“all of these policies share a problem if enacted as the exclusive solution to rising rents. As economists often stress, rent control fails to address the core issue of why housing is so expensive to begin with: lack of supply. In particular, states and cities have a bevy of rules and regulations regarding what kind and size of new homes can be built that overwhelmingly make it illegal or unprofitable to build small single-family homes, multi-family homes, and dense neighborhoods.”
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“Rent control should be understood as a remedy for displacement, rather than a solution to the spiraling cost of housing. It’s best as a measure that can help keep current tenants from being displaced from their neighborhoods”
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“It’s become abundantly clear that even if states do begin to build more homes, it will take years if not decades to rebalance supply and make housing more affordable, and in the meantime millions of families will continue to suffer. Economists are right to be worried about the ways rent control could worsen the housing crisis, but rent control can work.”
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“A well-designed rent control policy exists in tandem with eliminating exclusionary zoning laws, reducing the cost of housing construction, and providing universal vouchers to help low-income tenants afford their rent.”
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“To encourage people to still build more homes, it is important to exempt future construction from rent control and to allow landlords to increase rents annually by a moderate sum tied to inflation. Policymakers also want to make sure there are incentives to keep existing rental stock well-maintained; one way to do so is by allowing for vacancy decontrol so that when a tenant moves out, a landlord can upgrade the unit and charge a higher rent to the next tenant.”
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“When it comes to worries that rent control policies might increase evictions (both formal and informal) as landlords are motivated by profit to convert to condos or force their tenants to vacate so they can renovate, the answer is that, similarly to all types of abuses of power in the market, there needs to be more oversight. A few policies that cities and states should enact are:
Just cause eviction statutes, which would require the landlord to justify kicking a tenant out of the property. The government can define what a reasonable justification is, including but not limited to failure to pay rent, desire to add another tenant to the renter’s lease, violation of lease terms, illegal activity, etc.
Right to counsel to ensure that tenants are not just getting steamrolled in these types of hearings. Numerous studies have pointed to the fact that the vast majority of tenants are going unrepresented by counsel.
A rental registry to keep track of tenants and landlords. One of the biggest factors leading to informal evictions is that the power imbalance between very low-income tenants and landlords leads the former to simply comply when told to leave their home, even if they have the right to stay. By creating a rental registry, landlords will know that their lease terms are being monitored by local officials and that they will be easily caught if they informally or illegally evict tenants in order to get around rent control laws.”
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“Skeptics will correctly note that implementing all these ideas would increase the costs of renting out properties, which might push some landlords toward condo conversions or away from developing new units. That’s why it’s important to simultaneously make it cheaper and easier to build and renovate housing. As almost all urban economists have noted, the primary constraint on housing supply in America’s cities and suburbs is the regulatory morass that drives up the cost of developing and producing new homes and makes it nearly impossible for a landlord to extract multiple rents from a single lot by building multi-family housing.”
“Homelessness is a major issue in the U.S., and is inherently intertwined with the cost of housing. In fact, in a recent poll, respondents from the 20 metro areas that experienced the largest population growth between 2010–2019 listed both the cost of housing and homelessness as their top two concerns, and by almost identical margins (86 and 87 percent, respectively). The average cost of rent has increased nearly 20 percent within the last year alone, and since 2001, in nearly every state, rents have risen at a faster rate than incomes.
But simply offering rental assistance without a simultaneous increase in the supply of housing would only serve to exacerbate the cost problem, as a larger amount of money would chase after the exact same amount of inventory. In fact, the U.S. is currently as many as 5 million houses short of meeting estimated demand.
Of the roughly $150 billion which the Build Back Better Act appropriates toward housing, more than half is put toward dubious use, via rental assistance programs. About a third of that portion, though, is specifically tailored toward the construction or rehabilitation of more affordable housing units to increase the overall supply, which could help drive down costs.”
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“The Build Back Better Act does fund the establishment of a “competitive grant program,” the Unlocking Possibilities Program, to incentivize “streamlining regulatory requirements and shorten[ing] processes, [and] reform[ing] zoning codes.” As with any grant program, its efficacy will be dictated by its implementation, but with more than $4.26 billion appropriated, there is plenty of breathing room to potentially make a difference.
