The recent approval of rent control that was passed in California this past week has many alarmed. For those in the real estate industry it is easy to understand why this law will do nothing but devastate our industry and hurt our economy.
Back in April there had been talk of this here in Boston, but since last April it seems to have fizzled since then. Let’s keep our fingers crossed it stays that way and we are able to steer clear of this terrible law.
Rent control:
- Dissuades people from investing in property
- Discourages existing landlords from staying in the business because they can’t keep up with maintaining their properties up to standards when they can’t make more money from rent
- Makes building housing even more difficult
- Hurts tenants in the long run
As Anthony explains, putting more fees in place on builders, and putting requirements in place to make it more difficult to build is only driving up building costs. This is exactly what discourages builders and investors from creating more units.
As stated in REALTOR Magazine by the The National Association of REALTORS®,
“Rent control negatively affects the housing inventory by hastening the deterioration and loss of existing housing. By lowering the value of rental property, rent control affects a community’s tax base by causing a disproportionate shift of tax burden to other real estate and potentially curtails vital municipal services. The expense of complying with rent control laws and regulations inevitably increases the cost of housing to the consumer, and the expense of enforcing rent controls adds to the cost of local government.”
The NAR’s white paper report explains the many negative impacts of rent control through studies and research. Check out their findings here.
Rent control has been a long-heated debate especially recently, but one thing is for certain – it is a terrible idea that will only hurt renters, builders, investors and the economy.