Evaluating Rent Control Intensity in California Cities, 2010–2019

Rent control with reputation: theory and evidence

="abstract-subheading">Purpose The purpose of this study is to assess whether Catalonia’s 2023 Housing Law, aimed at controlling rental prices in high-demand areas like Barcelona, successfully reduced rental prices. By comparing pre- and post-policy trends in Catalonia with those of other Spanish regions, the study seeks to determine the effectiveness of the policy in achieving its stated objectives while accounting for external economic factors. ="abstract-subheading">Design/methodology/approach This study uses a Differences-in-Differences methodology to evaluate the impact of Catalonia’s 2023 Housing Law on rental prices. Catalonia is treated as the experimental group, while other Spanish regions serve as the control. The model accounts for macroeconomic variables such as gross domestic product (GDP) and inflation and uses administrative data on actual rental prices to ensure precision. The approach allows for a robust analysis of whether the rent control policy effectively influenced rental price trends compared to the control regions. ="abstract-subheading">Findings The findings suggest that while rental prices in Catalonia experienced a slight decline following the implementation of the 2023 Housing Law, the reduction was not statistically significant compared to other regions. Macroeconomic factors, particularly GDP growth and housing supply, played a more substantial role in shaping rental price trends than the rent control measure itself. ="abstract-subheading">Research limitations/implications The analysis is limited by the short post-treatment period (2023 to 2024), which may not fully capture the law’s long-term effects. Future research should extend the timeframe and investigate additional outcomes, such as housing quality, tenant mobility and broader socioeconomic impacts. ="abstract-subheading">Practical implications The study highlights that rent control measures alone may not be sufficient to reduce rental prices in high-demand areas. Policymakers should integrate rent control with strategies to increase housing supply, such as incentives for new construction and urban planning improvements, to ensure sustained affordability. ="abstract-subheading">Social implications Rent control policies may provide short-term relief for tenants but risk being ineffective in the absence of a sufficient housing supply. A comprehensive policy approach is necessary to achieve long-term affordability, particularly for low- and middle-income households in high-demand urban areas. ="abstract-subheading">Originality/value This paper offers empirical evidence on the limited impact of Catalonia’s 2023 Housing Law, emphasizing the importance of addressing structural issues like housing supply in conjunction with rent control policies. The study contributes to the ongoing debate on housing affordability and provides valuable insights for urban policymakers.

Rent control is a highly controversial housing policy. For Vienna, Austria, we show how rent control impacts block-group income distributions as the share of residents with rental contracts subject to a cap increase. Using regression with spatial fixed effects, we find that a 1%-point increase in residents with rental contracts subject to a cap reduces the average net income of the block-group by 52.70 Euro/year. For the typical block-group containing 861 residents, this implies a reduction in total block-group income of 45,375 Euro/year. This suggests increasing numbers of lower income residents are locating in block-groups with rental caps. We further show the effect of capped rents on average income is heterogeneous across and within block-groups, with greater reductions in higher income block-groups compared to lower income block-groups. Our results demonstrate that the rent control policy in Vienna impacts residents’ location choice and the resulting spatial income distribution despite the lack of means testing.

In a recent issue of this journal, Marks (1984) uses a hedonic approach to analyze the effect of rent control on the implicit prices of various housing characteristics. Since a rent control policy may cause the implicit prices and quantities of housing characteristics to adjust marginally, a hedonic approach can be especially useful for disentangling these price and quantity effects. Separating his Vancouver sample of 3,885 rental units into rent-controlled (3,198 units) and uncontrolled (687 units) subsamples, Marks employs both an F-test for structural homogeneity between the two hedonic regression equations and a means replacement technique. The empirical findings appear to suggest that implicit prices are significantly higher in the uncontrolled subsample. Furthermore, the results appear to indicate that a rent control policy leads to a lower rent level. While the value of Marks's methodology is unquestionable, the validity of his empirical findings is suspect due to a severe sample selection bias. According to Marks (1984, 82), the majority of the uncontrolled units (98 percent) are not subject to rent control because all apartments built after 1974 were exempt from rent control for a period of five years so that such units would be exempt during 1978 the year being studied. As a result of this dichotomous distinction between controlled and uncontrolled units based on the year of construction, before or after 1974, an examination of Table 4 reveals that the mean age for a controlled unit is approximately 17 years; however, the mean age for an age-exempt uncontrolled unit is only about 4 months. In other words, the average controlled unit was built in 1961, whereas the construction date for a typical uncontrolled unit was some time in the period 1977-1978. In effect, Marks's study compares two samples of rental housing which were constructed at different points in time rather than at a similar or related point in time. Moreover, since the two housing samples reflect construction at different points in time, the implicit market prices for various housing characteristics may also be significantly different across the samples because the market conditions for various housing characteristics may have changed from one period to the next.

