Why Rent Control is Just a Terrible Really Bad No Good Idea


This week Rep. Nicole Macri and 31 of her state House colleagues introduced a bill that would impose rent control across Washington state. Given the fairly comfortable majorities that the Democrats have in both houses this year, for once it has a good chance of passing in spite of expected Republican opposition.

That would be unfortunate, because the decades of intense research on residential rent control conducted around the world overwhelmingly conclude that rent control is terrible policy. When presented with the deluge of research confirming that it’s a bad idea, rent control advocates tend to say two things: first, “anyone can cherry-pick a handful of research papers to support their position.”  Second, “previous attempts at rent control made mistakes in implementing it that created loopholes and/or weakened it at the behest of corporate interests, but this time we’ll do it right.” 

The research showing the negative consequences of rent control isn’t cherry-picked; it’s the vast majority; similarly, the consensus among the economics research community is also that it’s bad policy. And when we consistently hear every rent control advocate say, “they did it wrong before but this time we’ll get it right,” we need to recognize that the problem with rent control isn’t the implementation details, but the idea itself. So let’s review how rent control works, and what the research says the results are.

Rent control regimes place some or all rental housing in a given market under regulation, limiting annual rent increases to a certain cap (usually tied to a given measure of inflation). In the case of Macri’s bill, increases can be no more than 3% in a given 12 months, or the federal government’s CPI-U index for the western region, whichever is greater – but under no circumstances more than 7% in one year. That sounds high, until we get a year like 2022 when inflation blew through that proposed cap. But there are two other problems with this approach.

First, landlords’ expenses are driven by construction, maintenance and renovation costs, which consistently have increased faster than consumer-based prices. So for every year that goes by, landlords’ expenses are rising faster than the amount they can raise prices; as time passes they get further and further behind until at some point it becomes untenable for them. Second, landlords quickly learn to increase prices by the maximum allowable amount every year, because if they skip a year there is no mechanism for them to ever catch up in future years: every year is separate and independent of prior and future years, and they don’t get credit for giving their tenants a break in previous years. The result is that under rent control, rents can often rise faster than they would have otherwise under ordinary market pressures.

Macri’s bill adds a small loophole, saying that a rent increase more than the cap is illegal only if it “is not justified by costs necessary to maintain the dwelling unit.”  But nowhere in the bill does it explain how landlords or government regulators should determine whether certain costs are necessary. This is a recipe for endless and costly litigation.

Other problems abound. The research also shows that the landlords of rent-controlled housing tend to reduce the amount of maintenance and upgrades, slowly degrading the quality of the housing until it matches what the landlords are allowed to charge for it. Multiple studies show that rent-controlled housing tends to be of lower quality than uncontrolled housing – and that a “hidden cost” of rent control is that tenants end up paying out of their own pocket for some of the maintenance on their unit.

Some approaches to rent control attempt to regulate all rental housing units in a market, but the research shows that doing so creates a strong disincentive to build new housing and the pace of rental housing construction drops dramatically. Since in most cases the reason that rents were going up in the first place was that demand was outpacing supply, this form of rent control is counter-productive and in the long term makes the housing problems even worse.

In response and to try to sustain new housing construction, policymakers often choose to exempt new housing for a certain number of years – as Macri has done with her bill, which exempts units for the first ten years after the certificate of occupancy is issued. But the research shows that this doesn’t solve the problem; rather, it just creates a different set of problems. It effectively splits the rental market in two smaller ones: a rent-controlled one and an uncontrolled one, each of which have their own dynamic. The rent-controlled market sees a measured increase in prices as is allowed, vacancy rates tends to be exceedingly low, and tenants tend to stay in place for a long time: they know they have a good thing, and they want to keep it that way. Perversely, studies also show that rent control tends to reduce the economic mobility of tenants in rent-controlled units: tenants will commute further and in some cases turn down better jobs because of how much money they are saving on rent by staying in place.

But the research shows that the impact on the uncontrolled portion of the rental housing market is much more severe. Because there are rarely vacancies in the rent-controlled portion of the housing market, there is increased competition for the uncontrolled housing – including everyone moving into the area.

Rents in the uncontrolled market skyrocket to levels well above what they would have been otherwise, and as a result, often the overall market for rental housing, including both rent-controlled and uncontrolled units, ends up just as costly on average as it would if rent control had not been imposed; the only difference is that some renters are getting a great deal, and others are compensating for them with even higher prices.

A common conclusion in rent control research is that rent control is great for those lucky enough to score a rent-controlled unit, and terrible for everyone else. By the way, studies have shown that the rent-controlled housing doesn’t get allocated to the people who need it most; it goes to those who are most skilled at scouring the market for an available unit. In San Francisco, for example, people living in rent-controlled housing have higher household income than those living in uncontrolled rental housing.

