Housing costs are a perennial political issue. Many see rent control as a way to guarantee affordable housing, especially in areas with rapidly rising rents. They view rent controls as providing more stability and certainty for low-income households.  

Economists have long pointed out that setting a price ceiling below the market clearing price will inevitably lead to product shortages. An unintended consequence is that product sellers can be choosy about the buyers on margins other than price. Since there are many willing renters and few available rental units at the suppressed price, landlords can be pickier and are less likely to rent to households with unstable and very low incomes who will have a more challenging time paying the rent. Likewise, they are more likely to rent to renters known to the landlord through personal, social, or political connections.    

In addition, controlled rents reduce the returns on investment in rental apartments. We’d expect landlords to invest less in maintaining rent-controlled apartments’ quality. Some may convert their buildings from rental apartments to condos, further shutting out wealth-constrained households from the market. 

Not all rent control programs are the same. Some are very restrictive, creating significant shortages. Others allow much more flexibility in adjusting rents. The research suggests that cities with more flexible rent controls, often called rent stabilization, may have lower rents but also have smaller shortages and less housing deterioration. Also, regulations restricting new development and housing often happen simultaneously with rent control in many cities. For example, NYC had rent control and dramatically restricted new building after the 1960s. Diamon, McQuad, and Qian (2019) found that rent control reduced worker mobility and the number of available apartments in the long run.  

The Urban Institute finds rent control generally promotes stability for people in rent-controlled apartments. They also found mixed results regarding rent control’s effects on rents, construction, and converting apartments to condos, as well as mixed results regarding rent control’s ability to promote economic opportunity for disadvantaged households. Also, many economic benefits of rent control go to households whose incomes and wealth are above the median in the local community.  

We don’t think rent controls are a very effective way of helping lower-income people. Rent controls also don’t help increase the available number of rental apartments. However, they may attract enough voters who obtain benefits or are unaffected but sympathetic to renters to create political support for the program.