Effectiveness and supply effects of high-coverage rent control policies

The long-run U-shaped patterns of economic inequality are standardly explained by basic economic trends (Piketty’s r>g), taxation policies, or “great levelers,” like catastrophes. This paper argues that housing policy, in particular rent control, is a neglected explanatory factor in understanding overall inequality. We hypothesize that rent control could decrease overall housing wealth, lower incomes of generally richer landlords, and increase disposable incomes of generally poorer tenants. Using original long-run data for up to 16 countries (1900-2016), we show that rent controls lowered wealth-to-income ratios, top income shares, Gini-coefficients, rent increases, and rental expenditure. A counterfactual analysis using micro-data from the Luxembourg Income Study shows that rent controls could reduce rental expenditure of mostly lower-income tenants and rental incomes of mostly higher-income landlords. Overall, rent controls must be strict in order to have tangible effects and, historically, only strict rent controls have significantly reduced inequalities. The paper argues that housing policies should generally receive more attention in understanding economic inequalities.

The long-run U-shaped patterns of economic inequality are standardly explained by basic economic trends (Piketty’s r > g), taxation policies or ‘great levellers’ such as catastrophes. This article argues that housing policy, and particularly rent control, is a neglected explanatory factor in understanding macro inequality. We hypothesize that rent control could decrease overall housing wealth, lower incomes of generally richer landlords and increase disposable incomes of generally poorer tenants. Using original long-run data for up to 16 countries (1900–2016), we show that rent controls lowered wealth-to-income ratios, top income shares, Gini coefficients, rents and rental expenditure. Overall, rent controls need to be strict in order to have tangible effects, and only the stricter historical rent controls did significantly reduce inequalities. The study argues that housing policies should generally receive more attention in understanding economic inequalities.

A meta-analysis of the impact of rail stations on property values: Applying a transit planning lens

Colombia has followed a typically Latin American approach to its housing problems. Conditions in the countryside had always been deficient but the vast migration to the cities forced national and local governments to devise a more active response. The first response was to encourage the middle classes to buy homes by offering them subsidized mortgages. The second was to help the poor by setting up state institutes to build homes for rent. The third was to deal with the issue of rental housing – rent controls were the inevitable if misguided response. None of these policies could cope with the vast increase in urban numbers and the housing deficit increased year by year. With the election of a neo-liberal government in 1990, the methods changed. The financially bankrupt state housing agency was closed and a Chilean style demand side housing programme introduced to help the poor. Targeted subsidies were introduced incorporating the now fashionable ABC combination (Ahorro, Bono y Credito – savings, subsidy and credit). The scheme was successful in generating large numbers of offers of subsidy although most beneficiaries failed to obtain a home because they could not gain access to credit. Various changes have been made through the years to the scheme but the basic rationale survives and has recently been enlarged. The chapter will discuss the changes, as well as the arguments underpinning the changes, and the effect that the policy has had on the housing situation. Underlying Colombian housing policy has been the assumption that every Colombian wants to own their home. The last national government promised to create ‘un pais de propietarios’. Of course, it failed, particularly in large cities like Bogota where almost one half of the population still rent their homes. Despite their enormous numbers there has been no change in housing policy and tenants and landlords continue to be ignored in official housing policy. Insofar as there has been a shift it has surprisingly come from the private sector – Camacol, the main trade organization, which was influential in modifying the rental housing law in 2003, is now discussing the possibilities of building at scale for rent. There is also some belated recognition that the targeted subsidy programme cannot work without access to cheap land and the concept of ‘macroproyectos’ has been introduced to solve that problem. There are also local efforts, e.g. in Metrovivienda in Bogota, aimed at providing cheap land for the poor. What is so far missing is any kind of sites and services programme. While the local state has been active in regularizing tenure and providing services to existing self-help settlements, there is no policy beyond targeted subsidies to cater for future demand for low-income housing. There is no solution to the housing problem in Colombia but a different approach would be helpful in mitigating some of the worst symptoms.

