Santa Ana recently became the first city in Orange County, California to enact rent control. The city plans to create a registry of all rental properties in the city. Landlords are required to register their properties with the city and pay an annual fee. Apparently, Santa Ana public officials have been drinking the Kool-Aid of rent control
Politicians and housing activists across the nation believe that imposing more restrictions, mandates, and costs on landlords will somehow alleviate the housing crisis. They believe that making it more difficult and more expensive to produce and operate rental housing, tenants—the ones who ultimately pay the costs—will somehow benefit.
A spokesman for the California Apartment Association correctly said,
The city needs more housing units — not more bureaucracy. Rather than focus on building affordable homes, the city is wasting time making a complicated law even worse by creating a costly and complex bureaucracy to regulate the very industry that provides homes for Santa Ana families.
This gets to the heart of the matter.
Fundamentally, the housing crisis is a supply issue. The supply of housing has not kept pace with the demand, particularly for low- and middle-income households. Government officials have responded by making it more difficult and expensive to increase the supply. The primary culprit is zoning (particularly single-family zoning), which drives up the cost of land by prohibiting the best use of property. Schemes like rent control, registries, “ban the box,” and “right to renew” not only add to the costs of housing, but they also discourage further investment in housing.
None of this matters to the defenders of rent control. Activists and politicians can pat themselves on the back because they have provided temporary relief to some tenants. The fact that these policies simply make the problem worse in the long-term isn’t a consideration. When the problem does get worse, they will demand more controls and restrictions on landlords and developers.
Rent control seems like at good idea to housing activists and politicians. But like drinking the Kool-Aid, rent control is ultimately destructive.