[Rent control means more money and control for renters and less
for landlords. It’s why they hate it — and why we should fight for
it.] [[link removed]]

LANDLORDS HATE RENT CONTROL BECAUSE IT’S GOOD FOR THE REST OF US  
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Brian J. Sullivan
August 15, 2021
Jacobin
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_ Rent control means more money and control for renters and less for
landlords. It’s why they hate it — and why we should fight for it.
_

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In 2018, California’s Proposition 10 threw landlords across the
country into a panic. If passed, the ballot measure would have paved
the way for expanded rent control throughout the state. One leading
landlord trade group called
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the ballot measure “nothing short of an existential threat to the
multifamily [landlord] industry.”

Worried about Prop 10’s reverberations in their own cities,
landlords from Chicago, New York, and elsewhere raised over $70
million
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to defeat the ballot measure. The landlords ultimately prevailed —
after outspending tenant advocates threefold.

Why did the prospect of rent control in California strike such
expensive fear into the hearts of landlords across the country? For
landlords, buildings are investments. Sometimes those investments are
enormous: the investment firm Blackstone has pivoted to real estate in
recent years, spending over $11 billion
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on it in the last three months of 2020 alone.

But even on a smaller scale, purchasing and maintaining residential
property is expensive. Landlords have to pay their mortgages, property
tax, and maintenance staff. Landlords expect a return on this
investment, and they generally get it.

Rents steadily rise over time, and generally outpace wages and
inflation, so owning residential property can be lucrative. Creative
landlords can find income streams other than rent as well, like
selling to speculators when property values rise. Or, usually at the
lower end of the market, they can burn their investment properties and
collect the insurance money. Whatever strategy they use, landlords
turn significant profits on their investments. Since March 2020,
sixty-one of America’s richest landlords saw their wealth increase
by $24.4 billion
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Landlords hate rent control because it interferes with this investment
cycle. It limits the rent they can extract from tenants, and it limits
the control they wield over their properties. Not coincidentally,
that’s also why rent control is such a good thing for the rest of
us.

Rent

It’s easy to understand why landlords hate the regulation of rental
amounts. In unregulated housing markets, landlords can charge whatever
they want for rent. When a tenant’s lease is up, the landlord can
increase the rent by as much as they like. They justify their
capacious appetite for higher rents with the standard economics
jargon: landlords only charge what the market will bear, and housing
supply and demand will ultimately balance out.

Rent control is good for tenants, who get to remain in their
communities, but bad for opportunistic landlords seeking the highest
returns on their investments.

The problem is, with an essential commodity like housing, the market
will bear an awful lot. Rental housing in the United States is
untenably expensive, so much so that it is “literally impossible to
afford the rent on minimum wage
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In 2014, almost half of all households paid more than 30
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percent
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of their income (a standard measure of affordability) toward rent.
After the economic fallout of the pandemic, this figure is likely much
higher. Tenants are routinely forced to choose between paying for
food, medical care, or rent.

Rent control prevents landlords from squeezing every penny possible
from their tenants. It imposes limits on how much a landlord can
increase the rent each year. In New York City, for example, the Rent
Guidelines Board generally approves increases in the range of 1 to 2
percent for one-year leases. By ensuring small incremental increases,
rent control keeps rents lower over time. The median monthly rent in
New York’s regulated housing is 31
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percent
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lower
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than in unregulated housing.

Landlords, unsurprisingly, hate this.

“Rent control laws are complete bullshit in NY,” one landlord at
biggerpockets.com, a popular landlord website, recently wrote. “We
have a tenant that moved in in the 80s and pays $680 a month because
we are only allowed to increase her rent by 2% a year. . . . The rest
of the apartments [in her building] get above $2,200 a month.”

Rent control is effective at keeping rents low, and this is half the
reason landlords want to do away with it.

Control

But lower rent increases alone don’t explain the depths of landlord
hatred. After all, heavily regulated markets like those in New York
City, San Francisco, and Santa Monica remain highly profitable places
to own rental housing. Equally important is rent control’s second
feature: eviction prevention.