Distributional aspects of public rental housing and rent control policies in Spain

Rent-control laws limiting the rents private landlords can charge tenants are controversial in the United States. Critics have condemned rent control’s mandated wealth transfer from landlords to tenants, and economists have decried its negative effects on rental supply and quality. With the advent of the sharing economy, rent-controlled tenants can rent out their below-market units for short durations at market-level or premium prices, a practice I term “rent control sharing.” The reaction to rent-controlled tenants pocketing money from Airbnb and other homesharing sites at the expense of their hapless landlords has been negative. Yet, the sharing economy has not changed an essential feature of rent control: the redistribution of wealth from landlord to tenant. Instead, Airbnb and similar platforms have altered the form of the redistribution and the legal relations between landlord and tenant, and increased the salience of the wealth transfer from landlord to tenant. As a result, rent control sharing collides with public preferences for in-kind redistribution and stronger legal protections for property used personally or intimately. This Article explores how rent control sharing accentuates some of the flaws of rent control and fuels the debate over rent control’s future.

This paper introduces a new international longitudinal database of governmental housing policies. The regulations are measured using binary variables based on a thorough analysis of the real-time country-specific legislation. Three major restrictive policies are considered: rent control, protection from restriction, and housing rationing. The database covers 47 countries and states between 1910 and 2018. This allows comparisons of regulation stringency across both time and space. The analysis reveals a surge of all restrictive policies in the first half of the 20th century. However, following World War II, the evolution of policies diverged: while rent control became more flexible or was phased out, tenure security stabilized at a high level or even increased, while housing rationing became used less frequently. An application of dynamic multivariate longitudinal clustering permits dividing the sample in two groups. One cluster comprises countries with more flexible rent control, stronger tenure security, and more housing rationing. It mostly includes European continental countries. Another cluster unifies countries with a more rigid rent control, weaker tenant protection, and rarely used housing rationing.

1 Housing Markets and Housing Institutions in a Comparative Context.- Housing Is Peculiar.- Housing Policies Are Special.- The Rationale of this Book.- Metropolitan Markets in National Economies.- A Taxonomy of Housing Policies.- Conclusion.- 2 The Swedish Housing Market: Development and Institutional Setting Alex Anas.- The State, the Counties, and the Municipalities.- Housing Policy.- The Planning System.- Land Use and the Ownership, Supply, and Pricing of Land.- The Housing Stock, Housing Production, and the Building Sector.- Financing of New Construction and Modernization.- Pricing, Rent Control, Rent Pooling, and Rent Negotiations.- The Public Queue: The Case of Greater Stockholm.- Swapping, Black Markets, Mobility, and Household Formation.- Housing Allowances.- Housing and Income Tax.- Conclusions.- 3 The Finnish Housing Market: Structure, Institutions, and Policy Issues.- Historical Background.- Urban Land.- Administration of Housing and Urban Planning.- Housing Production.- Development of the Dwelling Stock and Housing Finance.- Pricing of Housing.- Obtaining Shelter in the Helsinki Metropolitan Area.- Mobility, Household Formation, and the Housing Market.- Housing Allowances.- Housing and the Income and Wealth Taxes.- Conclusions.- 4 The Functioning of the Housing Market in Amsterdam.- An Institutional-Economic Framework.- The City of Amsterdam.- The Development of the Housing System.- Population, Housing, and Mobility in Amsterdam.- The Planning System.- Pricing and Financing.- The Allocation of Households to Dwellings.- The Black Market: Squatting.- Conclusions.- 5 Housing in San Francisco: Shelter in the Market Economy.- The San Francisco Bay Area.- Federal and State Housing Policy.- Regionalism and Localism in Bay Area Land Use and Development 195 Summary and Conclusions.- 6 Analysis of the Housing Sector, The Housing Market, and Housing Policy in the Budapest Metropolitan Area.- The Budapest Metropolitan Area in the Settlement System of Hungary and Central Europe.- Development of the Housing Sector in Budapest.- Housing Quality and the Evolution of Financing.- Conclusion.- 7 The Vienna Housing Market: Structure, Problems, and Policies.- The Structure of the Housing Market in Metropolitan Vienna.- The Governmental Role in the Housing Market.- Conclusion: Major Impacts of Housing Policies.- 8 Glasgow: From Mean City to Miles Better.- The Message and the Medium.- Time's Arrow.- New Pluralism.- Remaking Council Housing.- Conclusion.

