Can Rent Control Backfire?

Rent control advocates promoted the policy in California and Oregon as a solution to the housing shortage there, but it could have unintended consequences.

Over the long term, rent prices can still rise substantially after rent control regulation goes into effect, because most rent control ordinances allow landlords to raise the price as much as they want for new tenants if the previous tenants left of their own accord, says MarketWatch columnist Jacob Passy.

Making matters worse, there’s evidence that rent control policies can lead to a reduction in rental housing stock. In San Francisco, landlords were 10% more likely to convert their buildings into condos after the city imposed rent control in the 1990s, one study found. Rents in the city ended up increasing 5.1% as a result between 1995 and 2012, costing tenants roughly $2.9 billion.

Additionally, researchers have found that rents for apartments that were exempt from rent control policies grew much more substantially as a result.

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