OPINION: Understanding Rent Control

What is rent control, how does it work, and could it benefit Seattle?

by Natalie Barry

Earlier this spring, Kshama Sawant and the Seattle Renters Commission repeated calls for a citywide rent control ordinance and economic eviction assistance. In letters to the City Council, they specifically called for a repeal of the rent control ban on the city level, and an extension of the 30-day rent increase notice period, requiring landlords to inform tenants 180 days before increasing rents.

Today, a full-time minimum-wage worker cannot afford a one-bedroom apartment in 99 percent of counties nationwide. In a historic moment in late February, Oregon passed the first statewide rent control bill in the nation, demonstrating a real attempt to disrupt power structures that oppress large swaths of people in our country and their ability to access affordable housing.

Kate Dunphy, the Deputy Director of The Tenants Union of Washington State, says that country-wide policymakers “grapple with a worsening displacement and affordability crisis in which nearly half of all renters pay too much on housing and at least 6,300 families face eviction every day.”

As the housing affordability crisis develops not only in Seattle but around the country, advocates for and against rent control are engaging in increasingly contentious and expensive political campaigns.

Rent control is one of many issues that invites conflict, misinformation, and political donations to the legislative bargaining table, and by continuing to prioritize voices that advocate for those who already have wealth and power, we neglect to address the calls for massive and institutional reform.

In an age where information is dictated by those who are paying for it to be disseminated, it can be hard to distinguish between campaigns that are meant to fool the target masses and those that are designed to cut through widespread and well-funded lies.

Simply put, rent control will most often link rent increases with inflation, and limit yearly increases on rent prices to a certain percentage. Rent regulations more broadly come in many different shapes and vary state-by-state, but rent control generally behaves like this.

What are the arguments for and against rent control?

Opponents argue that rent control does more harm than good when used to address a shortage of affordable housing. They generally argue from an “economics 101”, supply-and-demand understanding of the housing market, viewing private property as a commodity, rather than seeing housing as a human right.

They would say that rent regulations increase the cost of developing housing and, by extension, hinder development. Rent control would then cut the total supply of housing available, raising the prices of all the units in the area in the long run.

“Rent control is a disincentive for housing production,” Roger Valdez of Seattle for Growth said in a Forbes opinion piece. “If we try to control all rents, we’ll see less housing built — fewer units mean higher prices.”

He’s not alone in this perspective, as he is joined by some of the most prominent and influential opponents to rent control across the nation, and even some well-known economists. This includes members of the real estate lobby; like the Rental Housing Association of Washington, national property management and equity firms like Blackstone, which recently invested $12 million against defeating Prop 10 in California, and the Washington Landlord Association, which explicitly serves the interests of landlords while simultaneously managing a PAC to impact legislation.

Opposition to California’s Prop 10, a lift of their ban on rent control, had “as much as $60 million” backing the cause. Wall street investment firms pooled their money to defeat the $22 million grassroots campaign waged by “over 150 housing advocacy, community, political and faith-based organizations”.

The proponents of rent regulations, say rent control stems rising rents and displacement, particularly for seniors, low-income tenants, communities of color, immigrants and women. Supporters argue that affordable housing is a human right, and that rent control specifically, when used in tandem with other policies, is one of the best tools to fight displacement and ensure that tenant rights are protected and prioritized.

They argue that supply-demand economics fail to acknowledge important aspects of how the relationship between people and housing actually works, and that “corporate greed” dominates the spectra of reasons why rent control is illegal.

Kshama Sawant is one of the most prominent advocates for rent control in Washington State, and she is joined by a myriad of advocacy organizations, including the Tenants Union of Washington, WA Representative Nicole Macri, Socialist Alternative, WashingtonCAN, Gender Justice League, Seattle Renters Commission and many others.

A report issued by Policy Link, center for Popular Democracy, and the Right to the City Alliance, addresses the short term and long term benefits of enacting rent control. The report said that current rent control and tenant protection policies on the table could stabilize 12.7 million renter houses if enacted. If every single state nationwide enacted rent control, 42 million households would be stabilized.

If the potential benefits of rent control include widespread stabilization, how and why did rent control become illegal in Washington state?

In 1980, just a year before the rent control ban passed in Olympia, Seattle voters rejected an initiative to enact rent control for reasons that are multifaceted and situational. The Seattle initiative was the “most costly political campaign in Seattle’s history at the time.” The opposition invested hundreds of thousands of dollars into making sure that it never came to fruition. At the same time on a national scale, another arm of the same sociopolitical landscape that welcomed Ronald Reagan into its folds, was just beginning to accept an unbridled trust in free market capitalism as a solution to growing inequality.

Seattle was not ideologically immune to the wave of deregulation that accompanied the beginning of the Reagan era, and rejecting rent regulations at the city level was just one of the roadblocks the tenants movement of Washington faced. The following roadblock proved to be much larger and far more damaging and insidious.

When the statewide ban on rent control that was backed by pro-developer lobbyists passed in 1981, the bill successfully restricted cities and localities in the state from enacting any form of rental regulations. This meant that from that point forward, landlords, property managers and developers of the real-estate industry had acquired unlimited discretion to unilaterally determine rent prices for their tenants.

Washington is not alone. As of now, a grand total of 35 states nationwide preemptively outlaw rent regulations in the form of a ban on rent control at the state level. Part of this has to do with the amount of money spent on inflammatory advertising programs that create and dramatize potential consequences of rent control.

For example, realtors’ lobby of Illinois argued that rent control as a solution had been “discredited by most economists”, and that if the rent control ban were repealed a myriad of horrible consequences would ensue; the availability of rental property would drop, property values would crash, investors would completely lose interest in development, and existing property would cease to be maintained at the cost of improvement.

