Rent control is good and we need more of it.
Expanding rent control is such an obvious step towards mitigating the worst effects of our housing crisis — we can mandate with a single law that rents stop skyrocketing. Rent control provides stability and keeps families in their homes; preserves diversity of race and class in our rapidly gentrifying cities; and transfers huge sums of money over the years from rich, absentee property owners to poorer renters.
Most people understand this — rent control is broadly popular, no matter how you measure it. A 2017 poll of California voters by the University of Berkeley showed 60% in favor of rent control versus only 26% opposed. In November 2016, a rent control ballot measure in Richmond (in the Bay Area) passed by a 65%-34% margin. And tenants organizations from across California to Chicago to New York have made it an immediate priority.
But rent control limits the profits of some very powerful and wealthy people, so we’re told it’s bad by those who typically advocate on their behalf — economists, right-wing think tanks, and the mainstream media writers that uncritically parrot their views.
Arguments against rent control are comparable to those used to justify tax cuts for the rich, and are equally full of shit.
They both rely on free-market logic that may look nice on a graph but doesn’t play out in reality. Trickle-down reasoning emphasizes the supposed secondary effects of cutting rich people’s taxes: the rich get more money, but then they’ll use their tax cuts to invest in jobs, so everyone wins. Anti rent-control arguments are similar: rent control will stop rents from going up at first, but then the supply of apartments will decrease, so actually rents will rise even more.
The message is simple: policies that obviously help the poor are bad, and those that obviously help the rich are good.
Some ex-Wall Street economists wrote a paper (“the Stanford study”) confirming this, published it in the Koch-funded Cato Institute, and now the media will report on the “unintended consequences” of rent control for the next several months.
But if rent control really had the effect of increasing rents, the California Apartments Association — who would love higher prices — would not have already raised over $10 million to defeat Prop 10.
By repealing Costa-Hawkins, Prop 10 would legalize rent control in three crucial ways.
1) Legalize rent control on single-family homes and take back power from Wall Street.
Under Costa-Hawkins, it is illegal to have rent control on any single-family home. This is great for the Wall Street firms that have poured billions of dollars into scooping up foreclosed homes in the aftermath of the 2008 financial crash. They’ve now securitized rental payments just like the banks did mortgages, and “to gain investor confidence, single-family rental companies promise to set competitive market rates [read: maximum] for rent and to aggressively pursue evictions.” These corporations exist to make profit for their investors, and have perfected the art of extracting wealth from tenants through consistently higher-than-average rent increases, excessive fees, lack of maintenance, and quick evictions. (All info here comes from this report.)
Invitation Homes, controlled by the largest private equity firm in the world, Blackstone, is the most prominent example. Like a feudal lord, it owns and manages the homes of 82,000 renters across the country. One tenant of theirs, Merika Reagan, explicitly compares it to sharecropping: “For me to work 12–14 hour days and barely have enough to pay increasing rents to a multi-billion dollar Wall Street giant, it’s like sharecropping all over again.”
These investments are also strategically concentrated in particular locations (often communities of color), allowing these massive companies to “significantly drive up rents in the markets where they operate.” In Sacramento County, for example, Invitation Homes is the largest private landlord, and the second-largest property owner after the County itself.
Allowing cities to put rent control on single-family homes would significantly curb Wall Street’s power to exploit tenants.
2) Legalize “vacancy control,” protecting longtime tenants and preserving affordability over time.
Because of Costa-Hawkins, it’s illegal for local laws to include vacancy control — meaning landlords are free to increase rents as much as they want for the next tenant once an apartment becomes vacant. Tenants in rent-controlled units thus have a target on their backs as time goes on and market rents rise, as landlords are essentially rewarded for evicting them. It also ensures the steady loss of units that are truly affordable. The Santa Monica Rent Control Board, in a 2012 report, explicitly blamed this mandate of Costa-Hawkins for the fact that 63% of rent-controlled units go for market-rate.
But it doesn’t have to be this way. If Prop 10 passes, cities can include vacancy control and ensure rent-controlled units actually stay affordable, getting rid of this perverse incentive to evict longtime tenants.
3) Legalize rent control on all the units built after 1995 (or 1978 for LA, 1979 for SF, etc.).
Costa-Hawkins made it illegal for units built after 1995 to be covered by rent control, and also illegal for cities that already had rent control laws to expand them to cover more units. For LA, this means no rent control on units built after 1978 (the year covered when LA’s law was first passed in 1979).
Tons of people, and entire communities, are thus prevented from enjoying the stability of rent control — almost 850,000 units across the state, from a rough calculation. This must change — every single tenant deserves the stability rent control provides.
Yes on 10.