rents, intensifying threats of eviction, and ongoing displacement are all part of a broader crisis of widening inequality and structural exclusion that is testing our values and identity as a state.”

The results they find are far-reaching, with people being pushed out of their communities, into homelessness and away from jobs and opportunity.

They argue: “The extent of these long-term harms will be determined in large part by how we respond today. This moment requires that local governments have the ability to enact immediate solutions to protect tenants from unfair rent increases as well as wholesale evictions.”

Taking a long-term view of housing affordability, they draw five key conclusions:

  • California has reached a tipping point where policies and the private market are failing to meet the needs of the majority of renters. There are over 9.5 million Californians living in rent-burdened households and there has been a startling increase of approximately 3.7 million rent-burdened tenants since the year 2000.
  • The housing crisis also harms Californians’ physical and mental health. Exposure to hazardous conditions in the home, social isolation, severe stress, and other health problems are being exacerbated.
  • Rising rents have pushed many residents into homelessness. California now has the largest number of people experiencing homelessness among all 50 states, and research shows a clear link between rising rents and increased homelessness.
  • Stabilizing rents would have broader benefits to the state’s economy, environment, and public services—from improved traffic conditions and reduced traffic-related greenhouse gas emissions, to increased spending by tenants in their local economy.
  • Seniors, Latinos, African Americans, low-wage workers, and families with children face the most severe burdens from the housing crisis. Rapidly increasing rents are displacing residents to areas with fewer quality jobs, well-performing schools, and other resources—reproducing racial segregation, particularly in suburban areas far from urban jobs centers.

They then focus on the rationale for rent control and “the importance of allowing government to fulfill its responsibility to rebalance the broken housing market and advance public well-being.”

One thing they make clear: “This brief is not intended to provide a detailed policy agenda or propose specific policy designs, as we know that this must come from further conversations that involve a full range of stakeholders.”

Instead they focus on where they believe that the conversation must begin.  They argue that conversation begins with “opening the door for local governments and the state to design and enact rent control policies that can truly address the immediate needs of California’s renters.  “

They argue: “While it will not solve the housing affordability crisis on its own, rent control is part of a needed adjustment to the rules of the market to ensure Californians’ access to housing.”

Here they raise five key points:

  • Rent control has several unique, essential benefits related to current housing challenges facing California. The policy can stabilize rents for existing tenants, improve affordability for tenants in the future, and preserve the existing affordability of housing that may otherwise become unaffordable.
  • Rent control is a cost effective policy with immediate effects: Where most other programs require tremendous financial resources and take a great deal of time, renter protections can be established as a matter of law and the administration of rent control is typically paid for through modest per-unit fees.
  • The disadvantages of rent control policies do not outweigh its benefits. Claims that rent control has negative effects on development of new housing are generally not supported by research, but if there are some modest effects in that direction, they should be mitigated by other policy and investment mechanisms. The urgent need for stabilizing rents for tenants in the state makes this a policy priority.
  • Housing production is needed, but only rent control will provide a near-term solution for renters. The magnitude of California’s housing shortage indicates just how long-term any effort to resolve the crisis must be. The state currently has an affordable housing gap of 1.5 million homes for extremely low- and very low-income households, and overall, it needs to build 3.5 million new homes by 2025 to accommodate current demand, pent-up or latent demand, and projected population growth. Thus, rent control can provide a timely solution that the market will not.

They argue, “While millions are struggling with housing instability and the threat of displacement due to extreme rent increases, our policy debates over solutions are too narrow when it comes to the needs of renters. Laws like Costa Hawkins have placed restrictions that limit communities’ ability to meet the needs of those who are hardest hit by the crisis—and furthermore, establish a path toward a better quality of life for all Californians.”

Thus they conclude: “These restrictions on rent control ought to be lifted in order to expand the conversation and create the possibility for a more equitable future in which all Californians can belong and thrive.”

Watch their presentation in September on their report:

—David M. Greenwald reporting


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David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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80 thoughts on “Report Finds We Need to Open the Door for Rent Control”

      1. Keith O

        But back to my point, with all the talk of rent control and new legislation landlords would be crazy not to increase their rents now knowing that rents may be locked in for many years to come. So all this talk of rent control might actually be increasing rents now.

        1. Keith O

          I’ve never owned a rental but if I were a landlord and knew the possibility of rent control was coming soon I sure would be considering locking in higher rent now before any new legislation was enacted.