The research also shows that savvy landlords will find ways to remove their units from rent control. Under Macri’s scheme, they could take the unit off the market, do enough modifications to require a new certificate of occupancy, and then rent it uncontrolled for the next ten years. Also, it isn’t completely clear whether “vacancy de-control” would be allowed, in which when one tenant leaves and another moves in, the landlord can reset the rent back to market prices.

Or, if the landlord takes the unit off the market for a few months, swaps out the appliances and carpets, and then re-lists it, that would allow for marking up the prices. And some landlords will likely choose to stop renting altogether and simply sell their unit to a homebuyer instead. Collectively, these tactics have been shown to slowly pare away the total number of units under the rent-control regime, over time eliminating the perceived benefit of imposing rent control in the first place.

The bottom line is that rent control doesn’t work: it perverts the rental housing market in artificial ways that create new problems that are just as bad, if not worse, than the problem it was intended to solve. It also creates disincentives to the one tactic that has been shown consistently to have a positive effect in sustaining affordable housing prices: increasing the supply of rental housing.

Governments should build public housing and social housing, and provide economic incentives to private parties to build more rental housing at every price point. If one looks closely at the few jurisdictions that have imposed rent control and it hasn’t been a complete disaster, one finds that the government also invested in building a large amount of new housing – either simultaneously, or after discovering that private housing construction had cratered in response to rent control. 

The message to governments is clear: skip the rent control, and jump straight to the part where they invest in building more housing.  Admittedly, that’s a tough sell: rent control is very seductive as public policy. Renters love it, it demonizes landlords (whom everyone already loves to hate), it’s immediate, and best of all, it’s free for governments: the landlords pick up the costs. 

Contrast that with investing in housing: it’s very expensive, it takes years to make an impact while providing no immediate relief, and it creates even more landlords as well as creating a perception that elected officials are cozying up to corporate interests. But building housing works, and imposing rent control doesn’t.

Washington state is a case in point. The communities across the state who haven’t built more housing have seen rents increase dramatically over the last several years. But Seattle, Everett, and a handful of other places that have made the investment have seen relatively stable prices (modulo the seasonality within a year, and the crash-and-recovery during the COVID pandemic).

Here is ApartmentList.com’s data on rents for the past six years for Seattle, Bellevue, Tacoma and Everett, four cities that have spend the last five years or so building a ton of new housing. All saw relatively stable rental prices up until the beginning of the pandemic in 2020. (when doing year-to-year comparisons, make sure to look at the same month:  every year prices go up in the summer and drop in the winter, so comparing summer in one year with winter in another year is meaningless)

Here is ApartmentList.com’s data on rents for the past six years for Seattle, Bellevue, Tacoma and Everett, four cities that have spend the last five years or so building a ton of new housing. All saw relatively stable rental prices up until the beginning of the pandemic in 2020. (when doing year-to-year comparisons, make sure to look at the same month: every year prices go up in the summer and drop in the winter, so comparing summer in one year with winter in another year is meaningless)

For the record, rents dropped even further (and faster) in Seattle in December 2022, putting the city at – 0.9% over the past twelve months. However, other parts of the state where there weren’t investments in housing over the past several years have seen a very different outcome: steadily rising rents.

If you need further proof that rent prices have more to do with supply of housing than anything else, check out this overlay of Seattle average rents and vacancy rates:

Similarly, the point in the chart above where we see rents in rural Washington flatten out in mid-2021 coincides with when vacancy rates started going back up.

This is compelling evidence that if Rep. Macri and her colleagues want to keep housing affordable, they should drop their rent control proposal and stay focused on creating more housing. It works, and it’s the only thing that sustainably works. But don’t hold your breath: among her bill’s co-sponsors are both the Chair and Vice-Chair of the House Housing Committee. While it’s unclear what might happen on the floor of the House and in the state Senate, it seems likely that it will cruise through committee this

Kevin Schofield
Kevin Schofieldhttp://sccinsight.com
Kevin is a city hall reporter and the founder of SCC Insight, a web site focused on providing independent news and analysis of the Seattle City Council and Seattle City Hall in general. In a previous life, he worked for 26 years in the tech industry in a variety of positions but most notably as the COO of the research division at Microsoft. Kevin volunteers at the Woodland Park Zoo, where he is also on the Board of Directors. He is also the Vice Chair of the Board of Trustees of Harvey Mudd College.


  1. A separate but related influence on Seattle rents is the existence of an estimated 7,000 registered “ short term rentals”. Our city’s appeal as a tourist destination has created this huge inventory of units who compete directly with our struggling hotel industry and would otherwise be available for long term occupancy. Many cities such as Honolulu, Palm Springs and New York have imposed “minimum rental periods” of 3 weeks to 3 months on all “non hotel” rentals. Seattle should consider doing the same.

    • Very true. In addition to short term rentals, many units simply are kept empty and off the market. In SF a survey showed the number of such units recently was 60,000. The reasons for doing this are many, including the difficulty/impossibility of evicting tenants in breach of the rental agreement terms, and large multifamily corporate owners deliberately keeping units off the market so they don’t have to report low rents to creditors (which can violate credit agreements).

