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Home›Anti Incumbency›Montgomery County Rent Stabilization Policy Has Its Part To Play – But Only If Done Carefully – Greater Washington

Montgomery County Rent Stabilization Policy Has Its Part To Play – But Only If Done Carefully – Greater Washington

By Robin S. Hill
July 13, 2022
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Montgomery Arms Apartments at Colesville Road and Fenton Street in Silver Spring, Md. Image by Elvert Barnes under a Creative Commons license.

Rents are skyrocketing across the country, including locally, and while not all increases are so dramatic, some are going up by double-digit percentages, 1617, 25, or even up to 50%, forcing tenants to choose between a tight budget and a move that is hardly free in itself.

Solutions to this problem remain complicated and controversial. Allowing more housing would indeed help. Providing more competition from more homes reduces landlords’ influence over potential tenants, and therefore, their ability to raise rents as dramatically as we are currently seeing.

Support for more housing production has grown, with the political left looking into the issue. But resistance, as evidenced by Montgomery County, is strong, and even blue states and jurisdictions will struggle to ease harmful zoning restrictions on a scale needed to meet enough housing costs alone anytime soon.

Moreover, even if all zoning were reformed to some sort of new ideal level tomorrow, it would take years, if not decades, for relaxed zoning to provide a dramatic number of alternatives in all but the most in-demand areas. Moreover, while the benefits of new housing, both short and long term, are very real at the top and bottom of the income scale, it is true that they benefit middle and middle income households more directly. superior.

This means that families with incomes well below the region’s median income often need subsidized, income-tested housing, which will require increased public spending. However, with the vast majority of residential land zoned only for detached single-family homes, this response, while crucial, is unlikely on its own to achieve the scale needed.

And like all solutions to the housing crisis, zoning reform and investing in more low-income housing are not panaceas. As Montgomery County’s emergency rent stabilization measures expire and a new one is considered, the need for a more permanent rent stabilization policy should also be explored, as well as the benefits and disadvantages of such measures.

What exactly is rent stabilization?

Rent stabilization (often referred to as rent control, although it may have a different meaning) is essentially putting some kind of limit on the growth of rents, usually expressed as the percentage of rent that can increase from year to year, usually applied only to a renewing tenant (as opposed to a new tenant signing a lease on a unit for the first time). The temptation to use this tool to legally cap the amount of rent that may rise at a time when so many people are struggling is understandable and somewhat intuitive, but like most things in housing policy, things are not so simple.

Benefits…

First, the benefits of rent stabilization, primarily housing stability. Writing next for Vox, Montgomery County’s Jerusalem Demsas noted that it might be more useful to view rent stabilization as an anti-displacement tool, rather than a broad measure of affordability. A cohesive community, kids who don’t have to change schools frequently and just…general predictability in life all have value, among other things, and that deserves to be weighed against the impacts on the offers rent control measures.

Similarly, while the ability of rent stabilization to control long-term costs may be limited, it can also serve as an anti-gouging and consumer protection tool, limiting sudden and dramatic shocks that can displace tenants. and/or cause serious financial damage.

…and the disadvantages of rent stabilization

The downsides are just as real. Rent stabilization targets occupancy of controlled housing better than it “needs” it, so it risks reducing costs for people who are relatively better off and already housed more than those who are looking for limited housing that is not already in controlled units. This problem may be compounded by the negative impact these policies are likely to have on supply, particularly when caps are tight, leaving less housing to be found for those in need.

This impact is all the more pronounced if there is no significant exemption period for new constructions, which gives housing producers time to recover their investment. Restrictions on how much you can raise rent do limit the profits that can be made from a subdivision. Whether we like it or not, fair or unfair, Is probably a lower supply of market-priced housing, which has always been the most common form of housing in this country.

We can see this happening in St. Paul, Minnesota, where housing construction plummeted (unlike nearby Minneapolis) after a strict rent control measure was passed with no new building exemption. (Although the policy has not yet gone into effect, developers are basing their decisions on whether or not to build based on anticipated future returns, and the bill has given them every reason to anticipate lower returns.)

Meanwhile, DC has a rent control law and still has a strong market for new housing, but it notably exempts any building built after 1975. This means new developments are not subject to rent restrictions, unlike Saint-Paul, which makes the new supply more economically feasible.

So where does this leave us?

I remain skeptical of permanent and extremely strict rent stabilization measures due to the effects described above, and if I thought that without rent stabilization we would have all the housing needed to keep things affordable, I wonder. I would oppose it in all its forms. , but that’s just not the world we live in.

There are a number of other barriers to supply, including zoning, parking minimums, and, well, weather, as described above. This does not mean that the additional impact of the stabilization of rents on supply should be ruled out, but it Is This means that we also need to consider the benefits of the policy, particularly if the supply side impacts can be limited.

The hard truth is that even though I have supported relatively strict temporary emergency measures in the past, there is probably no permanent a rent stabilization policy that would prevent mid-single-digit rent increases, even in times of low inflation, without limiting supply to the point that in the long run they do more harm than good. However, there are alternatives.

Oregon recently implemented a statewide law that allows rent increases of 7% over inflation, while exempting new rentals for 15 years, and it may be instructive to look at what is happening in this state. This could provide a way forward that could prevent many of the sudden double-digit increases that we are seeing, and which risk suddenly ripping residents out of their communities, and perhaps from Montgomery County and the DC area.

At the very least, Montgomery County should explore more permanent policy options. People are hurting, and we can’t ignore the moral imperative here. A house is the most important place in someone’s life, and it can uproot your whole life if you are evicted from it due to a dramatic increase in rent. Data, economics, logic, and hard supply impacts all have their place in this debate, but so does our obligation to help those who are simply hoping for a stable place to rest at night, and we have to use all the tools in the toolbox. do this.

Michael English is a resident of downtown Silver Spring. He holds a bachelor’s degree in political science from Southern Connecticut State University and a master’s degree in public administration from George Mason University. He is passionate about issues of county governance and housing affordability. Mr. English is a member of the Montgomery for All Steering Committee. All opinions expressed in this piece are his own.

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