This legislative session, state lawmakers are continuing efforts to regulate rent increases at the state and local levels. This legislation purports to help renters, but in actuality, it disincentivizes investment, restricts and degrades the quality of housing supply and raises the cost of housing. The National Apartment Association (NAA) is monitoring this legislation carefully to understand trends across the country and how they might affect the rental housing industry.
Washington State
Washington State’s proposal (HB1217/SB5222) to cap rent increases at 7% has returned. The measure, which failed last year, was given a hearing on the first day of Washington’s legislative session, suggesting renewed energy behind the push to adopt rent regulation.
In addition to limiting rent increases to 7% per year, the bill imposes other onerous requirements on housing providers. Notably, security deposits and late fees would also be capped, and housing providers would be required to provide residents with 180 days notice prior to increasing rents by 3% or more—a length of time that is out of step with other jurisdictions.
Illinois
Several rent control proposals were introduced in Illinois prior to the state’s filing deadline in February, including SB 1260 and HB 3687, which would allow localities to impose rent regulation on housing providers. SB 1260 repeals the Rent Control Preemption Act, while HB 3687 includes, in addition to other restrictive provisions imposed on housing providers, language that would allow local governments to hold a referendum vote to end the prohibition on local rent control, effectively enabling localities in Illinois to opt in to rent regulation.
“Despite overwhelming evidence that rent control only worsens the housing affordability situation, proponents in the General Assembly continue to pursue this failed playbook,” said Michael Mini, EVP of the Chicagoland Apartment Association (CAA). “CAA is leading the opposition to rent control here in Illinois by continuing the execution our SHAPE Illinois advocacy campaign, working with our coalition partners in the business and labor communities to educate elected officials about the destructive effects of rent control and offer alternative policies to create more apartments and keep rents affordable.”
Illinois lawmakers have also proposed to cap rents in mobile home parks. HB 3526 would cap rents at 3%, while HB 3828 would require housing providers to justify rent increases greater than 3% or inflation, whichever is greater.
Other Proposed State-Wide Caps
Washington is not the only state to consider capping rents statewide. Bills pending in Hawaii (SB1056), Indiana (HB1162), Massachusetts (HD495) and South Carolina (H3346) would similarly cap rent increases at certain percentages. A number of states—including Connecticut (HB5428, SB991), Massachusetts (HD551), Nevada (SB151), New Jersey (A3361, S2953), New York (S228), Oregon (HB3054), Rhode Island (HB5264) and Vermont (S34)—are also considering capping rents specifically in relation to manufactured and mobile homes.
Authorizing Local Rent Control
Certain states are considering bills that would enable rent control at the local level. Proposals in Arizona (SB1177/HB2337), Georgia (HB299/SB106), Illinois (SB1260), Michigan (HB4009) and New Mexico (SB216) would repeal state statutes preempting local rent control. Others, such as those in Hawaii (SB1133), Massachusetts (e.g., SD2499, HD2363, HD2501, SD1084), New York (A4877/S4659), Oregon (SB722/HB3065), and Tennessee (HB955/SB961) would authorize or have the effect of encouraging localities to adopt rent control ordinances. (Similar bills were introduced in Virginia (HB2175/SB366, SB1136), but those proposals have failed.) In some cases, these bills limit the rent increases that a locality opting into rent control could allow.
NAA’s Outlook
This crop of rent control legislation reflects the misconception that regulating rents will improve the cost of living for renters. However, research shows that rent control does more harm than good: Caps on rent increases fail to account for increasing operational costs for housing providers and the need to plan for capital expenditures throughout the property’s useful life. This ultimately impacts both the quality and quantity of rental housing in communities across the U.S. To address rising costs of living, it is imperative for lawmakers to confront the regulatory barriers that raise costs for housing providers and constrain housing supply. NAA will continue to its federal advocacy and support its affiliate partners in their tireless efforts against all forms of rent control.