Introduction 1042 I. Understanding the Goals of Rent Regulation 1043 A. Stated Goals of Rent Regulation Programs 1043 B. Existing Research and Challenges 1046 II. Features and Trade-Offs of Rent Regulation: Defining the Regulated Universe 1048 A. Breadth of Program 1049 i. The Universe of Regulated Properties 1049 ii. Tenant Income Qualifications 1053 B. Deregulation 1055 C. Tracking and Enforcement 1057 III. Features and Trade-Offs of Rent Regulation: Setting Rent Increases 1059 A. Process of Setting Rent Increases 1059 B. Increases Beyond Annual Rate 1061 i. Vacancy Bonuses 1061 ii. Capital Improvement 1063 ii. Rents Below the Legal Maximum 1065 B. Hardship Increases 1068 IV. Features and Trade-Offs of Rent Regulation: Additional Tenant Protections 1070 A. Protections Against Eviction and Harassment 1071 B. Special Provisions for Particular Tenants 1074 V. Recommendations for the Future 1076 Conclusion 1079 INTRODUCTION
Debates about rent regulation are not known for their nuance. The world tends to divide into fierce opponents and strong supporters. But within these debates, stakeholders and commentators rarely engage with the details of local ordinances, even though those details may significantly affect outcomes for tenants, landlords, and broader housing markets. This Article expands the landscape of contemporary rent regulation debates by articulating and cataloging the numerous choices jurisdictions must make in designing and implementing rent regulation programs. It shows that, far from being monolithic, rent regulation programs comprise a range of diverse schemes. The dearth of research examining the details of these schemes, however, has hindered policymakers from understanding their available choices and the trade-offs among them.
Part I of this Article reviews the overarching goals of rent regulation and explains how some of these goals may be in tension with each other. Parts II through IV outline the choices that local policymakers must make in enacting and implementing rent regulation ordinances and highlight the wide variety of regimes that jurisdictions with rent regulation have adopted in practice. Part II illustrates the choices that define the basic features of rent regulation: which units are to be regulated, how they become deregulated, and how jurisdictions implement and oversee these processes. Part III tackles the many components of annual rent increases, from how jurisdictions set annual, across-the-board increases to the exceptions and adjustments that may arise in cases of vacancy, building or unit improvements, or hardship. Part IV examines the ways in which rent regulation schemes interact with other tenant protections, chiefly safeguards against harassment and eviction, as well as protections for vulnerable groups. Part V calls for new empirical research to study the effects of different regulatory features.
UNDERSTANDING THE GOALS OF RENT REGULATION
Stated Goals of Rent Regulation Programs
State and local governments have authorized or adopted rent regulations to serve a number of different goals. One objective of rent regulation is to protect existing tenants from rent increases that would make their housing unaffordable. New York City puts that goal most starkly, justifying its program as necessary to "prevent exactions of unjust, unreasonable and oppressive rents and rental agreements and to forestall profiteering, speculation and other disruptive practices tending to produce threats to the public health, safety and general welfare." (1) Similarly, Oakland, California states its purposes is to "provid[e] relief to residential tenants in Oakland by limiting rent increases for existing tenants." (2) Washington, D.C. lists "protec[ing] low- and moderate-income tenants from the erosion of their income from increased housing costs" as the first of its five objectives. (3) D.C. is unusual in specifying that its goal is to protect tenants with low and moderate incomes. (4)
Landlords' ability to skimp on maintenance and repairs and arbitrarily evict tenants protected by rent regulations undermines the basic goal of protecting existing tenants. To address this issue and support tenant stability more generally, rent regulation programs aim to prevent evictions, harassment, and decreases in services or maintenance. (5) New York City's Rent Guidelines Board lists protecting "habitability and security of tenure" as one of its goals. (6) One of the objectives in D.C.'s rent regulation statute is to "continue to improve the administrative machinery for the resolution of disputes and controversies between housing providers and tenants." (7) Union City, New Jersey's ordinance explains that, at the time its passage, tenants were reluctant to complain about exorbitant rent increases or the deterioration of housing without protections like just cause eviction. (8)