          1. David Greenwald Post author

            My point is – if you want to raise the rent and can do so without negative consequences, you can do it right now anyway.

            The other thing is that you should distinguish between places like Sacramento which are already moving to enact a rent control ordinance for 2020 versus Davis which has not entertained the idea at the city level and may well never do it.

        2. Keith O

          The perception is that rent control is coming.  I’m sure there are many rentals where the owner doesn’t charge top dollar either because they don’t want to gouge the tenants or they would like to keep the current tenants.  But knowing that could easily change and rents could be locked in I’m sure there are landlords now raising their rents.

           

        3. Tia Will

          landlords would be crazy not to increase their rents now knowing that rents may be locked in for many years to come”

          This makes the assumption that individual profit is everyone’s highest priority. “Crazy” not to realize that someone may have much greater needs than yourself. My mother did not raise the rent on the house in which she raised us for over 10 years. When she died and I took over, I also left it the same for a poor family with a severely disabled child. I guess we were both “crazy”.

          With population increasing, if individuals will not act responsibly for others as well as for themselves, the government will eventually have to step in to establish some balance between have’s and have nots. If the “free market” ( which does not really exist) will not solve our social problems, government needs at least make the attempt. I see freeing local communities to make these attempts as desirable.

        4. Richard McCann

          David, landlords would raise rents today in anticipation of higher future rent income knowing that they may lose income today from reduced rentals, but that they can increase future rental income. It’s exactly the same principle as making an investment on the basis that the future income will repay today’s cost.

  1. Jim Hoch

    “California’s housing affordability crisis is harming communities across the state, stripping people of their incomes, disconnecting families from each other, restricting opportunities, forcing people into homelessness, and generating new patterns of segregation and stratification,”

    Sounds like we need to review our immigration policy.

    1. Keith O

      We all know that only adds to the problem but liberals don’t like to go there.  They want unbridled immigration (votes) knowing we don’t have the housing but then in turn want to complain that there’s not enough housing.

      1. Tia Will

        liberals don’t like to go there”

        What a misguided comment. I doubt you will find any “liberal” who doesn’t believe there is an immigration problem. I just don’t believe that a wall that costs billions, will wreak environmental damage and create an imminent domain morass is a reasonable response.

        1. Keith O

          Then why the immigrant invitation of “Sanctuary City” plastered all over Davis but then at the same time complain about a dire need for housing?  The same goes for the State of California.

          Jim made an excellent point.

    2. Tia Will

      Sounds like we need to review our immigration policy.”

      Immigration policy revision is a need, but unfortunately cannot be handled on the local or state level. We need to take local steps while hoping that at some point the national government can develop a bipartisan solution. I am not willing to hold my breath.

    3. Richard McCann

      Immigration isn’t causing this problem. The U.S. is now approaching net zero on undocumented immigration. Population growth is coming from births over deaths now.

      1. Jeff M

        LOL.  Yes it is, from the recent immigrants that tend to be poor and drive up the demand for affordable housing.

        Immigration has CAUSED the problem as it already exists.  And they are responsible for some of the ongoing problem as it will continue to exists with more immigration and not enough housing being built.

        Where do you get your information that the U.S. is not experiencing any more undocumented immigration? 80% of those that claim asylum are denied.   But before that they are released to sanctuary states and cities where liberals can plug them into the future Democrats vote getting factory as they have kids that become citizens or they bring in kids that become “dreamers” that get put on the voter roles with amnesty.  There has not been any notable decrease in the numbers coming here from what I am reading, but the Trump administration has just picked up where the Obama administration had started to deport more.

        1. Howard P

           immigrants that tend to be poor and drive up the demand for affordable housing.

          True for at least 140 years… those damn Irish!  My ancestors…

          Then “affordable housing” was known as ‘hovels’… or tenements…

    1. David Greenwald Post author

      I agree with Eric. It’s kind of like those who wish to deal with the local housing crisis by restricting enrollment. If we need housing – build it.

        1. Richard McCann

          Jim and Keith O, not factually true statements. And as I pointed out above, net undocumented immigration is approaching zero, so look elsewhere for your scapegoats.

        2. Howard P

          “Undocumented”… interesting term… includes folk born in the US, where records were lost… not so true, today, but still happens, rarely… Dad was “”undocumented”   his birth record was destroyed in a fire.  1930’s… he and his parents did not know that he was “undocumented” until he tried to enlist in WWII… guess I’m an ‘alien’, too… my grandfather and namesake was born in Mars…

        3. David Greenwald

          The term is undocumented immigrant which would preclude by definition those born here. It also doesn’t refer to people who have lost their documents.

