San Francisco has a rent-control mechanism that limits the rent landlords can charge for their properties. Rent-control cities not only control the rent payment for units in their cities, but also the rent cannot be raised at a rate higher than a predetermined percent or be higher than a certain level. This raises the question if the system of rent control actually helps or harms residents.
The National Multi Housing Council cites a survey of economists where 93% of respondents stated “a ceiling on rents reduces the quality and quantity of housing available”. San Francisco landlord Anne Kihagi is a proponent of improving rent control, maintaining that it is harmful for landlords and tenants alike.
The living conditions in San Francisco have deteriorated over the years because many landlords are unable to keep up with the maintenance on their properties. The income they receive from rents collected does not offset the ever-growing costs to maintain their properties. The average building in San Francisco is over 120 years old. As properties age, the wear and tear on these buildings will only continue, resulting in even worse living conditions in these rental properties. Per a recent white paper by Val Werness, there are a few states in the country that prohibit rent control because “… the state courts [found] that a rent control ordinance is constitutional only if landlords are not deprived of a just and reasonable return on their rental property”. This is not happening in San Francisco where landlords can barely manage upkeep and the city continues to pass more regulations to the disadvantage of the landlords.
Although living conditions in rental properties are a real issue, it does not receive much attention in San Francisco. The housing crisis and rent control and affordability are more press-worthy issues in the city. This failure to recognize landlords’ plight poses an imminent threat to many properties in the city. Many of them are constructed with zero separation from neighboring properties, which means any structural risks are shared by both properties. Residents in both properties are at risk of losing both their homes and belongings due to poor conditions.
The city needs to take note of the issue and look for alternative solutions. One viable solution is to set income restrictions to rent control like in New York City. Residents in New York City that make over $120,000 a year have decontrolled units. This means that the landlord is able to de-control the rent for such residents and charge market rent. Such a system in San Francisco would be beneficial for landlords and tenants in forging Improved living conditions. While there would be initial opposition from tenants, the system would create improved mobility and an improved profit return for the owners to better maintain these old buildings.
The National Multi Housing Council maintains that rent control encourages people to stay where they are, sometimes to their detriment. Some residents may miss out on career opportunities simply because they do not want to move and give up their rent-controlled unit. These residents may also be missing out on home ownership because their rent-controlled unit seems so appealing. Residents who stay locked into their rent-controlled units have outdated systems like plumbing or electrical because landlords cannot update them, adding to the dangers present in these buildings. In addition, rent controls is not a positive system for poorer residents, as rent-controlled residences are typically located in higher-priced, urban areas. These residents are forced to find less expensive units with long commutes to their place of employment.
Of California’s 482 municipalities, 15 of them implement a current form of rent control. This equates to approximately 20% of the state’s housing units and ¼ of the rental units
Rent control was created to aid residents who needed it; however, it is now an outdated system. The country’s economy has vastly changed since rent control started in the 1970s, and the rental housing market needs to reflect that. Municipal governments need to take what they have learned from rent control and utilize it to help improve the rental market for both landlords and tenants.
Additional Reading
Diamond, R., McQuade, T., & Qian, F. (2018). “The Effects of Rent Control Expansion on Tenants,
Landlords, and Inequality: Evidence from San Francisco.” NBER Working Paper No. 24181.
For more information on Anne Kihagi and West 18 Properties, visithttp://annekihagisf.com/.
