Some State Legislatures Adjourn Before Taking Up Rent Control

In the wake of double-digit apartment annual rent increases and the cost of houses increasingly out of reach for people, a number of states have proposed rent control on housing, as the National Multifamily Housing Council recently noted. Florida, Illinois, Maryland, and Kentucky are among these states. 

“Legislation in Illinois, Maryland and Kentucky, which would have either capped rents or revoked statewide rent control preemption, failed to advance out of committee,” the NMHC wrote.

Florida had seen the filing of a measure to revoke statewide preemption, which would eliminate restrictions on statewide rent control. “Of concern, however, is activity at the municipal level,” the organization writes. “While Florida preempts rent control statewide, municipalities may enact rent control for one year if both: the municipality declares a “housing emergency;” and voters then pass a ballot referendum on rent control.”

For example, commissioners for Orange Country, which is home to Orlando, are considering a “rent stabilization ordinance” where “rents have increased an average of 30% over the past year,” according to the Orlando Weekly. The measure would cap annual rent increases at 5% for landlords who own more than four properties. St. Petersburg and Tampa both rejected such proposals. Miami-Dade County has declared a housing affordability crisis and might be closer to action.

St. Paul, Minnesota passed a ballot measure in 2021. Pioneer Press reported that apartment construction had slowed year-over-year by 80% as developers pulled permits for 1,393 housing units in mixed-use or multifamily projects. The NMHC called this a continuation of “the negative ramifications of rent control” and has more broadly referred to attempts in other geographic areas as “flawed policy.”

But the questions around this are more complex and not necessarily something investors, developers, and landlords can dismiss. First, as Pioneer Press noted, “officials caution that seeing significant variation from year to year in building activity is not uncommon.”

These variations may be purely a response to rent control that still hasn’t gone into effect. But other factors are at work in the industry, including the construction producer price index that saw on a national basis multifamily construction costs—excluding capital investment, labor, and imports—up 20.1% year over year. Industry professionals have repeatedly cited high costs and ongoing supply chain issues as causes for project cancellations or significant delays, with developers waiting for better conditions to restart work. There is also significant concern over ongoing inflation and rising interest rates.

Could rent control chill development? Possibly. Other factors might as well. Furthermore, affordable housing has been an issue for years. At the same time, growing costs are keeping many developers looking at higher-end housing because the rents they can realize are high enough to make a project profitable even with rising costs.

But ordinary people who can’t afford rent are uninterested in hearing about the problems the industry has. Politicians, who need to be reelected, may feel disinclined to reject calls for rent control. What seems likely is more attempts to control rents are likely to occur.