Simply put, rent control and rent stabilization regulate apartment prices to protect tenants from unfair rent increases and to keep housing affordable for renters, while still allowing property owners to increase rent at a regulated, fair rate.
Currently, four states and Washington, D.C., have some form of rent control in place (California, New York, New Jersey, Maryland), 37 states prohibit rent control and nine states allow rent control but have no cities that implement it. Because rent control and rent stabilization are controlled by the state, and not the federal government, policies vary from state to state.
So, what's the difference and how does it apply to you? We'll explore the history of rent control and rent stabilization, talk about the differences between the two and highlight the pros and cons of rent stabilization.
Rent regulations came about after WWII as major metro cities faced severe housing shortages and sharp increases in rent. To help reduce the number of evictions and keep housing costs affordable, cities in New York and California created policies like rent control and rent stabilization.
Nowadays, rent control and rent stabilization is still prevalent in four states, but the number of apartments protected is dwindling.
Rent control means a tenant's monthly rate is pretty much frozen and can't be increased by the landlord at the end of the lease. Living in a rent-controlled apartment is like finding a pot of gold at the end of a rainbow. To qualify as a rent-controlled apartment, the building and tenants must meet very specific criteria:
If people don't meet these criteria and an occupant dies without a successor, the formerly rent-controlled apartment will be removed from regulation and will likely lease for current market value.
Rent-controlled apartments are rare and are decreasing in number. In 1950, there were more than 2 million rent-controlled apartments. But in 2017, there were only 22,000 left. Unless you have a family member that meets the above criteria, you won't be able to move into a rent-controlled apartment.
Now that we've covered rent control, let's talk about rent stabilization. When many people talk about rent control, they probably mean rent stabilization, which means rent can only increase by a small, set percentage each year. The good news is that rent-stabilized apartments are much more common and accessible than rent-controlled apartments.
Rent stabilization is a way to regulate the cost of rent for certain residential buildings in some cities. Renters and apartment complexes that are under rent stabilization must meet these qualifications:
Property managers are not obligated to tell you if the apartment building falls under rent stabilization protections. If you're curious about your own apartment building or looking to move into a rent-stabilized complex, you can ask the city and request documentation about rent history or check out this website for more information (specific to New York only).
The upside and downside of rent-controlled or rent-stabilized apartments depends on the stakeholder. If you're a renter, you'll benefit from these regulations and if you're a property owner, you'll likely feel the negative effects.
As rent continues to increase across the country, rent-stabilized apartment buildings become diamonds in the rough. Check your state's laws and policies regarding rent control and rent stabilization to see how it may benefit you.
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