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NAA Survey Respondents Overwhelmingly Say Rent Control Policies Affect Investment, Development Plans

by Channing Hamilton

ARLINGTON, VA. — More than 70 percent of housing providers say that rent control policies impact their investment and development plans, according to a newly released survey from the National Apartment Association (NAA). In addition, two-thirds of respondents say they would not consider investing in markets with strict rent control policies.

The survey — which examined the consequences of rent control policies in cities across America — was conducted by NDP Analytics and commissioned by NAA. From December 2022 to February 2023, NDP conducted 24 interviews with housing providers and developers from three different markets impacted by rent control policies and proposals: St. Paul, Minnesota; Santa Ana/Santa Barbara, California; and Portland/Eugene, Oregon.

The interviewees ranged from large firms operating thousands of units across the country to small mom-and-pop businesses with a handful of units. These mom-and-pop owners are often invested in real estate as part of a retirement plan or second source of income.

The housing provider research was supplemented with an online public opinion poll of 1,039 Americans across the country in February 2023. The poll questions focused on housing availability, residential construction and policy perspectives.

The Consequences of Rent Control

Seventy-one percent of housing providers reported that rent control negatively impacted their development or investment plans. Examples of changed plans included a decline in investment in the market, a shift in investment to markets that are not rent controlled, and a pause or cancellation of plans for future development.

Sixty-one percent of respondents reported having or anticipating the need to defer work on maintenance and renovation on rent-regulated properties.

“NAA’s latest research aligns with decades of data and real-life case studies that all lead to the same conclusion: rent control is a failed policy that brings more harm than relief to local communities,” said Bob Pinnegar, president and CEO of Arlington-based NAA, a trade association comprised of apartment communities, owners and vendors.

“It’s not surprising that policies that make it harder for housing providers to do their jobs lead to less housing options. It is past time for our elected officials at all levels of government to shift their focus to policies that address housing supply issues and are targeted to the households most in need of support,” added Pinnegar.

The official position of NAA is that rent control disincentivizes the development of rental housing, as well as accelerates the deterioration of existing housing stock. NAA favors expanding tax policies that encourage multifamily investment, reducing barriers to construction and increasing investment in programs such as Housing Choice Voucher Program Section 8.

Rent Control Hurts Housing Supply

According to NAA, rent control causes housing providers to absorb essential maintenance costs and reduce investment in improvements and nonessential maintenance. Consequently, 54 percent of housing providers reported that they would consider selling some assets.

NAA stated that this is cause for concern, due to the nation’s ongoing housing supply challenges. Previous research NAA commissioned from Hoyt Advisory Services and Eigen10 Advisors concluded that the U.S. must build 4.3 million new apartments by 2035 to meet current shortages and address future demand. The same research brought to light that the multifamily housing sector also supports 17.5 million jobs and generates over $3.4 trillion in economic activity.

Both NAA and NMHC have emphasized the need for more apartments and discouraged the use of rent control in their policy priorities for the apartment industry in 2023.

“To be successful, policy makers should resist politically expedient, but flawed policies — such as rent control — that undermine the creation of necessary housing,” according to NAA. “Such policies will only exacerbate current affordability challenge by scaring away investment and unduly interfering with housing providers’ relationship with their residents.”

“Rent control is not the solution it appears to be on the surface,” said Leah Cuffy, NAA’s director of advocacy research. “While well intended, these policies have been proven to work against their intended purpose and ultimately hurt renters, housing providers and communities. This research explains the unsettling truths about rent control which are important to recognize in housing affordability discussions.”

As a federation of 141 state, local and global affiliates, NAA encompasses over 95,000 members representing more than 11.6 million apartment homes globally.

Click here to read NAA’s full statement on the research.

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