It did not take long for this year’s Legislature to once again embrace ideology at the expense of common sense.
Multiple studies indicate that rent control would reduce construction and tighten the housing market, offsetting the desired goal of making housing more affordable. That, however, did not prevent the House Housing Committee this week from approving a bill that would limit the rent and fee increases that landlords may impose.
House Bill 1217, which was supported by nine Democrats and opposed by eight Republicans, would:
- Cap rent and fee increases at 7 percent in any 12-month period, while also prohibiting increases in the first year of a tenant’s lease.
- Limit move-in fees, security deposits and late fees.
- Make violations enforceable by the office of the state attorney general, under the Consumer Protection Act.
A similar bill is under consideration in the Senate, presaging a renewal of debates from last year, when legislators narrowly declined to pass a rent control measure.
The appeal is understandable. A tight housing market and a growing population in recent years have contributed to rental prices that outpace inflation throughout Washington. Unpredictable rent creates housing anxiety and can price people out of the market, contributing to a homelessness crisis.
The idea of capping rent increases sounds compassionate, but it would unfairly constrain landlords and would have deleterious effects on the rental market.
“Rent control appears to help affordability in the short run for current tenants, but in the long-run decreases affordability, fuels gentrification, and creates negative externalities on the surrounding neighborhood,” Rebecca Diamond, a Stanford University professor and founder of the school’s Cities, Housing and Society Lab, writes. “If society desires to provide social insurance against rent increases, it may be less distortionary to offer this subsidy in the form of a government subsidy or tax credit.”
Or, as famed Swedish economist Assar Lindbeck reputedly said, “In many cases rent control appears to be the most efficient technique presently known to destroy a city — except for bombing.”
That might be hyperbolic, but there is much evidence detailing the negative impact of rent control. Government limitations on rental prices lead to less construction of new rental units; incentivize small investors to sell to corporate owners; and compel many owners to convert properties to short-term rentals, further reducing the availability of housing.
Last year, while considering similar legislation, Sen. Annette Cleveland, D-Vancouver, said: “I agree that it is urgent for us to find relief for all who are struggling. But my concern is that this policy will have unintended consequences that will be counter to that goal.”
That should be the concern of all legislators as the issue is revived in Olympia. Rather than hampering the business practices of landlords in a specious attempt to protect renters, lawmakers should focus on increasing the housing stock. Tax breaks, grants and access to low-cost financing can be used to incentivize the construction and maintenance of rental units. So can collaboration with municipal governments to promote local policies that lead to more construction.
Such actions would organically stabilize housing costs, while rent control would artificially stabilize those costs and have only short-term benefits. Lawmakers should be able to understand the difference.