    • People put their rental units in “short term rentals”, AKA “AirBNB”-type platforms because Seattle City Council has enacted so many anti-landlord laws that people who happen to have an ADU, DADU, or unit in a du/tri/quadplex are not going to take a risk. I’ve got three direct neighbors, all ultra-liberals, who have gone this route. Their ability to pay their primary mortgages on their homes (one duplex, one with an ADU, one with a room) is based on short term rentals because they could not risk having a tenant not pay. Under Seattle’s recent laws, it can take a year to oust a non-paying tenant.

      Thousands of homeowners have made the choice to go AirBNB or other platform, removing long term rentals from the market – and the City Council was warned this would happen. Cracking down further by preventing short term rentals will only result in the homeowners selling out to developers, who will tear down these older homes and build six-pack townhomes that sell for $750k & up.

      • Feisty,
        Excellent perspective on a complicated issue. My takeaway is that there may not be a housing shortage at all, just horrible utilization driven by a totally inept city government.

  2. “creating more housing [ ] works, and it’s the only thing that sustainably works.”

    Decreased demand works as well to reduce rents. That’s already happening in Seattle, due to a handful of factors including WFH employees moving themselves and their households away, tech company layoffs, weak demand in Seattle for non-STEM-degreed labor, the eviction moratoria ending, and the factors that make living here more difficult and undesirable than living most places (high taxes targeting the least well off for the proportionally-largest adverse impacts, poor schools, crime/urban decay, and real estate prices inflated by the governments’ policies intended to attract tech executives who then supposed would fill all the new office towers with crowds of highly-compensated employees).

  3. Excellent article, Kevin. I simply fail to understand why measures to combat the state’s complex homelessness problem should fall mainly on homeowners’ shoulders. Perhaps it’s childish of me, but I don’t use the outdated term “landlord” hinting as it does of Dickensian slums and avaricious, greedy bast*rds sending people to the poorhouse. How else to explain why rent control, rent-increase control, pet deposit-control, lease-renewal-notification control and other insane measures are routinely proposed or inflicted on homeowners.

    What other sector of business is so over-regulated? When outgoing City Council Lisa Herbold sponsored the “first-in-line law”, demanding that homeowners rent to the first “qualified” applicant, a judge overturned it, but the Washington Supreme Court reversed it. There’s a reason this is believed to be the first law of its kind in the country. What other state regularly enacts such insanity? Next, will a business be required to offer a job to the first “qualified” applicant?

    But that reversal wasn’t enough for the Seattle City Council. In July of 2022 before announcing their departures, council members put into law an insane measure requiring homeowners to give 180 days advance notice of a rent increase date.

    Noticeably absent was legislation requiring employers that provide 180 days notice before announcing layoffs…again the burden of reversing Seattle’s years of decline leading to homelessness falls upon homeowners. When the suggestion was made to exempt small, one-unit only property owners, Ms. Sawant fought it. “Just a loophole” she scoffed.

    Kevin, your article clearly demonstrates how creating affordable housing and dropping rent control proposals is the solution to cutting costs. I’m not certain Washington state lawmakers are ready to listen, however.

  4. Excellent article and refresher course on why rent control is not the answer. But hey, redeeming factor is no cost to the “taxpayer.”
    Maybe yes, unless the taxpayer needs to rent.
    I had forgotten the Seattle City Council’s piling on additional burdens, and the Supreme Court confirming them.
    Idea: Not original. Why wouldn’t the “housing authorizes” buy land and lease back to the developer. That would reduce the cost of building affordable housing.
    We all want the “easy fix.” But rent control will be an administrative nightmare and the “regulation writers” will have a field day, followed by lawsuits, and until this ungodly process is finished, no new housing.
    But the legislators and the Governor can claim they did all they could.

  5. Spot on. Rent Control is “good” politics but really bad policy. State should focus on zoning if they want to have an impact on housing affordability

  6. Great piece. I found your sources to be new information, and very useful. I take exception to relying on in-parsed graphs and data when determining that rents in Seattle have stayed flat. What isn’t examined in those graphs is the ever-shrinking size of units: Seattle is building the smallest apartments in the United States. They are not big enough to share, and that means in real life that housing costs are far far higher over the last 20 years. If you rent an older 850 -1,000 square-foot two bedroom you could have two people split the rent. Most new apartments being built are micro studios, and very tiny one-bedrooms difficult to share, unless you are in partnership with someone. I was startled by the drastic changes after rent control in this example from one of your references:

    “Despite this controversy, the data appear to be generally consistent with the idea that controls reduce construction. For example, in England, where controls have been in effect for over 60 years, rental housing has shrunk from 61 percent to less than 15 percent of the country’s total housing. Similarly, New York has seen both the total number of its units and percentage of renters shrink, as has the District of Columbia which now has 8,000 fewer rental units and has experienced a sharp decline in the issuance of multi-family building permits since controls were imposed there.”


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