The Biden-Harris proposal for rent caps seems to be resonating, as a new survey from Redfin (NASDAQ:RDFN) found nearly four of every five respondents agreeing there should be caps on the amount landlords are allowed to increase rent.
The survey was conducted by Ipsos in September from a base of 1,802 renters and homebuyers aged 18-65. In the survey, 86% of respondents who identified themselves as Democrats believed there should be caps on the amount landlords are allowed to increase rent, compared with 79% of respondents who identified as Republicans. More renters (86%) than homeowners (78%) supported rent caps.
Redfin also noted that nearly four of every five respondents who live in California (78%) believed there should be caps on rent increases. California’s Tenant Protection Act prevents landlords from raising rent more than 5% plus the increase in cost of living each year. Next month, California voters will decide on a proposition that would allow cities to unilaterally expand rent control without state approve.
For its part, Redfin was not supportive of rent caps.
“Rent control sounds appealing for renters in theory because it limits price increases and saves money in the short term, but it eventually worsens rental affordability because it exacerbates the supply shortage,” said Chen Zhao, Redfin’s economic research lead. “If rent increases are capped below the amount developers would need to make a profit, they have little incentive to build more apartments and homes. The best way to make rentals more affordable is to build more units.”
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I own 5 nice rental homes in a smaller community. I have put over $90,000 updating and redecorating them in the last 2 years if I cannot recoup money, and they impose rent caps I will probably sell them. Do you tell MLB, NFL or others how much they can pay the players? Same thing. Supposed to be supply vs demand.
Let the market be free! That’s the only way to achieve true value.
Of course renters would favor caps.
Now survey landlords as to how much they are already losing to tax increases, tenant neglect, repairs and new government regulations and licensing requirements.
Those regulations are contributing to the housing shortage in the first place and allowing demand to force prices up, so don’t believe all the short sighted partisan rhetoric.
Keep (get) government out of the “free” market.
As a landlord, one of the unintended consequences of rent control or rent caps, is that I will raise my rents the maximum allowable (within market rates at least) every year, since I don’t know when my expenses will exceed my ability to increase rents. Without those controls, I will often allow rents to lag the market when I have good long term renters and avoid the costs of turnover (i.e. a win win scenario for the landlord and the renters), secure in the knowlege that if major repairs or inflation or whatever occur, I can increase rents as needed at that time.
As a Landlord, I had to increase rent after COVID due to tenants refusing to pay rent during COVID when they were told they wouldnt be evicted for not paying rent. Fortunatly I only had one tenant that used it for a reason not to pay for rent.. I lost 6 months rent plus they destroid the property resulting in an expensive total rehab.. I know of a lot of Landlords that almost went bankrupt during that period and sold their rental houses at the first oportunitiy which kicked off the housing shortage. I will be retiring in a few years and I plan on selling all my rentals since none of my children live close by to take them over when I pass on. I wouldnt want them to be stressed or bothered with something they know little about.. This is only my 2 cents worth of information for free.. I do consulting services for a fee… [email protected]
Funny how no one mentions cost control went the rent control subject comes up. Let’s cap property taxes on rental property. Let’s cap white goods replacement to wholesale, not jobber price, or under. Let’s cap roofs, carpet, tile, paint, drywall and the such to distributor prices. Let’s cap wages for all employees and/or sub-contractors of rental property. Doesn’t that make the playing field a little more fair? With these things factored in I don’t think people would be so fast to jump on the bandwagon. People who own rental property are looking for a return on investment not to break even.