With housing shortages, rising rent prices, unemployment due to COVID-19, and other issues, rent control has become a hot topic this election year. As a refresher, rent control (also called rent stabilization) caps a tenant’s rent at a specific dollar amount or limits the percentage the rent can be increased by after the tenant’s lease is up. While rent control has been utilized across the country for decades, there’s been a notable increase in states’ implementation of rent regulation measures over the past few years.
Currently, 6 states have some form of rent control laws. Likewise, many states either have no form of rent control or preempt it entirely. Here’s a look at how each state currently handles rent control laws; please note that this is intended for informational purposes only. We recommend further research into your state and local laws to better understand how they affect your rental properties and policies, as well as discussing changes to your policies with legal counsel.
State-Wide Rent Control
California is the most recent state to enact rent control, and only the second state to make the laws applicable state-wide. The AB 1482 bill was passed on September 11, 2019, and went into effect on January 1, 2020. This bill placed a 5% cap per year (plus inflation) on rent increases within the state. The cap doesn’t apply to properties that have been issued a certificate of occupancy within the previous 15 years. It also doesn’t place limits on the powers of local authorities, so local governments may choose to enact more aggressive rent control legislation.
Oregon was the first state to implement state-wide rent control measures, with Governor Kate Brown signing SB 608 into law in February 2019. This placed an annual limit of 7% (plus inflation) on rent increases in the state. Properties granted a certificate of occupancy within the past 15 years are exempt, as well as landlords who provide reduced rent to tenants as part of a federal or local program, or subsidy.
States With Rent Control Legislation
- New Jersey
New Jersey doesn’t have state-wide rent control laws, but local legislators have had the authority to implement them since the 1970s. Currently, over 100 municipalities in New Jersey have some form of rent control. The caps and exemptions for these laws vary from city to city.
- New York
New York utilizes two different systems for rent regulation: rent control and rent stabilization. Rent control typically applies to buildings built before 1947, while rent stabilization applies to buildings built between 1947 and 1974. For areas that are outside New York City, rent control may also be referred to as the Emergency Tenant Protection Act (ETPA). Although rent control measures aren’t state-wide, most cities and communities in New York state have some type of rent regulation measure in place.
In New York City, Nassau, Westchester, and Rockland, The Rent Guideline Boards set the rates for increases in rent-stabilized apartments. These rates are evaluated annually and are applied from October 1st to September 30 each year.
For rent-controlled apartments, New York City uses the “Maximum Base Rate System” (MBR). This method establishes a maximum base rent for each apartment and adjusts the amount every two years based on operating costs. Landlords may raise the rent by either:
– the lesser of either the average of the five most recent Rent Guidelines Board annual rent increases for one-year renewals, or
– 7.5% each year until they reach the MBR
Rent increases are prohibited from exceeding the rates determined by the Rent Guidelines Board, and tenants have the right to challenge any proposed increases. For areas outside of NYC, the New York State Division of Housing and Community Renewal regulates the maximum allowable rates for rent-controlled apartment increases. Rents are prohibited from exceeding these rates.
Also important to note: in June 2019, the Housing Stability and Tenant Protection Act was passed, which made rent stabilization a permanent fixture of the state’s housing code and closed loopholes used by some landlords to skirt around rent regulation laws. These include things like an end to “vacancy bonuses,” decreasing the percentage a landlord can raise the rent for property improvements, capping the number of family units to one per building, and ending high-income deregulation.
Only the city of Takoma Park currently has rent stabilization regulations. This applies to all individual condos and multi-family rentals. Single-family homes, accessory apartments, and duplexes where one of the units occupied by the owner as their primary residence, are exempt. The rent stabilization allowance is re-valuated annually by the city and has been set at 0.4% for the year, from July 2020 to June 2021. All landlords with properties under rent stabilization are required to give at least a two-month written notice of a rent increase and are prohibited from an increase that exceeds the approved allowance.
- Washington D.C.
Washington D.C. passed the Rental Housing Act in 1985, which set the annual limit on rent increases based on the Consumer Price Index, plus 2% (with a maximum of up to 10%). For properties with tenants who are 62 or older or disabled, the maximum increase is capped at the Consumer Price Index only, with a maximum of up to 5%.
Rental units that were built after 1975, federally or district subsidized units, and rentals units that were vacant when the act went into effect are exempt. Despite attempts by local lawmakers to extend the current rent control program to 2030, the program is set to expire on December 31, 2020.
States the Preempt Rent Control
While a number of states have rent control regulations, a greater number of them preempt local governments from enacting rent regulation laws on private rental properties. These include:
- New Mexico
- North Carolina
- North Dakota
- South Carolina
- South Dakota
States That Preempt Mandatory Exclusion Zoning and Rent Control
Exclusionary zoning was introduced in the early 1900s and has been used in the past to keep families with lower socioeconomic means from being able to find affordable housing in middle and upper-class neighborhoods. Six states preempt local governments from enacting mandatory exclusion zoning or rent control, including:
States Without Rent Control or
Seven states have no rent control regulations in place or preemptions:
- Rhode Island
Dillon States Without Rent Control or Preemptions
In addition to states that lack any form of rent control, there are also several Dillon states that don’t have rent control laws or preemptions. Dillon state rules essentially mean that local governments are only allowed to exercise powers that are expressly granted by the state. Unless the state allows local governments to pass rent control laws, the laws must be passed by the state or not at all. The Dillon states include:
- New Hampshire
- West Virginia
Will we see more states and local governments enact rent control laws in the future? Given the trend over the past decade and the increasing concerns over affordable housing, it’s very likely. As always, we recommend keeping a close eye on proposed laws and bills passed in your area to make sure you’re aware if there any changes made to existing laws that could affect your property.