An increase in local laws that erode multifamily revenue, suppress new construction and increase costs could be helping to drive rents higher beyond high-cost regions to communities across the country, contributing to the growing housing affordability challenge in the United States.

Among the regulations impacting the real estate market are source-of-income laws, eviction regulations, resident screening laws and state preemption laws, according to a MetroSight study supported by the National Apartment Association and the National Multifamily Housing Council. The debate over laws governing housing providers has become polarized, with tenant advocates seeking to protect renters and property owners warning of increased costs and reduced operational viability, the study said.

Source-of-income laws are meant to ensure fair access to housing by restricting housing providers from differentiating applicants based on their income source, as long as that income source is lawful. In jurisdictions where they were in effect, these regulations have led to lease signing delays, greater revenue losses from collections and vacancies, and higher utility expenses, the study found. The number of comprehensive source-of-income rules has been growing for at least three decades, and as of September 2022, they were on the books in 17 U.S. states and 106 municipalities, according to the report.