In the midst of a housing crisis that is already squeezing the poor out of the city of Los Angeles, the
Los Angeles Times reported a couple of days ago that a June 3 ballot measure would abolish all rent control laws in California (see http://www.latimes.com/news/local/la-me-rent28jan28,0,7822882.story). While this undoing of tenant protections would be gradual (since protected units would only join the unregulated market after their current occupants move out) it could deal a fatal blow to efforts at maintaining income diversity in the city, particularly in poor- and Latino-heavy, gentrifying districts like Echo Park, Koreatown, Lincoln Heights, Boyle Heights.
Four of the most popular arguments against rent control blame such regulations for actually
reducing the amount of affordable rentals in the city in the following ways: 1) by discouraging developers from creating new rental units since their ability to make a profit is reduced; 2) by keeping units occupied much longer than they would be without rent control since tenants, who would otherwise like to move, often remain in a unit to continue to pay below-market rents; 3) by encouraging landlords to leave the “low-profit” business of renting and convert their properties into condos; 4) and by encouraging landlords to jack up rents as much as possible the moment a longtime (and below-market paying) tenant moves out.
All four arguments are flawed, however.
1) While it is true that landlords whose regulated rental properties stand to make smaller profits, the fact that the law exempts all developments built after 1978 (when it was passed in Los Angeles) has meant that developers have continued enjoying considerable returns on rental housing built since then. Even if the law were to be updated so that it applies to all rental units created before February 2008, new housing developed for the next several years would continue to harness profits for both builders and landlords, especially if it took another three decades for the ordinance to be updated again. Given that a provision in the law allows for yearly increases in rent to match inflation, a landlord never sees any decrease in rent revenues throughout a protected occupant’s tenancy from the day she moves in.
2) As for the regulation encouraging the prolongation of a tenant’s stay in a rent-controlled unit, therefore keeping it unavailable to others, while true, the fact is that unless the tenant moves out of the city altogether, becomes homeless, or dies, she would always need to move into another home, meaning that the net number of units that would be made available by her moving would be null. Associated with this same argument is the point that tenants themselves suffer when they feel they cannot move into a new unit of their choice, say, closer to a new job, because they are compelled to stay put where they can pay below-market rents. However, that many people can’t afford market-rate housing is a problem that must be blamed on an unfair distribution of wages among workers, not on rent control, which actually ensures that at least one unit in the city remains affordable to a tenant.
3) Indeed, many landlords in rent-controlled markets have converted their properties into condominiums as a way of cashing in on the skyrocketing real-estate market in recent years. But laissez faire in rental housing would leave low- and moderate-income tenants no better off if they can’t afford the rising home values, be they for rent or sale. (A better protection for tenants would be to curb the condo conversion mania.)
4) Finally, that a landlord starved for profit during years of a renter’s occupancy is more likely to raise rents to the maximum as soon as the unit becomes available is foolish, as it ignores common market sense: a) the provider of any good will always seek to make the biggest profit possible, and b) the price of any good is ultimately set by the market.
Rent control is hardly a silver bullet to our affordable-housing crisis; it does create other problems, the main one being a landlord’s lowered incentive to keep up regulated properties. But in the face of public officials’ paltry efforts to minimize poor people's displacement being brought on by gentrification, rent control is the only thing that can save Los Angeles from becoming exclusively for the rich. Now the question is whether we can save it, as the June 3 election (when no mayoral, gubernatorial or presidential candidate will be elected) will almost surely garner a low voter turnout, which always benefits conservative causes.
