In 2022, local and state legislatures across the country raised the issue of rent control to address the high cost of living and the ongoing affordable housing crisis. Some municipalities enacted rent control measures or expanded on those already in place, while the efforts of others were shot down by city councils and state law.
Rent control measures are regulations enacted by state or local governments that place a limit on the amount a landlord can charge to lease a home or increase rent upon the renewal of a lease. Rent control regulations are legally binding once signed by a governor or passed through a referendum.
The intent of rent control is to keep living costs affordable for renters, particularly those who are earning lower incomes. However, the official position of the National Multifamily Housing Council (NMHC) as well as the National Apartment Association (NAA) is that rent control exacerbates housing shortages, causes existing buildings to deteriorate and disproportionately benefits higher-income households.
The NMHC and NAA, both based in Washington, D.C., have stated that they are in favor of alternative methods, such as voucher-based rental assistance, to address affordable housing shortages.
Rent Control Efforts Gain Traction
Though a contentious issue, many cities and states across the nation are poised to enact rent control measures in 2023 — even those with laws prohibiting rent control. Florida, despite being one of 31 states with statewide preemption on rent control, has seen multiple pushes from municipalities to enact rent control measures over the course of the year.
Lawmakers in Tampa and St. Petersburg considered measures to place rent control on the 2022 November ballot, but city councils in both localities rejected these efforts. In Orange County, Florida, nearly 59 percent of voters approved a rent control ordinance on the Nov. 8 ballot. However, a county judge granted a temporary injunction that prevented certification of the ordinance, which has been challenged by landlords and other groups on the grounds that it runs contrary to established law in Florida. The Orange County Commission, which voted 4-3 in August to put the rent control ordinance on the ballot, lost its appeal of the judge’s ruling and now the matter is headed to the Florida Supreme Court.
Similarly, the Culinary Workers Union (CWU) in Nevada pushed to include rent control on the North Las Vegas ballot for midterm elections. The North Las Vegas city clerk determined the CWU’s petition was “insufficient” and thus could not be placed on the November 2022 ballot. The clerk’s decision was upheld by the city council. The Nevada state legislature is scheduled to convene in 2023, during which several elected officials backed by CWU are expected to make a strong push to enact rent control measures.
The issue of rent control has been raised frequently in the legislatures of states such as Colorado, Illinois and Washington, and the NMHC report predicts the issue will continue to be up for debate through 2023.
Massachusetts is also expected to begin working toward rent control measures, with Governor-elect Maura Healey, a Democrat, indicating support for revoking Massachusetts’ statewide rent control preemptions.
Multiple state lawmakers in Hawaii have introduced rent control measures since 2021, but their efforts have been blocked. Hawaiian lawmakers are expected to continue these efforts in 2023.
In Connecticut, legislation was introduced at the state level that would create a study to explore the efficacy of rent control, though it did not gain traction. Another push for rent control measures is expected from Connecticut state lawmakers such as State Rep. David Michel, a Democrat, who has stated that he plans to revisit the issue in 2023.
Similarly, the Albuquerque City Council in New Mexico rejected a measure asking state lawmakers to lift rent control preemption. However, several representatives in the state legislature have indicated an intent to introduce legislation in 2023 that would repeal these preemptions.
Rent control has been prohibited by Michigan state law since 1988. This has remained the case despite numerous Michigan Democrats at the state level introducing bills to repeal rent control preemption in past sessions of the legislature. Democrat lawmakers in Michigan, who now have the majority in both the Michigan Senate and Michigan House of Representatives, are expected to make a similar push in 2023.
Rhode Island saw the introduction of legislation that would limit rent increases to no more than 4 percent annually. The bill failed to pass but may be reintroduced next year.
Arizona Governor-elect Katie Hobbs, a Democrat, has developed and released a plan to address housing affordability in the state. However, the adoption of rent control measures in Arizona is unlikely, as Hobbs’ plan is largely based on spurring new development and incentives for low-income residents, and Republican Arizona lawmakers have opposed rent control measures in the past.
A bill was introduced in the state legislature of Pennsylvania that would limit rent increases to 5 percent plus the change in cost of living, or 10 percent, whichever is lower. State Rep. Nancy Guenst has indicated her intention to push for the measure in 2023, but the Pennsylvania Senate opposition is likely to make it difficult for the legislation to pass.
Legislation regarding rent control may be introduced in Kentucky, North Carolina and South Carolina in 2023, but is also unlikely to pass due to opposition from state lawmakers.
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Existing Rent Control Laws Likely to Expand
As of 2022, only five states — California, Maryland, New Jersey, New York, Oregon and Minnesota — and the District of Columbia have rent control laws in place.
In New York, rent control applies to residential buildings constructed before Feb. 1, 1947. However, this is only the case in municipalities that have not declared an end to the postwar rental housing emergency. This includes New York City, Nassau County and Westchester County.
The city of Kingston, New York, declared a housing state of emergency in September and adopted a rent control policy in August 2022. A state Supreme Court judge has since blocked the city from putting it into effect, but efforts to implement rent control in other parts of the state are likely.
There are more than 100 municipalities in New Jersey with rent control ordinances, including the city of Perth Amboy, which adopted rent control in 2022. Additional cities may take up the issue in 2023.
Meanwhile, in Minnesota, a rent control city ordinance is expected to be put before Minneapolis voters in 2023. This is hardly a surprise, given that St. Paul enacted some of the nation’s strictest rent control laws in 2021. Though these laws were amended in 2022 and go into effect in January 2023, they still are a point of contention for property owners and landlords in the Twin Cities.
The state of California has had statewide rent control laws in place since the beginning of 2020. The law states that landlords can increase rent by no more than 5 percent each year, plus a local cost of living increase allowance of up to 5 percent. This does not apply in cities and counties that have enacted their own rent control.
In 2022, voters in three California cities — Pasadena, Richmond and Santa Monica — approved rent control measures on the November ballot.
Similarly, the state of Oregon adopted statewide rent control in 2019 and is continuing to explore ways to address the state’s housing affordability challenges. The Oregon Office of Economic Analysis (OEA) determines the maximum annual rent increase percentage allowed by statute on a yearly basis. The calculation is drawn from the percent change in the Consumer Price Index average for all urban consumers in the Western region, plus 7 percent.
The allowable rent increase percentage for 2022 in Oregon was 9.9 percent. The allowable rent increase percentage for the 2023 calendar year is 14.6 percent. The OEA will publish the maximum annual rent increase for 2024 by Sept. 30, 2023.
Source: RE Business Online