AB 1482 – Tenant Protection Act and Its Impacts on Tenants, Landlords, and the Broader Housing Market
With housing shortages and rent steadily increasing, many long-time tenants are in favor of passing rent control laws. Advocates argue that rent control offers many benefits, including providing security for tenants against rising rents, providing affordable housing to tenants, and protecting vulnerable tenants from displacement. Its benefits include allowing tenants to achieve better financial stability, keeping families in their homes, and preventing working-class tenants, seniors, and vulnerable members of society from being priced out of their long-time residences and neighborhoods. Without rent control, lower-income tenants would have difficulty securing and keeping a home. At the same time, landlords benefit from rent control because tenants are more inclined to stay in the property long-term. Fewer tenant turnovers mean less hassle and stress for the landlord. It saves them money because vacancy periods could result in landlords realizing a loss on the property. However, this is far from a win-win situation.
A substantial body of research has found that rent control often backfires and has quite the opposite effect of keeping housing affordable. One research study by Stanford Economists Rebecca Diamond, Timothy McQuade, and Franklin Qian examined the consequences of San Francisco’s 1994 ballot initiative to expand rent control. They found that while the expansion of rent control prevented tenant displacement, the landlords in San Francisco responded to the law by withdrawing from the rental market, selling their properties, and converting their rent-controlled buildings into condominiums. The overall supply of rental housing declined as landlords converted their apartment buildings into higher-end condominiums and replaced old structures with new construction to avoid rent control regulations. The reduction in rental housing led to rent increases in the long run. It also shifted the city’s housing supply towards less affordable housing since many multi-family housing structures were converted to condominiums and new construction. These shifts in the housing supply drove up rent and decreased the supply of affordable housing. It also inadvertently created a housing stock that catered to higher-income individuals. Ultimately, the authors found that rent control created the very outcome it wanted to avoid – a decline in the number of renters living in rent-controlled units and a housing stock which was less affordable than before.
Lau, Ava, "AB 1482 – Tenant Protection Act and Its Impacts on Tenants, Landlords, and the Broader Housing Market" (2021). GGU Law Review Blog. 80.
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