What is Rent Control?
Apartment hunting is pretty stressful, especially if you’re trying to find an affordable one. If you’ve ever tried looking for a bargain while scanning through apartment listings, there is probably a phrase that you’re looking for: rent control!
While you might be familiar with the idea of rent control, there are probably some things that you might want to know about it. You might be wondering where and how you can find a rent-controlled apartment, or what happens once you move out, right?
What is Rent Control?
“Rent control” refers to legislation that sets limits on apartment rental rates. These laws can vary from one state to another, and are often enacted on a municipal level. The aim of rent control laws is to make housing more affordable to lower-income communities by placing a cap on the maximum allowable rent for a unit. The cap also applies to how much the rent can be increased per year.
Typically, rent control laws can be found in cities where there is intense competition in the housing market. When apartments are in high demand, rental prices generally soar in response, making many of these units inaccessible to people with limited financial resources. Thus, rent control laws are put in place to ensure that a portion of housing can still be affordable to these residents.
How Does Rent Control Work?
In the US, only four states currently have active rent control legislation in place, namely California, Maryland, New Jersey, and New York. Washington D.C. also has rent regulations in place. Each state has different guidelines for their rent control laws, however, all of them state that a property owner or landlord cannot increase the price of rent above a certain threshold.
There are generally two types of rent control:
- Vacancy control
Also known as “true rent control”. Landlords can only raise the rent when the current tenant moves out. However, any amount in increase must follow the limits set by the state’s rent control board.
- Vacancy decontrol
Landlords can increase the rent by either a certain percentage above the previous rent or to an amount that is still below market value. In some cases, the increase can also be according to the tenant’s income. However, the price increase is still subject to approval by the rent control board.
Now that you know the different types of rent control, let’s take a closer look at the specific rent control laws in San Francisco and New York!
Rent Control Laws in San Francisco
One of the things that San Francisco is known for is astronomical rental prices. The average rent in the city is almost three times the typical national rent! Luckily, there are rent control laws that help protect the tenants. In San Francisco, rent regulations state that:
- Rent price increases are capped at 7% maximum per year.
- Rent can only be increased every 12 months.
- Property owners cannot charge extra rent for roommates.
Rent Control Laws in New York
Since New York is known as the most expensive city in the USA, it’s not surprising that there are rent control laws in place to help protect residents from skyrocketing housing prices. In fact, New York has the longest-running rent laws in the country! Any F.R.I.E.N.D.S. fans would also know that Monica and Rachel can afford their apartment due to rent control.
New York actually has two types of rent regulation in place, namely:
- Rent Control
In NYC, rent control only applies to apartment tenants who have been living in the same unit since July 1, 1971. They may pass the unit onto a family member provided that they have lived in the apartment for at least two years.
If a landlord wishes to increase the rent on a rent controlled apartment in NYC, they can only do it every two years. What’s more, the increase is capped at 7.5% of the previous rent.
- Rent Stabilization
If the tenant of a rent controlled apartment has moved out and does not pass it on to a family member, the unit becomes “rent stabilized”. For these apartments, landlords can only increase rental prices by a percentage that is determined by the NYC Rent Guidelines Board.
Can Rent Still Increase for Rent-controlled Apartments?
Technically, yes. However, any rent increase must follow the guidelines set by the city or state’s rent regulation board. Landlords cannot arbitrarily increase the rent prices or they can be subjected to fines or lawsuits.
Who Determines Rent Control Rules?
Each city that has rent control legislation has an official rent board. Typically, this board meets each year to determine how much landlords can increase the rent in their city.
Pros of Rent Control
Here are some of the pros of rent control that you will enjoy as a tenant:
The most obvious benefit of rent control is that it makes housing affordable. Even if the average rental prices of surrounding neighborhoods go up, you won’t have to worry about suddenly not being able to pay your rent.
What’s more, since you won’t have to worry about sudden rental price increases, you’ll be able to manage your finances better.
Repeated Lease Renewal
If you are assured that your rent price won’t increase, you’ll have more incentive to stay in a particular apartment. This is also beneficial to the landlord, since they won’t need to worry about finding a new tenant for their apartment.
Generally, people who live in rent controlled apartments tend to have a strong community spirit since they’ve stayed in the area for so long. This gives people a chance to get to know each other and invest in their neighborhood.
Cons of Rent Control
As a tenant, you might already think that there are no downsides to rent control. However, there are a few drawbacks that you should consider.
Subpar Housing Conditions
One of the biggest drawbacks to rent controlled units is that they are often poorly maintained. Since landlords cannot raise rent to cover repair and maintenance costs, the units can fall into disrepair.
In some cases, shady landlords will even purposefully withhold any repairs and maintenance to force the current tenants out. This is illegal, of course!
No Incentives to Develop the Building
As with poor housing conditions, landlords will not have the resources or the incentive to invest in the buildings. This is why many rent controlled apartments are found in older buildings with fewer amenities.
Less Available Housing Options
There are property owners who choose to convert vacant rent-controlled apartments into condos so that these units can be priced at market-rate. This results in fewer affordable housing options altogether.
How Can I Find a Rent-controlled Apartment?
There are two possible ways to get a rent-controlled apartment:
- Inheriting the apartment
As mentioned above, a current tenant can pass on a rent-controlled apartment to a new tenant at the same rental price, provided that they are either family or the new tenant has lived in the unit for at least two years. However, the rules for inheriting a rent-controlled apartment can vary from city to city. Make sure that you fit the criteria before you try to apply as the next tenant!
- Subletting the apartment
In NYC specifically, rent stabilized apartments can be sublet. For rent-controlled apartments, however, the lease must contain a clause permitting subletting for it to be an option.
Can I apply for a rent controlled apartment even if I do not fit the criteria?
Generally, it would be a waste of time and money to apply for a rent-controlled apartment if you do not meet the qualifications. That being said, there are times you might get lucky with an understanding landlord.
What protections do I have when renting a rent-controlled apartment?
If you have a signed lease, you will be entitled to the same renter rights under state law.
Rent control is a great option if it is available to you; it allows you to have an affordable apartment in large cities. However, these types of units are not for everyone, especially if you are looking for a newer apartment or a building with modern amenities.