In unregulated housing, a landlord can terminate a tenancy as soon as
the tenant’s lease expires. Landlords do not need to give any reason
for the termination, and they have almost unlimited prerogative when
it comes to eviction. They value this prerogative because it allows
them to pivot toward more profitable uses of their investment
properties.

For instance, the Bay Area has seen a massive infusion of real estate
capital over the past two decades. Wall Street investors have
purchased and renovated thousands of residential units, developers
have constructed new luxury towers, and the city and state have
subsidized megaprojects like Oracle Park, the stadium where the San
Francisco Giants play. Joining this infusion of capital is a glut of
high-income families looking to rent or buy property in the city.

San Francisco’s landlords can make huge profits by renting to
high-income tenants or building luxury housing. The problem, from the
landlords’ perspective, is that the buildings and land they own are
not vacant. They are filled with longer-term, often lower-income,
tenants. Without rent control, landlords could simply evict those
tenants, making way for whatever higher-profit use they deem
appropriate.

Landlords perceive rent control as a threat to their ability to
exploit the market for maximum profit — and they are right.

Rent control limits this discretion. Tenants in rent-controlled
housing are guaranteed renewal leases, meaning that their landlords
have to keep renting to them whether they want to or not. This
guarantee leads to housing stability for tenants.

San Francisco’s rent-controlled tenants are more likely
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the same address long-term and more likely to continue living in the
city despite the pressures of gentrification. Importantly, this
stabilizing effect disproportionately benefits San Francisco’s
black, Asian, and Latino populations.

For landlords, tenant stability is a source of apprehension and
resentment. Rent control prevents them from changing their business
strategy as housing markets become more lucrative. Instead of renting
to richer tenants, landlords are compelled to continue providing
housing to their current tenants. This is good for tenants, who get to
remain in their communities, but bad for opportunistic landlords
seeking the highest returns on their investments.

Human Need, Not Landlord Greed

Rent control shifts the balance of power away from landlords and
toward tenants. It limits the scope of the housing market and limits
landlords’ power within that market. Landlords perceive this as a
threat to their ability to exploit the market for maximum profit —
and they are right.

Rent control doesn’t just improve tenants’ market position; it
also paves the way for greater working-class organization and
political power. With lower rents and guaranteed renewal leases,
rent-controlled tenants are better positioned to organize and fight
their landlords. They cannot be evicted for demanding more repairs,
lower rent, and better housing conditions.

And why stop at their own buildings? As tenants get more organized,
they form neighborhood tenant coalitions
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challenging
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the power of real estate in local and national politics.

The landlords successfully fought back this threat to their power in
California in 2018. But a year later, they didn’t fare so well. In
early 2019, tenants in Oregon won statewide rent control. Several
months later, New York’s tenants won
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a dramatic overhaul of the state’s rent-control system. One landlord
compared [[link removed]] New
York’s new rent laws to physical dismemberment, saying, “It’s
almost like you’ve sent me out into the world and said, ‘go to the
store and buy all these things,’ but you’ve cut off my arms.”
This year, Albany, New York, continued the dismemberment, passing a
“good cause
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eviction law that provides the eviction protections discussed above.

With a post-pandemic eviction crisis looming, the necessity for
housing that meets human need instead of landlord greed has never been
clearer. Landlords are prepared to throw tenants out of their homes in
order to secure a return on their investments. Expanding rent control
will be a key piece
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of any solution to this crisis, and landlords will fight that solution
to the bitter end.

If anything, landlords underestimate the threat of rent control.
Socialists should not. By keeping rents affordable and protecting
tenants from eviction, rent control converts housing from an
investment designed to turn a profit into a benefit designed to meet a
basic human need. Rent control limits the power landlords and other
capitalists have over our lives. Socialists should fight to make those
limits as sharp as possible.

_Brian J. Sullivan is a housing attorney and labor activist. He lives
in New York City._

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