Rent control has the effect of discouraging developers from constructing new apartments and homes. This could conceivably be viewed as a negative, but it also means that for landlords there’s less competition. The demand for homes will be much greater, and any vacancies will thus be on the market for a shorter period of time. There are many Pros and Cons of Rent Control given below
Pros and Cons of Rent Control are Given Below.
Fewer vacancies, less turnover
Many tenants find it desirable to rent properties that have rent controls built-in. This benefits landlords because it will be necessary to find and screen new occupants every year. Even if a landlord loses out on significant rent increases because of long-term occupancy, the real costs to the landlord come in the form of vacancies and turnovers. Those costs can be avoided by maintaining tenants at a residence for a longer time frame.
Cons of Rent Control for Landlords
For the most part, rent-controlled units are included in buildings that are older, which means they will require more upkeep and maintenance than newer units would. This will obviously consume more of your profits from rental, which is why many landlords opt to defer maintenance as long as possible.
No property taxes:
Even if rent increases might be capped, there can’t be any property tax adjustments involved. If you are able to raise the rent at all, it probably won’t be equivalent to property tax increases, and that will cause you to scramble to make up the difference between the two.
With all the new regulations and eviction laws coming out, it has become very difficult to evict bad tenants. Naturally, these tenants will want to remain in their rent-controlled units, and it will be a major challenge to evict them unless they are committing some gross violation.
The primary intent of rent control is to limit the amount of any rent increases, and this is a primary concern of most landlords. Depending on just how strict any new regulation is on rent control, it can definitely make you feel like you have no control whatsoever in managing your own property.
Pros of Rent Control for Tenants
Obviously, the biggest impact for renters will be that housing comes much more affordable and allows them to stay longer. This is a huge benefit in large metro areas like New York City or San Francisco because in those locations rent will typically increase faster than tenants’ salaries do.
Helps to Avoid Displacement:
Quite a number of people who live in rent-controlled units are elderly individuals, and these people would find it difficult to locate affordable housing anywhere in the same area. The same thing applies to people who spent their whole lives in a city that has quickly become too expensive, and that would have the effect of forcing them out of their homes.
Cons of Rent Control for Tenants
Increased Competition for Rent-Controlled Units:
Rent-controlled units tend to be highly desirable, because of their minimal rent increases and lower rents. That makes it fairly difficult to actually obtain a property that is governed by rent control. Tenants frequently apply to a dozen or more units before actually being accepted at a rent-controlled unit. Many tenants favor rent control for this reason, but there are some drawbacks as well. Whenever strict rent control is in force, it can have a negative effect on both landlords and tenants. Since it increases competition for these units, it’s harder for a tenant to get one. It also inhibits developers from constructing new residential housing, and it puts a cap on profits for landlords.
Inhibits New Construction:
Areas that have rent control units often don’t see as much development from developers in the way of new apartment complexes. That’s because developers are loath to construct housing that has a cap on rents. Instead, they will prefer to build condos that can be sold at a higher price, and that means there will be fewer low-income units available for tenants.
While a unit may be under rent control, it doesn’t mean that the landlord is obliged to keep the property well-maintained. In fact, many landlords do neglect their property under rent control, simply because there’s no real motivation to keep it well-maintained. That often means that rent-controlled units are older and lack the modern updates that other complexes might have.