As officials in Utah and throughout the country try to find ways to increase affordable housing, one state lawmaker has an idea that she thinks could benefit low-income residents: letting cities choose whether to impose rent control.
The Utah Code currently prohibits any city from implementing rent control, a cap on the amount landlords can charge tenants for rental units, “unless it has the express approval of the Legislature.”
Rep. Jennifer Dailey-Provost, D-Salt Lake City, drafted a bill that would remove this provision “so that cities and municipalities can make that decision for themselves.” She plans to propose the bill during the legislature’s 2020 General Session.
Provost, who took office at the beginning of the year, said she was encouraged to draft the bill by a constituent who works with Salt Lake City’s homeless population.
It is not the role of state lawmakers to regulate rental rates, Provost said, adding that the law would restore “local control.”
“If we’re a state that values small government,” the Salt Lake City representative said, “then we need to be true to that philosophy and we need to put the decision-making power where it belongs.”
Lack of affordable housing is particularly an issue in Utah County. In October 2018, Mary Street, vice president of Utah’s Colliers International real estate firm, said most people in the county spend more than 30% of their income on housing costs.
According to listings on apartmentfinder.com, a one-bedroom apartment in Utah County can cost up to $2,280 a month, while most are listed around $1,100 a month.
Rent control in the United States goes back to at least World War II when caps on rental units were set as a price-control measure, according to David Sims, an economics professor at Brigham Young University.
Most cities and states got rid of rent control after the war, but some cities reinstated it in the late 1960s and early 1970s, Sims said.
Currently, there are rent control measures in California, New Jersey and New York City, according to Sims. In February, Oregon became the first state in the country to impose statewide rent control, NPR reported.
Supporters of rent control say setting limits on the amount landlords can charge is good for low-income renters and makes housing more affordable. Sims, who has researched the impacts of previous rent control measures in Massachusetts, said that, in the long term, rent control often has the opposite effect and leads to less affordable housing.
Rents go up when there is a housing shortage, Sims said. Rent control measures can “exacerbate” these shortages because landowners have a financial incentive to convert rental units into condominiums or commercial buildings.
When there is an excess demand of housing units, which happens in cases of housing shortages, “landlords essentially get to pick who they want as tenants from a pretty long line of people,” said Sims.
“Most economists see rent control as being a very costly way to try (to) help (low income) people,” said Sims. “Most of the benefits get captured by people who are not particularly poor.”
In a study that was published in September, researchers at Stanford University looked at the effects of rent control on affordable housing. They found that landlords who were subject to rent control reduced available rental housing by 15% and sold rental units to owner-occupants and developers. Additionally, their research showed that rent control limited renters’ mobility by 20%.
Provost, whose bill would let cities impose rent control, said she agreed that some rent control measures could have negative impacts.
“There are definitely wrong ways to implement it,” Provost said.
But the representative said she believes rent control can be passed in ways that help low-income Utahns. An example, she said, would be “a very targeted implementation for a very small subset of community members,” such as people on a fixed income.
In a statement, the Utah Apartment Association said it opposes any efforts to implement rent control in the state.
“Rent control hurts all property owners in Utah (not just landlords) by capping property incomes and values across the board,” the statement reads.
The apartment association said the way to increase affordable housing is by “reducing barriers to development, allowing basement apartments and accessory dwelling units, and fostering a strong economy that provides economic opportunity for households.”
Executive director Paul Smith said that letting cities and municipalities pass rent control measures “would require that we could potentially have to play by 245 different sets of rules.”
“It’s generally not the best approach to affordable housing,” Smith said.