In an ideal scenario, of course, there would be as few zoning restrictions as possible, allowing developers to simply respond to the needs of the community without requiring the government’s stamp of approval. While public funding to incentivize a reduction or simplification of red tape is better than the status quo, it is still not a perfect solution.”
“52 percent of voters approved Question 1, an ordinance that puts a hard annual 3 percent cap on rent increases. It makes no allowances for inflation or exemptions for vacant apartments and new construction that are typical in other rent control policies.
The new ordinance doesn’t go into effect until May 2022. Nevertheless, several real estate companies with large projects in the works have already announced that they’re pulling their permit applications.”
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“In response to the developer freakout, freshly reelected Mayor Melvin Carter’s administration sent an email to the St. Paul City Council on Monday saying that while he supported “rent stabilization” as one necessary tool to make housing affordable, the new ordinance passed by voters could use some work.
“Allowing a reasonable return on investment is why virtually every other rent control ordinance in effect today exempts new construction,” reads the email. “The Mayor requests you consider an amendment to exempt new housing construction, which he will sign once it reaches his desk.”
That would make St. Paul’s new rent control policy more similar to those that exist in other states around the country.
Both California and Oregon, which passed statewide rent control ordinances in 2019, exempt buildings that are less than 15 years old from their price caps. New York’s long-standing rent stabilization law mostly applies to apartments built before 1974 or to newer units that received certain tax benefits.”
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“Some economists have argued that even with exemptions for new construction, rent control policies still suppress the value of new buildings and thus deter some amount of new construction.”
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“The 3 percent cap on annual rent increases is itself pretty strict. California and Oregon permit annual rent increases of 5 and 7 percent respectively. Allowable increases at rent-stabilized apartments in New York are typically much lower, and are often in the 1 to 2 percent range.
Both California and Oregon also allow landlords to factor inflation into rent increases. St. Paul’s ordinance makes no allowance for inflation, meaning that if prices rise more than 3 percent, landlords will effectively be required to lower the real rents that they charge. St. Paul’s ordinance also does not allow landlords to raise rents beyond that 3 percent cap for vacant units.
All of this could well encourage landlords to just get out of the rental market altogether and sell their properties to owner-occupiers. Rising home values in St. Paul, where prices have increased 12 percent in the last year, only make this option more attractive for landlords.
This is what happened in San Francisco where an expansion of preexisting rent controls led to a 15 percent reduction in the supply of rental housing, according to one 2018 study. That study found that incumbent tenants benefited handsomely from the limits on rent increases but that their windfall came “at the great expense of welfare losses from future inhabitants.”
Even if the city’s new ordinance is amended to exempt new construction, St. Paul renters, current and future, can expect a similar result.”
“The Seattle City Council might have found a clever way around Washington state’s ban on local rent control policies. On Monday, it passed two bills that respectively require landlords to give generous notice to their tenants of any rent increases and to provide relocation expenses to low-income renters who do move in response to large rent hikes.
Current city and state law require landlords to give their tenants 60 days’ notice of any rent increase. One bill passed by the council would increase that notification period to 180 days, likely the longest notification period in the country.
And if a low-income tenant decides to move in response to a rent increase of 10 percent or more, landlords will be obligated to provide them with “economic dislocation relocation assistance” equal to three months’ rent, thanks to another bill passed by the council on Monday.
Both are the handiwork of Councilmember Kshama Sawant, a member of the Socialist Alternative party, who argues the twin bills are needed to protect tenants from a post-pandemic upswing in rents—and from capitalism more generally.
“Today’s victories will benefit tens of thousands of renters in Seattle, who are facing skyrocketing rent increases from profit-hungry corporate landlords and the venture capitalists and big banks who are [fueling] a speculative bubble,” said Sawant after the bills passed.
Landlords were less pleased with the bills’ passage, arguing during public comment that they’d raise their costs of doing business and are, per the Seattle Times, tantamount to rent control.
That latter charge could open up the new bills to legal challenges.
Washington state law preempts municipal governments from enacting laws “which regulate the amount of rent to be charged” and instead reserves that power under the state government.”
“The last two COVID relief bills passed by Congress in December 2020 and March 2021 collectively appropriated $46 billion to cover the massive amount of unpaid rent that tenants have accumulated during the pandemic.
