Two words: rent control.
Since Monica inherited the 1,125 square-foot rent-controlled apartment from her grandmother, she and her roommate benefited by paying only $200 a month for a pad that would go for around $4,500 in 2017.
While rent control situations like Monica and Rachel’s might seem like a dream come true for some, others believe it’s an unfair practice that hurts the communities it was created to help.
Help or hindrance?
Apartments have long provided people a flexible and affordable housing option but as the number of renters continues to rise, it’s becoming increasingly difficult for many families throughout the country to find quality rental housing that’s affordable.
Rent-control laws were designed to set a cap on rents and limit or prohibit landlords and property owners from raising rents. What was meant to improve housing affordability, especially in high-priced cities like New York City, San Francisco and Washington D.C., may be doing the exact opposite, according to research.
Instead, rent control exacerbates affordable housing shortages, benefits higher-income households and allows landlords to let their buildings deteriorate, according to research conducted by Dr. Lisa Sturtevant for the National Multifamily Housing Council.
“According to the basic theory of supply and demand, rent control causes housing shortages that reduce the number of low-income people who can live in a city,” Noah Smith writes for Bloomberg. “Even worse, rent control will tend to raise demand for housing – and therefore, rents – in other areas.”
The pitfalls of low rent
With rent-controlled units, landlords have little incentive to invest in their properties if they’re not getting the market rate. That doesn’t mean landlords can skirt their responsibilities as there are ordinances and requirements that landlords must adhere to when it comes to maintaining their buildings.
Still, without appropriate incentives or requirements, landlords of rent-controlled buildings will be unlikely to make improvements to buildings, according to Sturtevant’s findings.
Also, tenants who live in rent-controlled units may choose to continue to live in them, even if the units are too small, too large or not in the right location – they don’t want to give up such low rent.
Finding a rent-controlled apartment
Only a handful of states even have rent-control policies in place: California, New York, Maryland, New Jersey and the District of Columbia. Even within those states, it might be challenging to find a rent-controlled apartment.
In 2017, there were just over 21,000 rent-controlled units in New York City, according to a city survey published in February. And actually getting in one is impossible unless you’re already living there with a relative on the lease.
You’re better off looking for a rent-stabilized apartment, meaning the landlord can only raise the rent by a certain percentage while you’re living there. The same survey mentioned above showed there were 966,000 rent-stabilized apartments in 2017, approximately 44 percent of the rental stock in New York City.