DEFINITION of Rent Control
Rent control is a form of price control that limits the amount a property owner can charge for renting out a home, apartment or other real estate. Rent control acts as a price ceiling by preventing rents either from being charged above a certain level or from increasing at a rate higher than a predetermined percentage.
BREAKING DOWN Rent Control
The purpose of rent control regulations is to limit how much money individuals and businesses must spend on renting real property. The amount of rent permitted may vary across jurisdictions and property types, but is generally set at a level considered affordable to renters and fair to property owners.
The economic impact of rent control regulations has been disputed. Some economists consider rent controls like other price ceilings to be market distortions that discourage the construction of more homes by limiting the profits owners can earn from them. By discouraging the construction of new housing stock, regulators may create the same housing shortage they sought to prevent by enacting the legislation in the first place. Others believe rent control is a viable method of ensuring affordable housing for renters that prevents landlords from capriciously raising prices.
Rent regulation schemes may permit property owners to increase rents at a fixed rate, or at a rate indexed to economic factors. Rent levels indexed to inflation, for example, allow owners to increase the rent they charge tenants based upon the rate of inflation or the rate of inflation plus a percentage.
Why Rent Control Was Introduced
Rent control may have been instituted in response to some factor affecting the economy. For example, in New York City rent control was instituted in the wake of World War II and the policies continue to remain in place for certain properties. What started with temporary federal legislation, the Emergency Price Control Act of 1942, was eventually replaced by state-based legislation that enforced rent controls.
New York State Homes and Community Renewal is the state agency that regulates rent controlled and rent stabilized apartments in New York.
The current rent control program in 51 municipalities including New York City applies largely to residential buildings that were built before February 1947. This policy is also in effect for Albany, Buffalo, and towns and villages in counties including Albany, Erie, Nassau, Rensselaer, Schenectady, and Westchester.
Among the requirements for an apartment to remain under rent control, the tenant or their lawful successors must have resided in the apartment since before July 1, 1971. Lawful successors include spouses, lifetime partners, and family members. Once that apartment is vacated, its designation may switch to rent stabilized, or it may be removed entirely from rent regulation if there are fewer than six apartment units in the building.