Rent Control

Many cities have passed ordinances restricting the amounts by which landlords can increase a tenant’s rent. These local laws are generally held valid even in the face of contrary state law.

Rent control normally covers only residential housing (and not office space, shopping mallls, etc.) Since it is usually designed to assist low-income tenants, it is rarely applied to luxury housing, and sometimes does not apply to single family homes. In some cases the tenant will have to prove that the premises are his primary residence, and may be prevented from subletting the premises at a higher rent (this is to prevent rich people from renting out many properties and then subletting them out at higher rates, thus putting the government in the business of subsidizing profits for rich people at the expense of landlords).

In some cities, the landlord is entitled to raise the rent as soon as the premises become vacant – he can charge the next tenant higher rent, but cannot increase that rent as long as the same tenant lives thee. This is particularly important for cities that have rapidly increasing property values, in order to prevent people from being moved onto the street or into slums by rapidly escalating rental rates. If it causes landlords to go bankrupt, though, it can exacerbate housing problems by decreasing in investment in new housing (because of the reduced profitability caused by rent control).

The least restrictive form of rent control prevents landlords from evicting a low-income tenant simply to increase the rent – in this form of rent control, a landlord cannot refuse to renew a lease without good cause (tenant misconduct, for example), and may not raise the rent beyond a certain legal maximum. Many times this legal maximum is tied to the consumer price index (to allow the landlord to adjust rental rates to inflation).

Keep in mind that rent control laws vary from city to city, and are subject to interpretation.

DISCLAIMER: The following is intended for reference purposes only and not as legal advice.



Passive Income