Study: San Francisco Rent Control Expansion Led to More EvictionsA new study from researchers at Northwestern University found that landlords were incentivized by rising rents to replace existing tenants with new market-rate-paying tenants.
CHRISTIAN BRITSCHGI
7.6.2023
More moderate supporters of rent control will often argue that while the policy does constrain housing supply, it is nevertheless an effective means of keeping long-time tenants in their homes. The trick for policy makers is to balance these two goods of supply and stability.
But new research suggests that rent control might be a poor means of providing tenant stability as well.
A paper published last month by Northwestern University's Eilidh Geddes and Nicole Holz on SSRN, and summarized in a Cato Institute research brief published yesterday, found that the 1995 expansion of San Francisco's rent control law led to an increase in both evictions and complaints about wrongful evictions being filed with the city's rent board.
"We found that eviction notices filed with the rent board increased by 83 percent and that the number of wrongful eviction claims increased by 125 percent in zip codes with the average level of new exposure to rent control," write the researchers.
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That lends credence to the idea that rent control provides a mix of stability for incumbent tenants and less availability and higher prices for new entrants in the rental housing market.
San Francisco's rent control ordinance allows landlords to reset rents to market rates for a new tenant, a policy known as vacancy decontrol. The Stanford study found that this gave landlords an incentive to get rid of rent-controlled tenants when rents started to rise quickly.
"Individuals in areas with quickly rising house prices and with few years at their 1994 address are less likely to remain at their current address, consistent with the idea that landlords try to remove tenants when the reward is high, through either eviction or negotiated payments," said Stanford researchers.
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Rent control supporters typically argue that these aren't problems with rent control, they're problems with loopholes to rent control. They can therefore be fixed by eliminating vacancy decontrol, restricting condo conversions, and stepping up enforcement activities against illegal evictions.
New York's 2019 changes to its rent stabilization law that covers close to 1 million apartments in New York City were guided by these principles. It eliminated various means by which landlords could remove their units from rent control, reset rents to market rates, and pass on the costs of capital improvements to tenants.
The financial returns from operating rent-stabilized units have fallen dramatically as a result, leading landlords to claim their buildings are being "defunded." There's some evidence that unit quality is falling and vacancies are increasing, as owners have fewer funds and less incentive to maintain occupied units and renovate empty ones.
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Source:
https://reason.com/2023/07/06/study-san-francisco-rent-control-expansion-led-to-more-evictions/