By the end of January 2021, the federal government had released close to $25 billion of that money—including about $1.2 billion to New York state’s ERAP. Subsequent federal grants and state money would fund the program to the tune of $2.7 billion, according to City Limits.
And yet by the end of June, New York had, per U.S. Treasury Department data, managed to spend $0 of its rent relief funds. A month later only $1.2 million had gone out the door.
A major reason for the slow dispersal of funds is that the state’s Office of Temporary and Disability Assistance (OTDA)—which is responsible for administering the program—took until June 2021 to start accepting applications. When it did get an online application portal up and running, tenants and landlords were met with crashing websites, and requests for documents they didn’t have.
Applications would take hours to complete, yet the online web portal lacked a feature allowing people to save their progress and try again later. People who called into a hotline to report problems said that staff often had no answers for them.”
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“most state governments have done a pretty poor job of getting their rent relief programs off the ground. (The speed at which places like Virginia and Texas have managed to disperse funds shows that success wasn’t impossible.)
Nevertheless, New York has earned the distinction of being the slowest. As of Monday, the state has spent $100 million on rent relief, or about 4 percent of total ERAP funds.”
“Throughout the pandemic, the median view of good housing policy—supported by landlord associations, tenant advocates, and policy wonks of all ideological stripes—has been to have the federal government fund rent relief. That way, the providers of rental housing can pay their bills, and financially pressed renters aren’t forced onto the streets or into more crowded living situations.
Despite these funds being appropriated for rent relief programs, actually getting money to people continues to be a major challenge.”
It’s a familiar refrain to low-income renters searching for a place to live. The four-word phrase signals one of the last (mostly) legal forms of overt housing discrimination. Commonly referred to as “source-of-income discrimination,” landlords across the nation often refuse to accept tenants who attempt to pay rent with help from the federal government’s Section 8 housing voucher program.
Now, Iowa Gov. Kim Reynolds (R) has put the nearly 40,000 Section 8 recipients in her state in jeopardy of getting those notices by signing a new law that ensures cities and counties can no longer protect their residents from this subtle form of discrimination.
Section 8 housing is the government’s largest low-income rental assistance program. According to the Center on Budget and Policy Priorities, 5.2 million people nationwide receive vouchers from the program that cover some portion of their rent. The program is chronically underfunded, so only 1 in 5 households that are eligible to receive assistance actually do”
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“There’s a lot of evidence that Section 8 vouchers reduce homelessness and alleviate poverty.
In her reporting for Vox, Stephanie Wykstra highlighted studies showing that “housing vouchers help prevent homelessness and increase long-term health and economic outcomes of children in low-income families.” And Vox’s Dylan Matthews covered a fascinating study that showed how (with help) some housing voucher recipients were able to find housing in high-opportunity neighborhoods, where children have significantly better chances at a prosperous future.”
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“There is evidence that landlords have valid (nondiscriminatory) reasons for not wanting to participate in Section 8 housing — working with the government to make sure your property fits the requirements can be onerous and frustrating. Landlords may have difficulty getting rents paid on time by the local public housing authority and often the unit inspections can be an inefficient and arduous process.”
“Estimates about the amount of back rent owed across the country range from $8.4 billion to $52.6 billion, meaning that the $45 billion allocated should cover the vast majority of need, especially considering that renters have indirectly received other forms of aid from the federal government.
The vast majority of renters have figured out how to make rent payments. According to the National Multi-Family Housing Council’s rent payment tracker, “80.0 percent of apartment households made a full or partial rent payment by May 6.” The previous month’s data shows that by the end of the month, 95 percent of renters had made a full or partial rent payment.”
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“While 23.7 percent of renters have missed at least one payment over the past year, only 8.6 percent of renters have missed more than two payments.
But that doesn’t mean that over 90 percent of renters are doing fine. In order to make those payments, many renters have had to deplete their savings, max out their credit cards, or take on loans from family, friends, or payday lenders.
And it’s not clear when rental assistance will reach those people.”
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“Turner, a renter living in North Carolina, told Vox that his application for relief was initially accepted by a program in Wake County, but he was eventually denied aid after he paid rent.
