Study: Rent controls reduce multifamily investment

While well-meaning, rent controls work against intended purpose, National Apartment Association says

Two-thirds of housing providers would not consider investing in markets with strict rent-control policies in place, according to a new study released by the National Apartment Association (NAA).

The organization’s figures come from interviews conducted from December 2022 to February 2023 with businesses from three markets affected by rent controls or rent-control proposals: Portland, Oregon; St. Paul, Minnesota; and Santa Ana/Santa Barbara, California. Participants in the study ranged from mom-and-pop businesses with a small number of units to large firms with properties throughout the U.S.

Many of the smaller respondents, the NAA noted, invested in real estate as part of a retirement plan or a second income source. Findings from the interviews were supplemented with a nationwide public opinion poll conducted in February.

The study found that more than 70% of housing providers have had their investment and development plans impacted by rent controls. Fifty-four percent of respondents said that, on a scale from 1 to 10, enactment (or anticipated enactment) of rent-control policies has affected their development or investment plans at a 7 or above. Another 17% rated the impact at 5 to 7. Moreover, two-thirds of housing providers said they would “absolutely not consider investing” in markets with strict rent-control policies in place.

Rent controls also hurt existing properties, the NAA claims, with 61% of providers saying they anticipate having to defer maintenance on rent-regulated units in their portfolio.

“NAA’s latest research aligns with decades of data and real-life case studies that all lead to the same conclusion: rent control is a failed policy that brings more harm than relief to local communities,” said Bob Pinnegar, president and CEO of the NAA. “It’s not surprising that policies that make it harder for housing providers to do their jobs lead to less housing options.

“It is past time for our elected officials at all levels of government to shift their focus to policies that address housing supply issues and are targeted to the households most in need of support.”

“Rent control is not the solution it appears to be on the surface,” said Leah Cuffy, NAA’s director of advocacy research. “While well intended, these policies have been proven to work against their intended purpose and ultimately hurt renters, housing providers and communities. This research explains the unsettling truths about rent control which are important to recognize in housing affordability discussions.”


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