What is rent control and why do we have it in DC?

You've probably heard of rent control, but you might not know what it means or how it works in DC. It’s a particularly relevant topic here: forty percent of District residents own their homes, compared to the regional and US average of 64 percent.

DC is also a city known for its strong protections for renters — most notably the Tenant Opportunity to Purchase Act (TOPA) — and what we call rent control. Over the past two years a number of efforts have been made to amend DC’s version of rent control, but larger unresolved issues remain if we want to maintain a stock of lower-cost rental units in the city. Here's what you need to know about the system.

This is why cities have rent control

Renting has benefits: it allows people to move more fluidly as their lives change and permits people without sufficient savings to afford a downpayment to live in the city. However, there are downsides too. Renting isn’t intrinsically as secure as owning; landlords can increase your rent from year to year or ask you to move out. That lack of stability changes the decisions you make.

There is a wealth of research on the price that housing instability exacts on a community. To prevent this volatility, DC enacted rent control more than 40 years ago and has reenacted and extended the law numerous times since then.

There are several exemptions, but generally speaking, DC’s rent control law applies to buildings constructed before 1975 that contain five or more rental units. Because this law impacts roughly 80,000 housing units in this city, it’s a critical institution to understand when talking about affordable housing.

What is rent control?

Generally speaking, rent control has three parts:

1. Just cause eviction: this means a landlord may not end a lease, even after a lease ends, for any reason they like. After the end of an agreed lease, the tenant has a right to continue, month-to-month as long as they like, if they pay their rent and do not violate the other terms of their lease. That means the landlord needs a just cause to take the property back.

This may seem like a violation of property rights, but most contracts regarding basic services (like housing) have to provide them in a way that ensures that they cannot be withdrawn capriciously.

2. Rental rate stabilization: this is a limit in the pace at which your rent can increase. This is sometimes expressed as a percentage increase, but in DC it’s linked to inflation.

A landlord may increase the rent by CPI-W (the percentage increase in the urban wage consumer price index) + two percent of rent, each year. In between tenants, they may increase it by 10 percent automatically or up to 30 percent if the prior rent was out of step with comparable units in the building. The idea is to allow the price of housing to rise consistently with the general cost of living.

This does not end increases in housing prices, but simply protects against sudden shocks that can evict moderate-income tenants or anyone who spends a significant percentage of their income rent.

3. Rent ceiling: The third pillar of rent control is a slowly-growing rent ceiling. The rental rate might fluctuate — its oscillations moderated by the stabilisation provision — but it cannot rise above a fixed number regardless. This ensures the continued affordability of housing in the community.

There are various reasons a housing provider can apply to the government for an adjustment. On the consumer protection side, reductions in services — including housing code violations — can trigger rent refunds.

Do we have this type of rent control in DC?

Well, we used to. The third pillar, the rent ceiling, was repealed in 2006. It hadn’t been well designed, and at the time many rent ceilings significantly exceeded the rents housing providers could actually obtain even on the open market, often by several hundred dollars per month. This left tenants vulnerable to significant rent hikes if housing providers started implementing rent increases that approached the rent ceilings they had preserved.

We now have rent stabilization — that is, we have parts one and two, which we colloquially call rent control. It’s worth noting that for-cause eviction applies to all units, not just rent-stabilized ones.

Tomorrow I'll address criticisms of rent control broadly, and explain why the system is no longer working the way it's supposed to in DC.