Two-thirds of housing providers say they would not consider investing in markets with strict rent control policies, new research from the National Apartment Association (NAA) finds. Highlighting the unintended and detrimental consequences of rent control, the research conducted by NDP Analytics and commissioned by NAA also found that 70% of housing providers say rent control impacts their investment and development plans.
"As rent control policies become more widespread, housing providers are finding themselves in a difficult position. Without the ability to make up for increasing operations costs and adjust rent in accordance with market volatility, there is little incentive to invest into developing new apartments,” says Leah Cuffy, NAA’s director of advocacy research. “This stagnation of investment and development for new housing could ultimately lead to the loss of critically needed rental housing in rent-controlled markets."
NAA reports that housing providers are faced with the financial strain of absorbing essential maintenance costs when rent control is in effect. There is also a reduction in improvements and nonessential maintenance investments. Because of this, 54% of housing providers say they would consider selling some assets in markets with rent control.
“NAA’s latest research aligns with decades of data and real-life case studies that all lead to the same conclusion: Rent control is a failed policy that brings more harm than relief to local communities,” says Bob Pinnegar, NAA president and CEO.
“It’s not surprising that policies that make it harder for housing providers to do their jobs lead to less housing options. It is past time for our elected officials at all levels of government to shift their focus to policies that address housing supply issues and are targeted to the households most in need of support.”
Three-quarters of the respondents indicated a desire for policies that increase funding for local programs by attracting more residential and commercial development.
"Rent control is not the solution it appears to be on the surface,” adds Cuffy. “While well intended, these policies have been proven to work against their intended purpose and ultimately hurt renters, housing providers, and communities. This research explains the unsettling truths about rent control, which are important to recognize in housing affordability discussions.”
The research is a result of extensive interviews conducted by NPD with housing providers and developers to better understand the implications of rent control. The interviews encompassed three markets affected by state or local policies: St. Paul, Minnesota; Santa Ana/Santa Barbara, California; and Portland/Eugene, Oregon. The research was also supplemented with an online opinion poll that gauged public perceptions of rent control.
