shop.illinoisrealtor.orgAffordability For All – Rent control policies will make everyone pay more to live in Illinois.

6 MYTHS Search for: Search for: Protect private property rights Affordability for All Matthew Brewer 2019-06-17T14:35:10+00:00 Rent Control Policies Will Make Everyone Pay More to Live in Illinois In most U.S. communities, supply and demand sets housing costs. Housing located within easy reach of amenities such as shopping, entertainment, parks and workplace costs more because people are willing to pay a premium for a prime location. These cities often work with developers to make sure there is affordable housing by using zoning and other local regulations . Some cities have experimented with laws which limit the amount a property owner can charge a renter. Property owners in cities with rent control find themselves caught in a vise as they are limited as to what they can charge for rent but are faced with a constant increase in property taxes, fees, and other inflationary costs that come with property ownership. Fact vs. Fiction: Four things Rent Control backers don’t want you to know 1 Rent control kills development It might seems logical to just build more housing units in areas with affordability issues. Often, that’s not possible as developers realize they might lose money based on local regulations and rent limits. 2 Taxes are rising faster than rents Rent control advocates would have you believe that rents are still soaring. The reality is much different. According to the data, rents in Chicago are actually decreasing . According to a Chicago Tribune article , rents dropped more than 15 percent since 2017. A bigger issue for renters in Illinois is the rate at which taxes increase in Illinois. While rents are decreasing, tax rates still climb every year. 3 Property maintenance can suffer If a property owner is squeezed by quickly-rising property taxes and they are limited in what they can charge for rent, they might have to cut back on building maintenance and services. Property owners might even have to put off upgrades that can make a rental complex more attractive. 4 Policy adds lots of bureaucracy With rent control comes a massive bureaucracy which is responsible for inspecting and setting limits on what rents can be charged. Illinois has more layers of government than any other state. Adding another layer oversight just adds to a crushing tax burden. Implementing rent control in Santa Rosa, Calif., was estimated to cost an additional $1.4 million a year. Based on that rough guide, it might cost $24 million a year in a much larger city such as Chicago. Case Studies: How Rent Control Failed in Two Major Cities San Francisco In 1994, San Francisco imposed strict rent control to address surging rent increases. City leaders thought setting a ceiling on how much rent could be charged would address a housing shortage for moderate and low wage earners. They were wrong. A study released in 2018 showed that instead of encouraging affordable housing, the policy had actually decreased regulated units by 15 percent. In other words, there were fewer properties on the market as property owners determined they could not make ends meet renting and converted many of their apartments to condos. Cambridge Cambridge, Mass., repealed rent control with a statewide referendum in 1995, ending a quarter century of the policy. Abolishing rent control had immediate impacts in the city, not the least of which was that property values which had been artificially suppressed by as much as 25 percent suddenly began to increase. A study estimates that property valuations surged $1.8 billion, and of that $1 billion was attributable to the elimination of rent control. The study found that rent control created a situation where maintenance and re-investment in properties suffered. Unintended consequences In an area with rent control, a lucky few will reap the benefits of artificially low rents. For those who live outside the areas with rent control, the costs of housing typically increase. The policy might seem like it benefits moderate wage earners, but studies have found that’s not necessarily the case. A study of tenants living in rent-controlled units in New York City found that more than 10 percent of 2,300 rent stabilized units there had incomes of more than a half a million dollars. Government budgets can take a huge hit. Since rent controlled properties won’t undergo as much maintenance or see new upgrades, assessments will be lower. Lower assessments mean lower tax levies. Lower tax levies translate into shrinking government budgets, resulting in service cuts or even higher tax bills. The BIG Idea Rent control kills development, guarantees a never-ending cycle of affordable housing shortages and property tax increases, and ensures a rental property falls into disrepair due to lack of funds. Download information on Rent Control 6 MYTHS about Rent Control in Illinois Advocates for Rent Control would have you believe the policy will magically fix a lack of affordable housing in Illinois. Here’s why they are wrong. The Impacts of Rent Control on Chicago’s Housing Market The Impacts of Rent Control on Chicago’s Housing Market Illinois REALTORS® retained Anderson Economic Group to identify and quantify the impacts of a citywide rent control ordinance in Chicago. © Copyright Illinois REALTORS® 2018 - | All Rights Reserved | Powered by...