          1. David Greenwald Post author

            I don’t know why it’s such a difficult term, undocumented refers to specific documentation that allows one to reside in this country. It could also refer to a person whose documentation has expired.

        4. Jim Hoch

          “undocumented refers to specific documentation that allows one to reside in this country”

          Anyone who has been removed from the country has specific documentation enjoining them from re-entry. They might not like the document but they certainly have it.

        5. Howard P

          Uh, we’re pretty much all ‘immigrants’… or directly descended from those who were…

          [David’s Oct 12 10:03 post]

          As far as being born in the US, if you have  no document (or if there is no such document, for any reason) saying you were, how would anyone know that?

           

      1. Jeff M

        You guys are confirming Keith’s point that it is a big contributor to the problem yet you don’t want to include it in the discussions of solutions.

        Let’s do root cause analysis for the causes of inadequate affordable housing:

        – Too many people needing affordable housing that is directly related to the mass of poor and uneducated people that has flooded into California from south of the border because of our broken immigration system. (primary responsible party = Democrats)

        – Too little housing being built and it is directly related to higher costs heaped on development from increased codes, regulations and fees, and inflated land costs due to land use restrictions and lawsuits for development that are mostly CEQA related.  (primary  responsible party = Democrats)

        – Banking regulatory changes related to Dodd Frank that have made it more difficult for developers to finance housing development projects (primary responsible party = Democrats)

        – Local restrictions caused by Measure J/R. (primary responsible party = Democrats)

        – Killing of RDA which was primarily used to build affordable housing to raid the funds for government employee pensions. (primary responsible party = Democrats)

        And now the demand for rent control. (primary demanding party = Democrats)

        All of this demonstrates that when Democrats are put in charge we end up with a lot of problems related to housing.

        1. David Greenwald

          “You guys are confirming Keith’s point that it is a big contributor to the problem yet you don’t want to include it in the discussions of solutions.”

          I don’t agree.  He hasn’t presented any data on the impact.  Or anything to substantiate it.  In fact, it has hijacked the conversation which is about Prop 10 and taken us off track.

          I’m fairly confident in saying that locally, it has nothing to do with the rental housing crisis.

          I would suggest we stay on track here.

        2. Jeff M

          It impacts regional housing demand and supply and thus it absolutely has a connection to Davis’s rental market and also is a contributor to why liberals now think rent control is a solution.

          There is not enough housing.  How is rent control going to solve that problem?

        3. Keith O

          What data, that we welcome illegal immigrants even though we don’t have housing for them?

          That UCD keeps accepting more students even though they and the city don’t have housing for them?

        4. David Greenwald

          What do you mean what data?  You’re arguing that large numbers of undocumented immigrants are preventing others from being able to live housing.  If that’s the case, there should be data to back up that assertion.  You’ve presented none.

        5. Keith O

          California is home to more than two million undocumented immigrants.Undocumented (also known as illegal or unauthorized) immigrants are not directly identified in any representative national or state surveys. But the best estimates suggest that in 2014, the year of the most recent data available, California was home to between 2.35 and 2.6 million undocumented immigrants. Nearly a quarter of the nation’s undocumented immigrants reside in California, where they constitute more than 6% of the state’s population.

          http://www.ppic.org/publication/undocumented-immigrants-in-california/

        6. Ron

          Thanks for posting this, Keith.

          You and Jeff are right, in that some with more liberal points of view don’t seem to want to discuss the impacts of this, or what (if anything) to do about it.

          It’s likely having impacts on the state that go well-beyond the demand for housing.

          I don’t have a specific answer, but I doubt the effectiveness of a wall. What a thorny problem, with lots of accusations attached whenever it’s discussed.

        7. Ron

          David:  I realize that your question was directed to Keith, but can you answer that question?  I suspect the answer is that there’s an unknown range, regarding the types of housing occupied and the impact that this is having on the rental market in some communities.

          Since they’re not documented, wouldn’t this mean that the answers to such questions are not necessarily known or tracked?

        8. David Greenwald

          My view is that if he wants to argue that the large undocumented population is impacting the rental market, he should be able to demonstrate that with data before we talk about remedies.

        9. Keith O

          Well David, the 3 million illegal immigrants in California are living somewhere, aren’t they?    So are you trying to say they don’t help put pressure on the housing and rental market?

