Rent Control

Rent control is a legal limit on the rent a landlord may charge, or on how much and how often the rent may be increased, for housing the law covers. There is no federal rent control. Every limit in the United States is imposed by a state statute, a local ordinance passed under state authority, or the terms of a government housing program, and the coverage rules differ in every one of them.

The word is used in two senses, which is worth untangling first because New York uses the narrower one. New York State Homes and Community Renewal, the agency that administers both, describes "rent regulation programs known as rent control and rent stabilization," so in New York rent regulation is the umbrella and rent control is the older and much smaller of the two schemes inside it. Elsewhere, and in ordinary conversation, "rent control" is used loosely for any law limiting rent increases, including the recent statewide caps that operate on an entirely different design.

Those two designs are the substance of the subject. Under the older unit-attached model, the regulated status belongs to the apartment and persists across tenants. Under the newer tenancy-attached model, the law limits increases while a tenant remains and lets the owner reset the rent to whatever the market bears once the unit is vacant, a feature usually called vacancy decontrol. A reader who knows which model a jurisdiction uses can predict most of the rest.

New York is the unit-attached model, and its two programs are defined by building vintage and tenancy history. According to the New York City Rent Guidelines Board, quoting the state agency's own Fact Sheet #1, rent control in New York City generally applies to buildings built before 1 February 1947 where the tenant has been in continuous occupancy since before 1 July 1971, or their lawful successors; rent stabilization generally covers buildings of six or more units built between 1 February 1947 and 31 December 1973. Rent control operates under the Maximum Base Rent system, in which a maximum base rent is set for each apartment and adjusted every two years for operating costs, and an owner who certifies that essential services are provided and violations removed may raise the rent toward it by the lesser of 7.5 percent a year or the average of the five most recent Rent Guidelines Board annual increases for one-year renewal leases.

What happens on vacancy is the part that distinguishes the model. A rent-controlled apartment becomes decontrolled when the tenant leaves, but in a building of six or more units built before 1974 it then becomes rent stabilized rather than reverting to the open market. So the unit remains regulated across tenancies, moving from the stricter program to the looser one. Only in a building of five or fewer apartments can it be fully deregulated on vacancy. Rent control in New York is therefore a shrinking category by design, since no new units enter it.

The modern statewide statutes are the opposite design, and calling them rent control obscures that. California, Oregon and Washington each cap increases during a tenancy and each, in its own way, frees the rent when the tenancy ends.

California's cap, at Civil Code section 1947.12(a)(1), bars an owner from increasing the gross rental rate over any 12-month period by "more than 5 percent plus the percentage change in the cost of living, or 10 percent, whichever is lower," measured against the lowest gross rental rate charged for that unit at any time in the preceding 12 months, and paragraph (a)(2) allows at most two increments in a 12-month period. Subdivision (b) is the vacancy release: "For a new tenancy in which no tenant from the prior tenancy remains in lawful possession of the residential real property, the owner may establish the initial rental rate not subject to subdivision (a)." Housing issued a certificate of occupancy within the previous 15 years is exempt, as is deed-restricted affordable housing and, on conditions including a written notice to the tenant, a separately alienable unit whose owner is not a real estate investment trust, a corporation, or a limited liability company with a corporate member. Subdivision (o) repeals the section on 1 January 2030.

Oregon's cap sits in ORS 90.323, which bars an increase during the first year of a tenancy, requires 90 days' written notice thereafter, permits only one increase in any 12-month period, and caps the amount at the maximum calculated under ORS 90.324. That maximum is "the lesser of: (A) Ten percent; or (B) Seven percent plus CPI," and the Department of Administrative Services must calculate and publish it "no later than September 30th of each year" for the following calendar year. A dwelling whose first certificate of occupancy was issued less than 15 years before the notice is exempt.