A number of jurisdictions articulate a broader intent to avoid or alleviate the crisis in housing affordability. San Francisco's Rent Board describes the purpose of its program as "alleviat[ing] the city's housing crisis." (9) Union City's rent regulation ordinance states that "[u]nless residential rents of tenants are regulated and controlled, there will be an inevitable housing crisis that will inevitably lead to homelessness." (10) Takoma Park, Maryland's rent regulation website describes the program as "designed to preserve the city's affordable housing stock." (11)
Some jurisdictions adopt rent regulations in part to preserve the diversity of their populations. Takoma Park's rent regulations are designed in part to "maintain economic and ethnic diversity." (12) Union City, New Jersey's rent regulations are justified in part by "the public interest to have a cross section of people residing in Union City across all socio-economic backgrounds." (13) Oakland defines the purpose of its rent adjustment program as "foster[ing] fair housing for a diverse population of renters." (14)
Some of these goals may be in tension. For example, protecting the affordability of the existing housing stock may make housing overall less affordable by discouraging, rather than encouraging, the construction of new rental housing; (15) the continuing operation of rental properties as rentals; (16) or adequate maintenance and rehabilitation of the rental stock. (17) Additionally, protecting existing tenants may undermine, rather than advance, the diversity of the population. (18) Further, rent regulation might facilitate discrimination by creating excess demand, thereby making it easier for landlords to handpick their tenants. (19)
Accordingly, jurisdictions try to balance the aim of providing tenants with stable and affordable housing with concern for market incentives and landlords' abilities to earn fair returns on their investments. Some make a point of stating that the purposes of their rent regulation programs include "provid[ing] incentives for the construction of new rental units and the rehabilitation of vacant rental units" (20) or "encouraging rehabilitation of rental units" and "investment in new residential rental property." (21) Others specifically note the importance of allowing landlords subject to the regulation to make a "fair return," (22) "fair and adequate rents," (23) or a "reasonable rate of return on their investments." (24) Oakland states that its goals include "allowing efficient rental property owners the opportunity for both a fair return on their property and rental income sufficient to cover the increasing cost of repairs, maintenance, insurance, employee services, additional amenities, and other costs of operation." (25)
Existing Research and Challenges
Studying how well rent regulation serves the goals jurisdictions articulate for their programs is challenging. Chief among these obstacles is that rent regulation laws are relatively static, presenting few opportunities to examine the effects of a change in policy. (26) It is difficult to identify control groups when policies do change because the properties excluded from regulations within a jurisdiction are often idiosyncratic. (27) Comparisons between jurisdictions are problematic because cities that adopt changes to rent regulations may be experiencing very different market pressures than those that do not change or do not have rent regulation programs. (28) Even when plausible control groups do exist, data on rent and tenant outcomes are difficult to come by. Finally, because of the potential for variability in both regulations and market conditions, scholars must be cautious in assuming the evidence of the effects of rent regulations from one jurisdiction will generalize to another.
The best evidence we have on the impacts of rent regulation provides support for the idea that there are trade-offs among the goals jurisdictions articulate for their programs. Rebecca Diamond, Timothy McQuade, and Franklin Qian used uniquely comprehensive data to exploit an expansion of rent controls in San Francisco in 1994. (29) They found that tenants in rent-regulated units enjoyed lower rents and, on average, stayed in their homes longer. (30) However, rent regulation prompted some landlords to demolish their units to make way for new construction or to convert them into other uses. (31) Ultimately, this led to a reduction in rental supply, a housing stock that served higher-income individuals, and higher rents citywide. (32) Accordingly, sitting tenants generally benefited, but other renters and those wanting to move into the city encountered fewer units and higher rents. (33) Further, they found that tenants who lived in areas with the highest rent appreciation and who had only been at their current address for a few years were less likely to remain at their addresses than tenants in the control group of similar buildings not subject to the expansion of rent regulation. (34)
Similarly, Brian Asquith used an instrumental variable approach (35) to study whether...