          1. David Greenwald Post author

            Don doesn’t want us to continue down this path and that’s fine. I’m only interested if you have some data to back up your claim. Apparently you don’t.

        10. Keith O

          Fueling Demand
          Fueling housing demand, immigrants replace baby boomers retiring from the labor force, according to University of Washington economist Jacob Vigdor.
          By his reckoning, the country’s 40 million immigrants add $3.7 trillion to total housing wealth. In Houston’s home county, the newcomers boosted the value of the typical home by $25,000 during the decade ended in 2010.

          https://www.bloomberg.com/news/articles/2017-02-22/why-trump-s-immigration-crackdown-could-sink-u-s-home-prices

          1. David Greenwald Post author

            1. Not data
            2. Mixes immigrant with undocumented
            3. Not California specific
            4. Doesn’t tell us where undocumented immigrants live

        11. Richard McCann

          Here’s the facts on the undocumented immigrant population. There has been a net DECREASE in this group since 2007. Please let that one go and move on to other issues.

          https://www.factcheck.org/2018/06/illegal-immigration-statistics/

          http://www.pewresearch.org/fact-tank/2017/04/27/5-facts-about-illegal-immigration-in-the-u-s/

          http://www.pewresearch.org/fact-tank/2018/09/14/key-findings-about-u-s-immigrants/

          (BTW, all of you/us are immigrants–none of you/us are “natives.”)

           

        12. Jeff M

          (BTW, all of you/us are immigrants–none of you/us are “natives.”)

          Which is true for at least 70% of the global population depending on your statute of limitations.  So your comment is a non sequitur related to the topic.

          Also, is all water equal when it floods?  Or does some water need to be diverted during a flood so that it does not cause damage?

        13. Jim Hoch

          “Here’s the facts on the undocumented immigrant population”

           

          uhh, no. Posting a collection of irrelevant studies does not magically make any of them relevant. US demographic trends mean little at the level of California state and even less at the  Sacramento–Arden-Arcade–Yuba City, CA–NV Combined Statistical Area.

          I could just as easily post national level rental vacancy and price increase data which would show plenty of housing for everybody.

          Your post is intentionally deceptive.

      2. Jim Hoch

        Studies have shown that people who live in houses use electricity, flush the toilet, drive cars, etc. What is often known as the “cascading series of crises”. We have almost 8 billion people in the world and certainly at least four billion would like a house in Davis.

  2. Ron

    David:  “If we need housing – build it.”

    That’s exactly how California has developed into a sprawling, over-populated place (straining infrastructure as well as the environment).  With no end in sight.

    The “lifeboat” is sinking. And, in this case, there’s other “ships” (locations) nearby (which would welcome more growth and redevelopment, for now). In fact, there’s already a net outward migration, from California. (Especially among lower-wage workers.)

    1. Jeff M

      That’s exactly how California has developed into a sprawling, over-populated place (straining infrastructure as well as the environment).  With no end in sight.

      Move to Nebraska if you don’t like it.  Really, what makes you believe you have the right to push policy to prevent others from living here?

      I don’t disagree that California is over-populated in many parts of the state (for my preference), but there are lot of places on the planet that have tremendously higher population density.  The point is that you need to move to places where it fits your interests and move away if the community changes so that it no longer fits your interests.

       

      1. Ron

        Jeff:  “Move to Nebraska if you don’t like it.  Really, what makes you believe you have the right to push policy to prevent others from living here?”

        Society at large has some say, in how much growth/development occurs.  It is not a “personal” decision.  Nor is it targeted at any individual (or hopefully, toward any particular group). But, factors might include infrastructure capacity, the environment, protection of the farming industry, etc.

        Anyone can move anywhere they want to.  It doesn’t mean that any given community has to (or should) respond to market demand.  If that’s your goal, maybe you should move to someplace that welcomes this type of planning.  Since that’s pretty much the “norm” in many areas, you shouldn’t have much trouble finding such a spot.

        It seems that you might be  referring to folks who don’t already live in California.  (Like the immigrants that you want to block.)

        1. Ron

          My computer crashed, before I completed editing my comment above.

          I also wanted to point out that many communities take steps to limit growth and development.  This is by no means unique to Davis.  Many of these place are frankly superior to Davis, in many ways.  Even if I never have the opportunity to live in such places, it doesn’t mean that I’d want them to screw it up by overbuilding (for the remote chance that it might provide a better opportunity for me to move there).