Washington's RCW 59.18.700 bars any increase during the first 12 months of a tenancy and, in any later 12-month period, an increase greater than "seven percent plus the consumer price index, or 10 percent, whichever is less," subject to exemptions listed at RCW 59.18.710. The Department of Commerce calculates and publishes the applicable percentage annually. Vacancy decontrol is explicit: the section "does not prohibit a landlord from adjusting the rent by any amount after a tenant vacates the dwelling unit and the tenancy ends." The section expires on 1 July 2040.

Read together, three features recur across the newer statutes and are worth looking for in any jurisdiction: a formula rather than a fixed percentage, so the applied cap moves with inflation and is published annually by a state agency; an exemption for recently built housing, which is how the statutes avoid discouraging construction; and a release of the rent on vacancy.

A state can forbid or confine what its cities do, and the mechanism is ordinary preemption. California is the clearest worked example. Its Costa-Hawkins Rental Housing Act, at Civil Code section 1954.52(a), provides that notwithstanding any other law an owner "may establish the initial and all subsequent rental rates" for a unit with a certificate of occupancy issued after 1 February 1995, or one that is "alienable separate from the title to any other dwelling unit," which covers single-family homes and condominiums. Local rent-control ordinances in California therefore operate only in the space Costa-Hawkins leaves them. Preemption is not unique to California, and how far a particular state's version reaches is a question about that statute rather than something that can be generalized. The point to carry away is that the existence of a city ordinance is never the whole answer, because state law sits above it and has to be read first.

What these laws do and what they achieve are separate questions. This page states what the statutes provide. Whether limits of this kind help or harm the supply, quality and cost of housing is an economic question that the statutes themselves do not answer, and no number is offered here on it.

Three questions decide whether a rent limit applies to a particular unit, and they are asked in this order. First, coverage: does the jurisdiction have a statute or ordinance reaching this property, given its age, size, ownership and any government program it participates in. Second, the cap: what does the law permit as an increase, and is it a fixed percentage or a formula whose applied value is published each year. Third, the vacancy rule: does the limit follow the unit or end when the tenant leaves.

Where a formula is used, the applied percentage is published by a named state agency on a published schedule, which is where the current figure should always be read rather than from a secondary source.

A hypothetical example using California's formula. Assume a year in which the applicable percentage change in the cost of living for the property's metropolitan area is 3.2 percent. The statutory cap is the lower of 5 percent plus that figure, which is 8.2 percent, and 10 percent. So 8.2 percent applies. On a rent of $2,400 a month, the maximum increase over the 12-month period is $196.80, taking the rent to $2,596.80, and the owner may take it in at most two steps. The 3.2 percent here is an assumed figure for the illustration, not a published rate for any particular year.

Two features of the statute change that answer. The cap is measured against the lowest gross rental rate charged for the unit at any time in the prior 12 months, not the current rate, so a temporary concession does not become a new base. And if the tenant leaves, subdivision (b) lets the owner set the next tenancy's opening rent free of the cap altogether, which is why the limit constrains an increase and not a market price.

Pros

• A covered tenant gets a predictable ceiling on the increase and, under the newer statutes, a minimum notice period before it takes effect.
• Formula-based caps track inflation rather than freezing rents, so they adjust with operating costs instead of falling further behind each year.
• The statutes are public and specific, so a tenant can check a proposed increase against the law and an owner can price within it.
• Enforcement mechanisms are written in. Washington, for example, allows a tenant or the attorney general to sue and provides damages and attorneys' fees.

Cons

• Coverage is riddled with exemptions, so a tenant who believes a cap applies frequently finds it does not: new construction, separately alienable homes, owner-occupied duplexes and program housing are all commonly carved out.
• Vacancy decontrol means the limit protects the sitting tenant rather than the unit, so a covered rent can reset entirely when the household moves.
• Several of the statutes carry sunset dates, which makes the protection temporary unless a legislature renews it.
• For an owner, a formula cap sets a ceiling on revenue while property tax, insurance and repair costs are set by other markets, and nothing links them.
• Because state preemption sits above local ordinances, a city's rules can reach far less housing than the ordinance appears to cover.