Rent Control: What It Means For The Real Estate Marketplace

Rental rates continue to rise year over year, with a vast majority of the nation’s 100 largest cities seeing increases. For tenants, the first question that often comes to mind is: "Is this even legal?!" The short answer is yes, unless you live in an area that has rent-control or rent-stabilization acts in place. And rent control probably isn’t going anywhere — a report from late last year indicated that there was not a single location in the country where someone working a full-time minimum wage job could afford to rent a two-bedroom apartment.

But what exactly is rent control, anyway? The topic seems to be making headlines regularly. People typically picture one of two things: Tenants imagine beautiful apartments at below market value (think the Friends apartment), while landlords think of reduced profits and lost incentives. Straight out of the dictionary, rent control is the government regulation of the amount charged as rent for housing. In other words, rent control is a program that places limits on how much landlords may raise rent on existing tenants.

Rent control is a controversial subject, and the lack of affordable housing in many major markets is once again bringing this issue to a head. Like any other social issue, rent control has two sides, and as a real estate investor, it is important to understand both.

Rent Control Pros