          In fact, even Yolo county as a whole as mitigation measures in place (e.g., protection of other farmland as housing is developed, urban limit lines, etc).  One can argue that this is limiting future growth/development, and is “preventing others” from moving to Yolo county.

  3. Ron

    Regarding rising rents, they’ve already been “plateauing” for a couple of years now, in the Bay Area.  Seems like housing trends occur there first, and then spread to the Sacramento area.

    https://www.sfchronicle.com/business/networth/article/Bay-Area-rents-plateauing-studies-confirm-9193894.php

    There’s lots of articles on the Internet, regarding the recent softening of the real estate market.  In such situations (where sales prices have already risen since the last housing crash, and interest rates are rising), it apparently can make more sense to rent:

    https://www.msn.com/en-us/money/markets/its-better-to-rent-than-to-buy-in-todays-housing-market/ar-BBMUsPs

  4. Richard McCann

    As an economist, I disagree with the findings of the UC report. Rent control has been found to suppress new housing development, and that it benefits middle and upper income tenants who tend to live in one location for longer periods of time. I have yet to see an empirical study that shows rent control is truly beneficial to a community. There are other solutions which are preferable. Of course we’ve gotten ourselves into this pickle locally by rejecting so many significant developments since 2000 in search of the “perfect.”

    1. Jeff M

      You are an economist?  God help us!

      But I agree with you on this based on my understanding of the data on the topic.  And I agree with you that the pursuit of perfect has been the enemy of the good related to our local housing supply.

  5. Ron

    I have yet to see anyone (accurately) allege that rent control “damages” the cities that have enacted it, or the renters who benefit from it.

    Seems like San Francisco is doing pretty well, as well as the current renters who have been there for awhile (and benefit from rent control).  But yeah, probably not the best place to move to, as the current version of rent control won’t help with that.

    In any case, I can’t imagine simultaneously being a long-term renter and opposing rent control. Maybe some folks like to shoot themselves in the foot, or they’ve wholeheartedly bought into the argument that developers (some of whom also happen to be large-scale landlords) will rescue them.

    1. David Greenwald

      Really seems like SF is doing pretty well?  Least affordable rent in the nation.  Lack of available housing.  How do you define pretty well in this instance?

      1. Ron

        “Least affordable rent” for those moving there.  Long-term renters, not so much.

        I know of someone who has outrageously low rent, in a very nice area. Bottom line is that it works, and does so brutally well.

        Has any survey been done, regarding the satisfaction and rental amounts of those who benefit from it?

        1. Ron

          “Selective benefit” is the basis of Affordable housing, as well.

          One difference is that in the case of rent control, the benefits can apply to anyone willing to stick it out for awhile.  (And, in the unlikely event that Proposition 10 passes, you won’t even necessarily need to do that!)

          In general, I view rent control as being somewhat similar (for renters), as Proposition 13 is (for owners).

        2. Ron

          Rent control has been around for some time, as well.  It is not a new or untested concept or policy, in some places.

          I haven’t looked into it, but doesn’t New York also have such policies? (In addition to San Francisco, Berkeley, etc.) If I’m not mistaken, I believe that Santa Cruz recently adopted something, as well.

        3. Ron

          Also – regarding rent control’s “cousin” – Affordable housing:

          “Despite Los Angeles’ new bond for homeless housing and recently-approved linkage fees, the surrounding county is at risk of losing $3 billion worth of affordable housing over the next half-decade, radio station KPCC reports.” 

          https://nextcity.org/daily/entry/why-los-angeles-county-could-lose-3-billion-in-affordable-housing

          Perhaps this a reason that much of the interest regarding rent control/Proposition 10 has apparently arisen in the Los Angeles area.

           

        4. Jeff M

          That is a good article Ron.

          And the state’s 2012 shutdown of city Redevelopment Agencies hasn’t helped matters. Those agencies were supposed to set aside 20 percent of their property tax revenues for affordable housing projects. In L.A., that translated to about $50 million annually, the city’s housing department recently told the Los Angeles Times.

          Compounding that loss, the city opted to spend state funds that would have gone to the agencies (before they were shut down) on city services such as law enforcement, firefighters and pensions, rather than on affordable housing, the paper reports.

          Again, as with so many other things wrong in this state… the culprit is the state Democrats and their public sector union benefactors.

        5. Jeff M

          In general, I view rent control as being somewhat similar (for renters), as Proposition 13 is (for owners).

