Legal Definitions - Rent control

Rent control refers to government regulations that limit the amount of rent a landlord can charge for a property, as well as how much and how often rent can be increased. These rules are typically put in place by local governments, such as city councils, to help ensure housing remains affordable for residents, particularly in areas with high demand and rising housing costs. The specific details of rent control laws can vary significantly from one location to another.

Here are some examples illustrating rent control:

• Example 1: Annual Rent Increase Cap

  The city of "Maplewood" enacts a new ordinance stating that landlords can only increase the rent for existing tenants by a maximum of 3% per year, regardless of how much market rents have risen in the area. If a landlord wants to raise the rent on an apartment from $1,500 to $1,800, they would be legally restricted to increasing it by no more than $45 (3% of $1,500).

  This example demonstrates rent control because the municipal government has imposed a specific, legally binding limit on the percentage by which landlords can raise rent annually. It prevents landlords from charging market rates if those rates exceed the allowed increase.

• Example 2: Vacancy Control

  In "Riverside," a rent control law specifies that when an apartment becomes vacant, the landlord can only increase the rent by a maximum of 5% for the new tenant, even if the previous tenant was paying significantly less than the current market value for comparable units. If the previous tenant paid $1,200, the landlord could only charge the new tenant up to $1,260.

  This illustrates rent control by showing a restriction on rent increases even when a unit changes occupancy. Instead of allowing the landlord to reset the rent to the full market rate, the law limits the increase, ensuring a degree of affordability is maintained even for new tenants.

• Example 3: Inflation-Adjusted Increases

  A state passes legislation where rent increases for certain older apartment buildings are tied to the Consumer Price Index (CPI), allowing landlords to raise rent only by the annual percentage increase in the CPI, or a fixed percentage below it, whichever is lower. For instance, if the CPI increased by 2.5% in a given year, landlords could only raise rents by that 2.5%.

  This example demonstrates rent control by linking permissible rent adjustments to an external economic indicator (inflation), rather than allowing landlords complete discretion to set prices based purely on market demand or their own desired returns. This mechanism caps potential increases to a predetermined, often modest, rate.