The Hidden Cost of Regulations: How Policies Are Driving Up Rent

The Big Picture

America’s housing affordability crisis is a growing challenge, impacting millions of renters across communities nationwide. To better understand the financial impacts of rental regulations, the National Apartment Association (NAA) and the National Multifamily Housing Council (NMHC) cosponsored two studies conducted by Metrosight that provide data-driven insights for policymakers and housing providers.

The first study, Behind the Cost of Rent, quantified how specific regulations such as source-of-income laws, just-cause eviction laws and right-to-counsel statues and resident screening restrictions increase operational costs and reduce revenues for housing providers. Building on this foundation, a new study, Regulation and Rents, examined whether these increased costs lead to higher rents. The findings are clear and show that these regulations lead to higher rents, particularly for lower-income renters and residents of smaller multifamily properties.

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MetroSight’s analysis used two robust datasets, CoStar Group’s market level rent data and the U.S. Census Bureau’s American Community Survey (ACS), to measure how rents changed over time in areas with and without these regulations. The CoStar dataset, covering 391 U.S. metros from 2000 to 2024, focuses on professionally managed properties, while the ACS dataset, spanning 307 metros from 2005 to 2023, captures a broader range of rental housing, including smaller and subsidized units. Both datasets produced consistent, statistically significant results, reinforcing the credibility of the findings.

Key Findings

• Source-of-income regulations increase rents between 5.2% and 5.3%, or about $876 to $1,104 annually per unit.
• Just-cause eviction laws and right-to-counsel statues increase rents between 5.9% and 6.3%, or about $1,092 to $1,224 annually per unit.
• Criminal and resident screening laws increase rents between 1.5% and 3.4%, or about $252 to $708 annually per unit.
• Rent increases tied to these regulations disproportionately affect lower-income households.
• Residents of two- to four-unit buildings experience the largest rent increases. These properties, often owned by smaller housing providers, are less able to absorb the additional costs of regulatory compliance, leading to higher rents for renters.

Americans Need Real Solutions for Housing Affordability

The findings of these studies make it clear that addressing America’s housing affordability crisis requires a comprehensive, bipartisan approach with real, sustainable solutions. While increasing housing supply is the most effective long-term solution, we must also provide more immediate support to renters and ensure that policies do not unintentionally exacerbate the problem.

NAA commends Congress for recent legislative efforts, such as the expansion of the Low-Income Housing Tax Credit and the Senate Banking Committee’s approval of the Renewing Opportunity in the American Dream (ROAD) to Housing Act of 2025. These measures represent significant progress, but more work is needed. To address the root causes of the affordability crisis and create meaningful change, NAA urges Congress to prioritize the following actions:

1. Expand Housing Supply
2. Modernize Housing Assistance

Increasing the supply of housing at all price points is the most effective way to address the affordability crisis. NAA urges Congress to focus on reducing regulatory barriers and incentivizing development through the following measures:

• Identifying Regulatory Barriers to Housing Supply Act [NAA Priority]: This bipartisan bill (H.R. 4659/S. 2416) would require Community Development Block Grant (CDBG) recipients to report on efforts to remove discriminatory land use policies and promote inclusive housing development.
• Build More Housing Near Transit Act: This bipartisan legislation (H.R. 4576/S. 2363) would direct the U.S. Department of Transportation (DOT) to incentivize local governments to promote housing development and regional growth near transit corridors.
• Housing Supply Frameworks Act: This bipartisan bill (H.R. 2840/S. 1299) would direct the U.S. Department of Housing and Urban Development (HUD) to publish guidelines and best practices for state and local zoning frameworks to encourage housing development.
• Accelerating Home Building Act of 2025: This legislation (S. 2361) would establish a HUD-administered grant program to fund the creation of pattern books for pre-reviewed construction designs, with a focus on missing middle and infill construction.
• TIFIA Reform: Reforming the Transportation Infrastructure Finance and Innovation Act (TIFIA) to include housing underwriting standards would unlock $70 billion in below-market lending authority for transit-oriented housing development.
• Workforce Housing Tax Credit Act: This bipartisan legislation (H.R. 6686/S. 3425) would establish a new tax credit to produce affordable rental housing for households earning 100% or less of the area median income (AMI), addressing the housing needs of essential workers like teachers, firefighters and nurses.
• Revitalizing Downtowns and Main Streets Act: This bipartisan bill (H.R. 2410) would provide a 20% tax credit to convert office buildings, hotels and retail spaces into affordable rental housing, creating jobs and boosting local property tax revenues.
• Reduce Basis Increase Thresholds: Congress should lower the basis increase necessary to qualify multifamily rehabilitation projects for Opportunity Zone benefits to no higher than 50%, making it easier to rehabilitate and preserve existing properties.

To provide immediate relief to renters, we encourage Congress to fund, revitalize and streamline housing assistance programs:

• Choice in Affordable Housing Act of 2025 [NAA Priority]: This bipartisan bill (H.R. 1981/S. 890) would address overlapping and redundant programmatic procedures that deter housing providers from participating in the Housing Choice Voucher (HCV) program.
• HUD Funding: Fully funding HUD programs like Housing Choice Vouchers, Project-Based Rental Assistance, and the HOME Investment Partnerships Program in the Fiscal Year 2026 T-HUD appropriations bill is critical to ensuring private sector confidence in these resources. Read more.
• Electronic Benefit Transfer (EBT) for Rental Housing Vouchers: Establishing a pilot program to convert HCVs into an EBT system would make recipients indistinguishable from other renters while reducing waste, fraud and abuse.
• HOME Investment Partnerships Reauthorization and Improvement Act of 2025: This legislation (H.R. 2031/S. 948) would reauthorize the HOME program, increase its funding to $5 billion and make critical program improvements.
• HOME Reform Act of 2025: This draft legislation would expand income eligibility, allow funds to be used for infrastructure, and reduce regulatory requirements like Davis-Bacon and NEPA to speed up affordable housing development.

What's Next

The findings from Behind the Cost of Rent and Regulation and Rents paint a clear picture that while well-intentioned, certain housing regulations increase the cost of providing rental housing, which in turn increases the cost of rent, especially for lower-income renters and residents of smaller multifamily properties. These studies emphasize the need for a balanced approach to housing policy, one that protects renters without unintentionally exacerbating affordability challenges or discouraging housing providers from staying in the market.