          This is a reasonable point except for the fact that we live in a town hosting a world-class research university and thus we have a much higher than average turn-over of rental housing.

          It would be good to see the statistics on this, but those benefiting from rent control similarly to a property owner benefiting from Prop-13 are not your average Davis renter.

        6. Ron

          Jeff:  Your post brought up another consideration:  Don’t landlords (including large-scale apartment owners) benefit from Proposition 13?

          Not sure, but I assume that large-scale landlords benefit from the “commercial” property owner exclusion. Periodically, some politicians have been attempting to separate out the commercial exclusion, vs. residential exclusion. (But, those efforts have apparently failed so far.)

  6. Wesley Sagewalker

    Rent control is highly distortionary policy which, in my opinion, should be treated with much more caution than the authors of this paper adopt. Rent and housing prices do not need to inevitably rise; they are doing so due to decades of failure to build enough housing caused by a plethora of more well-meaning but ultimately distortionary policies. The authors claims that there is little research into the effects of rent control are laughable. In fact, this is one of the few policies (along with tariffs) that nearly every serious economists knows and understands to be bad. Even a cursory literature review would reveal well-researched papers using rigorous statistical modeling and analysis–not this slapdash undergraduate-quality work that relies on nothing but descriptive statistics. For Christ’s sake, they don’t even try to present a model of how their proposed policy would behave. Really, I see they got their degrees in city planning, but they should leave policy proposals (and analysis if they were ever so inclined to try it) to people with the skills to do it. Pulling some figures and graphs from some government reports that show that rent has increased while incomes haven’t is beyond banal. Duh! Anyone with more than pudding between their ears knows that if they have spent more than a week in California. They have attempted no inquiry into why this might have happened or what would in fact be a truly efficient solution. That a policy can be implemented quickly is not really a commendation. Anyway, this paper is empirically risible and just because it dresses up obvious conclusions with nifty graphical visualizations doesn’t give it any kind of intellectual heft.

  7. Howard P

    Some seem to confuse “rent-control” with “rent freezes”… article in the Bee today indicates the proposed “rent control” initiative in Sacratomato would limit rent increases to 2-5% per annum (based on CCI).  Hardly draconian unless inflation sky-rockets…

    When we were landlords (sf), we made sure the rent increases covered City utilities increases.  We already figured mortgage, taxes, allowance for maintenance, capital replacement, etc., etc. into the rent.  Anyone who doesn’t do so, should not be a landlord… too stupid.

     

  8. Gavin Putland

    VACANCY TAX: BETTER THAN RENT CONTROL

    Rent control doesn’t force owners to offer their properties “to let” at the allowed rent. Rent control doesn’t force land owners to build more housing. On the contrary, it discourages both, reducing the supply of housing and RAISING other rents. Exempting NEW buildings from rent control may avoid deterring construction, but it still doesn’t open up EXISTING buildings for tenants. Worse, it means that the stock of rent-controlled housing becomes a shrinking fraction of the whole housing stock — unless the exemption is only for a limited time, in which case you’re discouraging construction again!

    Will removing regulatory barriers to construction solve the problem? Not by itself, although it’s obviously a necessary condition. Cheaper housing requires developers, builders, and owners to increase supply to a point where it reduces their return on investment. They obviously won’t do that voluntarily. They will do it only if they are penalized for NOT doing it.

    SOLUTION:  Put a punitive tax on vacant lots and unoccupied housing, so that the owners can’t afford NOT to build housing and seek tenants. By reducing the owners’ ability to tolerate vacancies, a vacancy tax strengthens the bargaining position of tenants and therefore reduces rents. It yields both an *immediate* benefit, by pushing existing dwellings onto the rental market, and a *long-term* benefit, by encouraging construction.

    Such a tax, by reducing the cost of housing, would make it easier for employers to pay workers enough to live on. A similar tax on commercial property would reduce rents for job-creating enterprises. That’s GOOD FOR BUSINESS and GOOD FOR WORKERS.

    A vacancy tax is also GOOD FOR REALTORS because they get more rental-management fees for properties coming onto the rental market, plus commissions from any owners who decided to sell vacant properties to owner-occupants (who of course don’t pay the tax).

    Best of all, the need to avoid the vacancy tax would initiate economic activity, which would expand the bases of other taxes, allowing their rates to be reduced, so that the rest of the city/state/country gets a tax cut!

    Gavin R. Putland,
    grputland.tumblr.com .

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