Real Estate

Rent Control in the United States

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By Olivia Lamoureux and Martin Daesch, Sandberg Phoenix & von Gontard

In the United States, rent control is not a popular regulatory concept. Indeed, other than landlocked New York City, the concept is almost non-existent and has been prohibited by statute in most states, while only four states and the District of Columbia recognize lawful rent control for cities that wish to adopt this regulation. Where rent controls exist, they have taken two forms. The first type is the "first generation rent control," which has caps on rents at an amount below market rates. The second type, called "second generation rent control," permits the rent amount to be chosen when a tenant moves into an apartment, but limits further increases so long as the tenant continues to occupy.

American cities are known for their "urban sprawl" and wide open spaces. The advent of the interstate highway system has allowed the suburbanization of most metropolitan areas. Improved means of transportation and an ever rising affluence has created an upsurge in the pride of home ownership that has driven the supply of apartments to exceed demand.

Nonetheless, the few cities with low vacancy rates, such as New York City, Los Angeles and the District of Columbia, have shown a greater propensity to experiment with some form of rent control. However, not all large cities with large proportions of renters have tried using rent control. Among those that have not used rent control are Chicago, Philadelphia, Baltimore and Cleveland.

Furthermore, some areas that once had rent control have abolished it or significantly reduced its power. For example, the cities of Boston, Brooklyn and Cambridge, which had rent control, abolished it through public referendum. In California, the legislature passed a law that significantly limits any rent controls. The push towards ending rent control in these areas has largely been due to better organization among landlords.

Critics of rent control seem to have been able to persuade state legislatures and city lawmakers and have been winning the political fight to suppress rent control legislation. They argue that rent control is inefficient, aggravates housing shortages, distorts housing markets, diminishes landlord's incentives to maintain property, reduces motivation for cooperation between landlords and tenants, does not directly address the issues that seeks remedy and causes unfair redistribution. Proponents have generally been unsuccessful arguing that rent control is the means to protect against unfairness arising from the free market.

Whether due to free market economic realities of supply over demand or socio-political lobbying weakness in the state houses, rent control has historically not been a popular regulatory mechanism in the United States and currently does not have sufficient support to extend beyond its already limited boundaries.


Olivia Lamoureux 121px

Olivia Lamoureux
Sandberg Phoenix & von Gontard
600 Washington Avenue - 15th Floor, St. Louis MO 63101, United States of America
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Olivia Lamoureux holds an Honor's Bachelor of Science in Biology & Psychology from the University of Toronto in 2008 and earned her Juris Doctorate from Washington University, with an emphasis in Wealth & Succession Planning, in 2013. She also earned her LLM in Taxation from Washington University in 2013.

 

 

martin-daesch 121pxMartin Daesch
Sandberg Phoenix & von Gontard
600 Washington Avenue - 15th Floor, St. Louis MO 63101, United States of America
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Martin Daesch is a Shareholder at Sandberg Phoenix & von Gontard in St. Louis and focuses his practice on real estate litigation. He earned his Juris Doctor from Saint Louis University in 1992 after receiving his CPA and degrees in accounting and finance from Southern Illinois University at Carbondale.

 

 

With more than 110 attorneys across seven offices, Sandberg Phoenix's work is concentrated in the areas of Business, Business Litigation, Health Law and Products Liability. We stand behind our promise to provide superior client service with a rare client service guarantee, reflecting our commitment to quality and broad depth of legal expertise.


published: January 2014

 

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