“We sold all of our belongings in our apartment to pay the rent,” Turner told Vox. Now, he says, he’s caught in an impossible place. If he doesn’t pay his rent, he’s at risk of receiving an eviction notice — a black mark on any renter’s history that can make it harder to get housing in the future — but without showing proof that he’s behind on his rent, he’s unable to get help to stay solvent.”
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“Turner’s story might seem to indicate that these programs are running low on funds, but all reports indicate that very little has actually made it into the pockets of at-risk renters. The Treasury Department is collecting data on how much states have allocated and to whom, but it has yet to be released. Tenant advocates I spoke with in California and Washington, DC, told me they didn’t personally know anyone who had actually received aid.
Georgia’s Department of Community Affairs told me that it has distributed more than $4 million in rental assistance funding to landlords and tenants; the state has received over $552 million for that purpose. Delaware’s State Housing Authority told me that it has distributed $40,000 in rental assistance — 0.02 percent of its allocated funds. The Idaho Housing and Finance Association told me it has distributed $6.1 million of the $175 million it received from the December congressional rent relief allocation. Colorado’s dashboard shows $2.8 million has been approved from the $247 million it has received. Arizona’s dashboard shows $4.38 million has been disbursed out of the $289 million it has received.
More has reached tenants — those state numbers don’t include the spending done by programs at the county and city level — but it indicates the pace of these programs may not be fast enough to meet the urgent, coming crisis.”
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“Time, knowledge, and bureaucracy: These are the challenges facing rent relief programs racing to dole out funds.
States and localities have never before had to set up rent relief programs to distribute federal aid. To do so, programs needed to hire staff, set up websites, comply with any additional regulations or goals set by their state legislatures, and conduct outreach. Even with best efforts, most experts Vox spoke with were skeptical that it would have been possible for programs to move fast enough to get all the aid out the door before the end of June.”
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““One of the things that this pandemic has made very clear is that there’s a lot that we don’t know about our housing market,” Vincent Reina, director of the Housing Initiative at the University of Pennsylvania, told me. “The vast majority of cities don’t have full registries of every owner in their city. … It shows we often don’t know who owns properties and what’s going on with these properties or which tenants are experiencing financial hardship.”
If states had been collecting detailed information about where struggling tenants are and how much back rent was accumulating, it’s likely this process would have moved faster.”
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“there are some success stories. A representative from the Alaska Housing Finance Corporation, for instance, told me that by May 10 the state had paid out $18.2 million and 9,000 applications had been approved. When I checked back nine days later, the representative told me they had approved more than 1,300 additional applications and sent a total of $25.9 million in payments. The state’s total allocation is $200 million, so they still have a way to go, but they credit their progress to the fact that they “offered a unified application that was optimized for mobile” as well as measuring how long it was taking to process applications and making it “as easy as possible for applicants and landlords or utility companies” to submit required documentation.”
“Los Angeles politicians’ plan to preserve affordable housing might just end developers’ incentive to ever build more of the stuff in the city.
Last week, the Los Angeles City Council passed a resolution directing city agencies to explore options for freezing rents at privately owned buildings with expiring affordability covenants. These covenants require building owners to keep their rents at below-market rates for a specified period of time, typically 30 to 55 years, in exchange for various government subsidies—including tax credits, low-interest loans, and relief from zoning restrictions.
Covenants covering thousands of these units are set to expire within the next few years, allowing landlords to raise rents to market rate. Lower-income tenants benefiting from affordability restrictions could be faced with unaffordable rent increases.”
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“A rent freeze would be a pretty radical move, particularly when compared to other policies people have floated to preserve affordability covenants. That California Housing Partnership report recommended more subsidies and tax credits to preserve affordable units.
HCIDLA has proposed forgiving building owners’ debt they owe the city in exchange for extending affordability covenants, or, in the case of debt-free buildings, subsidizing owners for forgoing market-rate rents.
All those ideas involve compensating property owners for voluntarily keeping their rents low. Cedillo’s proposal would require them to eat the entire cost of maintaining below-market-rate rents.
That would be a huge disincentive for anyone to ever participate in future affordable housing programs, says Dan Yukelson, executive director of the Apartment Association of Greater Los Angeles.”