Rent Control And Rent Stabilization
Rent control and rent stabilization are two terms that are often confused with one another. In fact, you’ve probably heard the two used interchangeably. Rent control and rent stabilization are both methods of limiting the amount a landlord or management company can increase rent, but there are a few key differences.
Rent control is when a governmental body limits how much a property owner can charge in rent. With rent control, the rent caps out at a certain amount, and a landlord can’t ask for more money than that, no matter what. Tenants in rent-controlled units have also unique eviction protections, as they’re allowed to continue living in their apartments indefinitely.
Rent control vs. rent stabilization
When people say “rent control,” they often actually mean rent stabilization, which is much more common. Rather than capping rent at a specific price, rent stabilization is when rent increases are based on a set percentage. This percentage depends on where the tenant lives as well as market rates and the health of the economy.
Rent control pros and cons
Rent control laws do protect tenants from unfair or surprising hikes in rent, which is definitely a pro. Pros for landlords and tenants, according to Avail, a management tool for landlords, include:
1. Rent control combats a high tenant turnover rate.
It makes sense: If tenants aren’t burdened with skyrocketing rent year over year, they’re more likely to stay in one place. This is a benefit for renters (being forced to move out of a community they love is an emotional hardship and costly one, considering how expensive it is to move and start over somewhere else) as well as landlords, who don’t have to deal with the cost of cleaning and repairing the unit after the renter leaves, possibly going months without income, and then having to grapple with new tenants who may or may not be reliable.
2. Rent control means less competition for landlords.
Rent control has been shown to be a form of a disincentive for development companies to construct brand new, shiny apartments in the neighbourhood. “With less development, the demand for existing units goes up, meaning lower vacancy rates and a larger pool of potential tenants,” Avail reports.
3. Tenants want consistency—and rent control laws provide that.
When a renter knows how much they need to pay every month—and exactly how much their rent will go up the next year–it allows that renter to financially plan for this. Especially in larger, more expensive cities like New York, Los Angeles, and San Francisco, this could help combat homelessness