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The strongest opposition to rent control comes from landlords and the real estate lobby. Following are some of the arguments typically made against rent control, along with counterarguments:
Against: Public policies should not interfere with
the functioning of the free market or property rights of owners.
For: The free market does not operate in a fair and efficient manner in providing for everyone's well-being or compensate for extreme inequities in income and wealth. For most of the past century, private housing developers have consistently failed to provide a sufficient supply of decent affordable housing. In fact, virtually all of the low-income housing built during the past half century has been constructed with public subsidies or built by non-profit organizations. Furthermore, contemporary rent control laws are "moderate" in that they provide for rent increases that cover operating costs, provide a fair rate of return on the landlord's investment, and often exempt new construction.
Against: Rent control leads to greater deterioration and abandonment of rental property by reducing the amount of income available to landlords for repairs and maintenance, making it more economical to abandon the building.
For: The major causes of housing deterioration and abandonment are due to factors associated with the decline of urban economies generally, including the disappearance of manufacturing; a sharp drop in employment opportunities; rapid turnovers and declines in population; lack of new business investments; redlining by banks and insurance companies; crime; and poor municipal enforcement of housing codes. Furthermore, there is no evidence of significant abandonment in Santa Monica, Berkeley, and the other 14 California cities with rent control, or in the 120 rent-controlled communities in New Jersey.Conversely, abandonment has been prevalent in cities without rent control, such as Detroit, Cleveland, East St. Louis, St. Louis, and Chicago. In addition, almost all rent control laws deal with this issue by providing landlords with incentives to make improvements and requiring compliance with local health and safety codes. (For an exhaustive study of rent control's impact on maintenance, see Gilderbloom readings in the Resources section.)
Against: Rent control discourages new construction.
For: A multitude of factors influence new construction, including zoning and building codes; interest rates; cost of land and labor; vacancy rates; and others. In New Jersey , the most heavily rent-controlled state in the country, there has been no significant difference in the rate of new construction in rent-controlled vs. non-rent controlled communities. And, in New York State , there was actually more construction in rent-controlled cities. Moreover, the issue of new construction can be addressed in the rent control law itself by exempting it from rent control, as long as the law also contains anti-eviction protections for tenants in existing housing. In New Jersey , state law exempts new construction from rent control. (For additional discussion of arguments on both sides of this issue, see Downs , Barretto, Gilderbloom and Vitaliano readings in the Resources section).
Against: Rent control shifts property tax burdens
to non-rent-controlled properties because it limits landlord income, depressing
the value of the property, thereby reducing assessments and shifting the
tax burden to businesses and individual homeowners.
For: The fact that rent control limits the amount of income a landlord can receive does not mean that there is a decline in the value of rental property; the value simply does not increase as greatly as it could without rent control. A number of studies show that apartments significantly appreciate in value whether or not they are rent controlled, and that rent control is not a major variable in causing tax shifts. Tax shifts occur as frequently in both rent controlled and non-rent controlled communities for a variety of reasons other than rent control. (For further discussion of this issue, see Gilderbloom and Kahn readings in the Resources section).
Against: Rent control provides an unnecessary subsidy
to non-poor tenants.
For: Some middle-income and affluent tenants do benefit from rent control, but this is true of any social policy that provides universal coverage. For example, the mortgage interest deduction on federal tax returns is available to all homeowners regardless of income. As a result, wealthy homeowners also receive this tax subsidy and it is often much greater due to larger mortgages and the ownership of more than one home. More importantly, the overwhelming majority of tenants is not affluent, but rather of low and moderate income. The average tenant income is almost half that of the average homeowner's. In California , Massachusetts , New Jersey and New York , nearly half of all tenants cannot afford the average cost of a two-bedroom apartment.
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