10 Unintended Consequences of Rent Control Policies 
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4 minute read

1. Reduces the incentive to develop new rental housing.

When housing providers are not able to increase rents to keep up with rising costs, they are less likely to develop in markets that have rent control. This lack of development can further exacerbate the shortage of rental housing. More than 70% of housing providers have or expect to reduce development in rent-controlled markets by scaling back plans, shifting to other markets or canceling plans altogether.

2. Discourages investment. 

By capping rent prices, rent control decreases the value of a rental property and discourages investment in the rental market. Sixty-seven percent of housing providers say they would “absolutely not” invest in another market with strict rent control policies.

3. Reduces property taxes. 

Rent control reduces the amount of property taxes housing providers have to pay. This is because rent control limits the amount of rent that housing providers can charge, which in turn reduces the value of their property. As a result, owners pay less property taxes and the government ultimately collects less revenue. Property taxes are an essential source of tax revenue for local governments as they fund infrastructure, schools, parks, transportation and other needs. The vast majority (75%) of Americans who want to better fund local programs are looking for policies that attract more residential and commercial development.

4. Deters maintenance and improvement spending.

With rent control in effect, housing providers are faced with the difficult financial strain of absorbing essential maintenance costs and are forced to reduce investments in improvements and nonessential maintenance. Over 60% of housing providers have deferred or expect to defer nonessential maintenance and improvements due to rent control.

5. Pressures housing providers to sell.

With the mounting costs of doing business, housing providers are feeling a great strain trying to stay afloat under rent control policies. Some examples of these increased costs are insurance, labor, utilities, installation and construction services, and accounting and reporting costs related to rent control. Without the ability to adjust rent to cover increasing costs, 54% of housing providers say they expect to sell some assets or may consider it as a result of rent control.

6. Subsidizes high-income residents.

Rent control policies are often misunderstood as helping only lower-income households, but these same policies also subsidize high-income residents. Half of Americans misunderstand rent control policies and believe that these policies provide housing assistance low- and moderate-
income households only. However, 58% of housing providers know of higher-income residents who benefit from these policies.

7. Decreases housing options for low-income individuals and families.

Due to under-market rates, renters in rent controlled properties have less incentive to move as their lifestyles change. In an unregulated market, households often look to upgrade housing when they realize increased income or expand their families. In a regulated market, those households often choose to stay put longer, reducing mobility and housing options. 

8. Small landlords are the most likely to be hurt by rent control.

Smaller housing providers are often disproportionately impacted by rent control policies because they have fewer resources available to manage sharp operational cost increases.

9. Rent control does nothing to aid those who want to enter the rental market. 

Rent control can have a negative effect on those outside of the current rental market. By limiting availability for potential renters and reducing incentives for housing providers to develop new rentals, these policies lack benefits for those in greatest need of housing solutions. A poll of Americans revealed that half of respondents feel there are insufficient options available. This sentiment was strongest among those with lower incomes (53%).

10. Risks encouraging  residents to illegally sublet apartments for profit.

Rent control may encourage residents to sublet units at market rates for profit, rather than living in the unit themselves. Subletting can lead to overcrowding in apartment properties. This is because residents who are subletting units may be inclined to pack as many people into the unit as possible in order to maximize their profits. This can create a number of problems, including safety concerns, noise complaints 
and a general decline in the quality of life 
for all residents. 


Leah Cuffy is the Director of Advocacy Research for NAA.