Rent Control in the Twin Cities
In November of 2021, due to an affordable housing crisis spurred by a global pandemic, Twin Cities voters approved a new rent control policy. As a result, renting families have greater financial stability because there is little to no increase in rent prices. However, there, are several external factors that can affect renting families in the Twin Cities. According to an Associate Professor of Economics at Stanford, rent control can have a negative long-term impact by influencing landlord’s incentives in multiple ways: 1) landlords will delay maintenance and upgrades, and 2) landlords will not likely build new housing due to low profits, and 3) they would build new housing avoiding rent-controlled areas, and 4) landlords will switch apartments to condos to avoid rent caps (Diamond, 2018). Decreased housing maintenance could lead to poor living conditions for renting families. Additionally, low-income families are concentrated in rent-controlled areas while higher-income families leave for new housing outside rent-controlled jurisdictions, perpetuating income disparities. These low-income tenants would be incentivized to rent housing for longer in order to avoid rent price increases. This could lead to tenants not pursuing better housing options in the future, creating poor housing allocation i.e small families occupying large housing units while large families are occupying small housing units. Although rent control may create affordable housing in the Twin Cities, it does not promote moving from low to high opportunity areas or disincentivize housing discrimination.
Conclusion
Despite the positive intentions of rent control policies in the Twin Cities, there are several negative outcomes stemming from limiting landlord profits. Positive approaches to affordable housing could include giving families access to housing consultants in order to aid them in high-quality housing options, access to quality schools and successful landlord-renter partnership coaching, or giving housing vouchers to low-income families where the government pays for a portion of housing costs. Even with a diverse set of approaches, affordable housing in the Twin Cities is not yet solved. There needs to be a solution that offers a combination of financial tools and coaching to help give low-income families the stability of a high opportunity neighborhood without causing disincentives with landlords. Ultimately, rent control policies are certainly a step in the right direction first for the landlord as tenant turnover decreases, secondly, it enables savings opportunities for the tenant. Rent control will eventually allow these low-income families to move into the next tier of housing and improve their economic outcomes while opening up low-cost housing to benefit new families in need of quality, affordable housing.
References
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