Will California Finally Evict Rent Control Laws?

Despite that fact that most economist agree (to steal the global warming crowd’s favorite turn of phrase) that rent control has primarily negative effects, laws constricting or capping rates persist in many large cities.

Theoretically, rent control prevents landlords from taking “too much” profit from their renters and provides housing for low income people. In practice, however, it has the opposite effect. Under rent control landlords face the unenviable choice between raising rent on their other properties not covered by controls in order to compensate for losses and getting out of the business entirely, and profit by selling off their properties.

The more neighborhoods are subject to controls, the greater the number of landlords selling off property and the higher they will need to raise rent in other counties to compensate. The more landlords sell their properties the less available apartments become, increasing demand, pushing rent even higher, and decreasing quality.

Ultimately, rent control is not an effective way to increase the availability of low-cost housing. Yet some continue to cling to the dream that simply demanding lower rents will result in plentiful, cheap, quality housing.

This June Californians will have the opportunity to eliminate the rent control across the state and protect private property from eminent domain to boot. Proposition 98 or the California Property Owners and Farmland Protection Act, will face strident competition against Proposition 99; the Homeowners and Private Property Protection Act which would not eliminate rent control and according to the Institute for Justice provides, “insubstantial protection against the use of eminent domain for private commercial development.”

Opponents on both sides of the debate in California are gearing up for a heated battle, while residents of California and others with vested interests will be watching outcome of the June vote intently. If Californians have lost the taste for controlling rent, we may see more bills like prop 98 cropping up around the country.