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This thread is a good jumping off point to discuss what I think is my most contrarian view: that universal rent control, if well-designed, is probably good policy in severely housing constrained markets. https://twitter.com/TheRealEstateG6/status/1313496719276101638
To my mind, a good universal rent control policy:
1) Applies only to leases, not to units. It is explicitly a protection for current tenants.
2) Allows units to reset to market upon vacancy. No vacancy control, no bureaucracy required to keep track of decades of rent data. 2/
1) Applies only to leases, not to units. It is explicitly a protection for current tenants.
2) Allows units to reset to market upon vacancy. No vacancy control, no bureaucracy required to keep track of decades of rent data. 2/
3) Rent increases should be above inflation.
4) First named tenants are the only protected tenants; minimal succession rights.
5) Offers a formal, government-arbitrated process for tenant buyouts, with stiff penalties for landlord noncompliance. 3/
4) First named tenants are the only protected tenants; minimal succession rights.
5) Offers a formal, government-arbitrated process for tenant buyouts, with stiff penalties for landlord noncompliance. 3/
Big picture, I don’t think conventional economics captures the non-monetary benefit of renter stability for the health of cities and neighborhoods. Being able to project out one’s housing costs a few years helps people plant roots and invest in their communities. 4/
This can be as simple as becoming a ‘regular’ at a local establishment or volunteering at a nearby community garden, or as complex as starting a new business. Either way, a feeling of insecurity means life decisions are short-term and less oriented around place. 5/
And this is not to mention raising a family, getting involved in the schools, and participating in community planning processes. 6/
Ultimately, it’s the vitality of a place that leads to its long-term value. Landlords benefit from this placemaking as much as any other actor. And a well-designed policy will have reasonable turnover - hence, above-inflation increases - allowing predictable returns. 7/
And I don’t think a policy like this would limit new development. It would probably lower land prices to a degree, but a good policy - particularly one that doesn’t have vacancy control - will allow accurate underwriting of new multi-family construction. 8/
Of course, a universal rent control policy is not an excuse for supply-constrained cities to avoid permitting and building as much new housing as possible. That’s necessary too. 9/
But taken all together, good policy fairly splits the bounty of rent increases that arise from undersupply between owners and tenants. The savings for tenants is, on margin, more likely to be spent in the community. And as units vacate, landlords can reap some of the surplus. 10/
Please don’t murder me in the replies. 11/11
