The ABCs of Rent-Controlled Apartments

“Rent control” refers to a state government’s decision to limit the rent a landlord can charge. In simpler terms, if a tenant in Texas pays $1,000 a month living in a rent-controlled apartment, it’s illegal for the landlord to charge them more than that in the future. Of course, since each state has different costs of living, each one’s definition of “rent control” differs significantly. For instance, the New York state government allows this kind of renting only when family members are renting the unit in question. Other crucial regulations like a building’s date of construction will also determine the legality and continuity of rent control. If the set regulations and guidelines aren’t met, the rental apartments in question will be listed at market value.

Why Do People Prefer Rent Control?

The main reason why most people prefer rent control is that it keeps rent prices lower. Without rent control, tenants could be forced to pay more over time, especially if the area their current home is located in becomes more popular. If they fail to pay the hiked rent, they’ll be forced to move to another location. Doing so several times can be costly and disadvantageous, to say the least.

Another reason many people appreciate rent control is that it gives lower-income tenants access to more homes. Such tenants not only experience challenges keeping a home but also securing another one after eviction.

Advantages of Rent-Control

There are several advantages of rent control. Some of them include:

Saving Tenants Money

The main advantage of rent control is that it saves tenants more over the years. Most renters have been subjected to hefty rent increases at some point in their lives – but since rent control limits the amount of legal increase, less tenants are being subjected to big hikes that might otherwise affect their financial position. There are even some rental properties that can increase rent by as much as 10 percent every year. This makes it very difficult for an individual to live in that property without a job change or significant pay raise. Such predicaments are prevented by rent control.

In short, rent control offers a form of stability for renters. As a result, they can plan their futures out more comfortably knowing that they’ll pay a fixed amount for several years to come.

Higher Chances of Lease Renewal

Since the amount of rent is fixed under rent control laws, tenants are more likely to stay in rent-controlled property for longer periods of time than they normally might. Relocating to a new building or city will mean risking a significant increase in the amount of rent they pay. This is also advantageous for property managers and landlords, who won’t have to worry about dealing with costly and hectic vacancies every year.

Cons of Rent Control

As much as rent control is preferred by many people and boasts of several advantages, it also comes with a few setbacks. For instance:

Prices Fall Below Market Value

In most cases, rent-controlled houses and apartments fall below market rates. The longer the apartment or house is rent-controlled, the further it usually falls behind. The biggest victims here are the landlords, who may not generate as much income as they need to maintain the building. This can lead to things like frequently postponing tenant-requested repairs in the hopes of cutting back costs.

No Incentive to Upgrade

Usually, landlords regularly update their property by remodeling and installing new appliances to keep existing tenants or attract new ones. When a home has new appliances and improved amenities, the landlord can easily increase rent to make up for the expenses. This only sounds fair because the tenant will be enjoying more comfort. However, with rent control laws, the drive and incentive to upgrade the property decreases significantly. Even when the landlord upgrades the kitchen appliances to modern ones and gets a new carpet, they will not be allowed to increase rent. As a result, they’ll often shy away from implementing updates both big and small, which can cause the entire building to deteriorate over time.

Older Buildings

Even though rent control mostly favors tenants, it’s important to note that most rent-controlled apartments are older buildings. While you might save a good amount of money living in such apartments, you won’t enjoy the same amenities and comfort offered in their pricier, non-rent-controlled counterparts. In most states, rent control laws apply to buildings built before 1985. This means that the building has been in existence for over three decades. Therefore, if you want to enjoy rent-controlled apartments, you’ll probably have to warm up to the thought of living in an old unit.

Discourages New Construction

Developers and investors are more likely to be interested in building new apartments and homes in locations where rent control laws don’t apply. If the unit they intend to build is likely to be subjected to such laws, they will lose the incentive to build. For better or worse, most people invest in real estate with the main goal of enjoying financial benefits. With such benefits put in the hands of the state governments, many shy away from investing and building. As a result, such areas will remain untapped.