PurposeThe purpose of this paper is to show how an optimization model previously published by the authors is employed to study the effects of rent control on income optimization for the owner and the manager, as well as on the principal‐agent relationship. The model explains effects on management, maintenance and housing quality observed under rent control.Design/methodology/approachThe optimization model is developed by applying a transaction cost framework to the context of income structures in investment properties and their management. Rent control is introduced into the model as a rent maximum.FindingsUnder rent control, the manager is forced to optimize income solely through cost control, without motivation to provide above minimum services. The owner is unable to optimize income. Income and funds available for management and maintenance are reduced by costs uncontrollable by the owner. Consequently, management and maintenance are reduced, if not eliminated, resulting in deterioration of the housing stock, notwithstanding minimum habitability standards imposed by regulators. This dilemma argues against dropping management entirely and interferes with the owner's quest to find the right incentive structure for the agent.Research limitations/implicationsRent control is modeled as a cap on rents. Many rent control policies employ a maximum in rent increase instead, with the maximum often linked to inflation. As the results of the model are in line with real‐world observations, this simplification seems to be non‐critical.Practical implicationsRent control was implemented with the intent to provide affordable housing to the less fortunate in society. Economic and social effects of rent control have since been heatedly discussed, in the public arena and in academia. This paper supports the view that rent control has unintended, negative consequences not only for the property owner, but also for the property manager (who is at the brink of elimination) and for the tenant (as housing quality deteriorates). This paper therefore encourages a renewed discussion and review of rent control policies.Originality/valueThe paper expands existing literature by analyzing the effects of rent control on property management. By using an optimization model, theory‐based results are provided that supplements real‐word observations, which is interesting for both academics and practitioners. Furthermore, the applicability of the previously developed optimization model is strengthened.

During the past decade, over 200 cities in the United States have imposed rent control [Baird, t980, pp. 54-7]. Although most likely a response to the accelerating inflation of the 1970's, this second generation of rent control has been justified on the grounds of the existence of a housing crisis. In different locales the crises are described variously as arising from a housing shortage, low vacancy rates, rent increases, tenant hardship, housing deterioration, lack of new construction, or environmental necessity [Baar and Keating, 1975, p. 490]. Invariably, newly enacted rent control ordinances are presented as temporary measures. Presumably, policymakers view the imposition of rent control and its concomitant effects as reversible after the housing crisis, however defined, has passed. But is this assumption correct? Does decontrol restore market rents, maintenance levels, optimal crowding, and tenant mobility? Or are housing units permanently altered by virtue of their having been under rent controls? These are important issues in evaluating rent control as a feature of local housing policy. Surprisingly little empirical work has been done on the relationship between rent control and housing quality, crowding, and tenant turnover. Furthermore, the authors have found no empirical studies dealing with decontrol. The purpose of this paper is to make a modest contribution to understanding the efficacy of decontrol by exploring the effects of selective decontrol in New York City (NYC). The data used in this study are taken from the 1968 Special NYC Housing