More multifamily owners nationwide may soon have to contend with rent control measures. Rent control was on the ballot in many cities throughout the U.S. in the recent midterm elections, and, for the most part, it fared well. Voters in Orange County, Florida, approved an ordinance that would prevent existing apartment owners from raising rents at a rate higher than the region’s inflation rate, and that’s just one example from the recent election.
The Orange County, Florida, ordinance proved popular, passing by a wide 59 to 41 percent margin. The rule, however, can’t go into effect yet because of legal action taken by the Florida Apartment Association and the Florida Association of Realtors. Rent control ballot measures also passed in Portland, Maine, and Richmond and Santa Monica, California, while in Pasadena, California, the result is still too close to call. At stake with all these ballot measures was the limit on how large annual rent growth could be.
National rent growth has slowed recently, but it’s still rising annually at double-digit percentages. Add inflation in other areas to the mix, and it makes sense voters are pushing for rent control. Whether or not the ordinances work in the long run is questionable, though. Multifamily owners argue that rent control leads to inadequate returns on investments, less incentive to improve properties, and makes developers less likely to build new housing. Nevertheless, rent control talk and action are spreading quickly, and the Democrats’ surprisingly strong showing in the midterms in state and local races could lead to more ordinances soon.