The claims that members of the real estate lobby make against rent control on behalf of the ban are strikingly bold, and almost entirely issued by the same groups that benefit from the ban. Posing such virulent consequences as the inevitable result of repealing the ban, is at its best melodramatic. At its worst, it’s indicative of the biggest failure of neoliberalism in the form of self-serving legislation that exclusively benefits the wealthy and the powerful, at the expensive of folks without the funding to engage at the bargaining table with wall street firms.

Neoliberalism offers a picture of money at the top eventually serving people that typically lack resources. As the fight surrounding rent control demonstrates, this isn’t how it plays out. Under the guise of a government infringing on private property rights by regulating rent prices, and lobbyists with useful and lucrative connections to public institutions, lies a rent control ban that on its face, protects the interests of the wealthy and the powerful.

Does rent control actually work, instances of success and instances of failure?

The question of whether or not rent control works is a hard one to answer, since we are collectively fed the story that every instance of when it has been tried was a massive failure because of a flawed idea. Research suggests however, contrary to the mainstream understanding of rent control, that it wasn’t a flawed idea that made rent control fail in the places where it was implemented, but rather loopholes that were bargained for by lobbyists from the real estate industry.

For example, the Rental Housing Association of Washington (RHAWA) argues that a study published about the effects of rent control in San Francisco “speak for themselves.” Remember that RHAWA played a large part in banning rent control in Washington state with political donations to the campaign for the ban that passed in 1981. Now, on their website, they claim that rent control is a failed policy, does more harm than good, and discourages the production of rental inventory to meet demand. In fact, when read differently, the very same study speaks to something completely different.

The study of San Francisco showed in fact an “increased likelihood that a long-term tenant would be able to stay in their home”, and reduced rates of displacement, but an accompanying 15 percent reduction in rental housing supply. The study suggest that this was a result of landlords removing their properties from the rent-controlled supply in order to sidestep the rules that prevented them from upcharging their tenants. Even the summary offered by the researchers who conducted the study however, says that rent control “offered large benefits to covered tenants.” In short, it was the ability of landlords to exempt themselves from rent control regulations that created the negative consequences that were exhibited from rent control regulations in SF.

In Massachusetts, we have a clear example of what happens when a state that had rent control regulations, deregulates entirely. This New York Times article from 2000, finds that five years after Massachusetts ended rent regulation in Boston, Brookline and Cambridge, rents took sizable jumps, “the cities are spiffier and less pockmarked by deteriorating neighborhoods” and that many low-income communities were forced to move farther from the urban core. This further demonstrates that rent control protects against displacement and gentrification.

Could it work for Seattle, and what would it look like here?

Research suggests that the primary reason that rent control regulations have failed to succeed in their entirety is because of the loopholes that the real estate industry managed to create for themselves to work around the regulations. The power of the real estate industry also accounts for the malleable takeaways with regards to instances of success and failure of rent regulations across the nation.

If and when the rent control ban is eventually lifted in favor of protecting tenants from rent exploitation, rent regulations must be crafted with the past in mind. Rent control could stabilize just over 1 million estimated households in Washington alone if enacted effectively. The report released in February details important ways to support the road to tenant protections in the short and long term; strengthen, expand, and protect rent control in the states where it exists, establish rent control in more states, and support tenant organizing in every community.

The report also details four fundamental principles for rent control to be enacted effectively: ensure maximum coverage of rental homes, pair rent control with robust tenant protections and systems, maximize long-term affordability, and tenants should play a central role in program design and implementation of tenant protections and regulations.

Many local advocacy organizations and nonprofits are already working towards shifting balances of power towards renters, and away from landlords and the real estate industry. These folks who are already working to address issues of housing justice see the problem as one comprised of many separate but intertwined issues that all exacerbate the problem.

Gina Owens is an activist and organizer with Washington CAN, a grassroots organization that organizes around housing justice among other things, and speaks to the organizations work around housing justice. She cites exorbitant move-in fees and resource discrimination. Erin Fenner of Washington CAN spoke about large-scale bureaucratic barriers to housing, about massive wealth inequality, about tenant insecurity, and about public spaces that aren’t designed for low-income folks or people of color.

The Tenants Union of Washington State cites application fees along with the costly and arduous process of applying for housing. Sawant cites the investing and financial speculation procedure that drives up rent prices, and the political power of the real estate lobby to fund conservative politicians that oppose legislation like rent control.

In addition to supporting the abolition of the ban on rent control and eviction reform, it is also critical that we support folks working on the ground in all capacities to support our community. Groups like STOP who organize tenants against Section 8 housing discrimination, groups like the Housing Justice Project that provides volunteer legal services to people facing eviction.

As Fenner of Washington CAN puts it, “When we see renter protections enacted across the state and across the country, we see people have more power. We need to have developers commit to building affordable housing. We need to protect tenant stability in their neighborhoods via eviction reform. We need to provide tenants with a modicum of stability; with rent control.”

Featured image by Tony Hoffman.

3 thoughts on “OPINION: Understanding Rent Control”

  1. If someone moves out because of a rent increase, and someone else moves in, why is the person who could pay less more entitled to the unit than the person who could pay more?

  2. I don’t know what Seattle would do, but Portland’s 7% a year is laughable. If they can not do more, landlords will raise rents as close to 7% every year as they can expect to get without tenant moving out. So, in 4 years, that is about 30%. The article says that rents in Portland went up 25% in 4 years. that is better than 7% a year.

    So, how does this help tenants? Plus, landlords will start higher if they know they can not raise rents, which will result in units sitting vacant until they get it, or it will result in wealthier renters to pay more than market rate, knowing that it will not go up much for years. But the less wealthy tenants will nto be able to, so they will be shut out.

    So, tenants get to stay, but see their rent go up every year. new renters will have to pay more. talk about opposite unintended consequences.