A new special report from the Washington Research Council should be read and filed for future references. The issue it addresses, rent control, has a way of hanging around and resurfacing when housing costs soar.
The WRC writes,
Economists have identified a number of negative effects stemming from rent control. Residential rent control reduces the supply of rental housing by discouraging new construction and encouraging the conversion of rental units to owner occupancy. It discourages maintenance of rental housing, causing housing stocks to deteriorate. It reduces the property tax base. It lowers tenant mobility, generating mismatches between units and tenants. It discourages densification and lengthens commute times. Within rent controlled cities, local property taxes are shifted away from rental housing onto owner-occupied housing and commercial and industrial properties. Regional and state-wide property taxes are shifted onto property owners outside of the city.
Policymakers have tended to agree [with the economists].
The report thoroughly examines the research, which fully supports the shorthand take above.
Prompting the review is, no doubt, the recent experience in Seattle, where relief from the state’s preemption of rent control made it to the city’s legislative agenda. Tom James wrote in Crosscut last month,
No one imagined Seattle City Councilmember Kshama Sawant’s rent control proposal would be wildly popular in the Washington Legislature, but it appears city lobbyists have barely been pushing the idea, even though it’s on the city’s legislative to-do list.
Sawant got rent control, always a controversial subject, added to the city’s legislative agenda last year over the objections of some of her colleagues on the city council…
As it is listed on the city’s legislative agenda, the target isn’t forcing rent control on landlords around the state — or anywhere for that matter — but just getting the state legislature to lift a ban in state law which prohibits any city from adopting rent control rules of its own.
As James writes, the proposal was dead on arrival. The Seattle Times editorial board similarly noted,
Rent control is a failed economic policy, well-documented in other cities, but that doesn’t stop Sawant and her supporters from tossing it out as a red-meat issue for her base. Rent control won’t be enacted, and wouldn’t make Seattle more affordable, but Sawant and council candidate Jon Grant seem to think they’ll win votes by tilting at windmills…
Repealing the statewide rent-control ban is still dead on arrival in the Legislature, regardless of a more nuanced request from Seattle. This is a waste of the council’s time.
And, setting the politics aside (if that’s possible), read the WRC report to understand the economics.