The High Cost of Low Rent

Last Updated: June 14, 2023By

How Rent Control Contributes to the Accessibility Crisis in Berkeley

By Miya Rosenthal, Student, University of California at Berkeley

California’s “housing crisis,” characterized by the unavailability and unaffordability of housing, has magnified the appeal of rent control policies. Rent control aims to set a price ceiling on rent increases and restrict evictions, ideally with the goal of providing affordable housing, stabilizing rents, protecting tenants, and promoting economic diversity.

Berkeley became the first city in California to implement contemporary rent controls in 1972 and established permanent rent controls in 1980, enforced by the Berkeley Rent Stabilization Board.1,,2 However, over the past half-century, Berkeley’s rent control policies have failed to adequately address residents’ need for sufficient affordable housing. Instead, a long-term housing shortage has only exacerbated the crisis of affordability.

Although Berkeley’s early rent control policies initially appeared successful, they have had long-term consequences. From 1980 to 1995, Berkeley enforced a policy of “vacancy control” which prevented landlords from raising [rent on] units to market rate between tenant occupancies.2 Consequently, rents in Berkeley increased slowly compared to the rents in the broader Bay Area.2 By 1990, rent-controlled units in Berkeley were priced 35%-40% below the market rate.2  While this helped prevent the short-term displacement of low-income renters, it resulted in an overall decline in rental housing availability and affordability.

Rent control [also] drove the reduction in available units, gentrification, and higher prices as properties were increasingly sold to owner-occupants or redeveloped to avoid strict controls, and new construction and investment declined.3  In the decade following the 1980 implementation of permanent rent control, the number of occupied rental units declined by 6% in Berkeley, while adjacent cities without [rent] controls saw their occupied rental housing increase by 2%.3 Rent control had similar effects in San Francisco, [by] reducing the overall rental housing supply overall by 15% and causing a 5% city-wide rent increase.4 It is therefore apparent that rent control policies implemented in Berkeley between 1980 and 1995 led to a reduction in the number of available units, which in turn resulted in an upsurge in overall prices.

The next phase of Berkeley’s rent control policy began in 1995 with the California State Legislature’s passage of the Costa-Hawkins Rental Act (Costa-Hawkins), which loosened restrictions and moderately improved the housing crisis. Costa-Hawkins allowed landlords to raise rents to market rates once a tenant moved out (“vacancy decontrol”) and prevented controls on newly built construction [and also exempted single-family homes and condominiums].1 The number of annual multifamily building permits issued in Berkeley rose from around 30 per year to over 140 per year.1 However, this policy fell far short of demand, resulting in only a rough 1,000-unit net increase in available rentals since Costa-Hawkins, despite a population increase of more than 30,000 residents.5,2,6

The housing shortage is evident through the significant numbers of unhoused individuals, housing insecurity, and commuters from the larger Bay Area. Beyond creating a housing shortage, rent control in Berkeley continues to harm available housing stock and promote long-term gentrification. The City of Berkeley currently allows annual rent increases of 65% of the Consumer Price Index, keeping units well below the market rate.3 As a result of “capped” rent increases along with property owners’ expenditures that increase with inflation, this has caused long-term losses and a decline in building maintenance.

Additionally, tenants’ savings accumulate with continued occupancy, disincentivizing them from moving. In San Francisco, rent control was found to decrease renters’ mobility by nearly 20%, further exacerbating the housing shortage.4 The combination of vacancy decontrol, strong eviction protections, and limited housing supply creates housing gridlock, with wealthier renters occupying more affordable rent-controlled units, leaving few options for low-income renters. This is counter to the central mission of rent control policies. Ultimately, while rent control promotes tenant stability, it reduces the quantity and quality of available rental housing stock and leads to gentrification.

Rent control policies are still popularly implemented, despite evidence of their historical and economic drawbacks. The rental regulation market has two main stakeholders: renters seeking protection from rent increases and property owners seeking optimal profitability. In Berkeley, tenants’ rights groups, affordable housing advocates, and progressive policymakers dominate the city government and Rent Stabilization Board, leading to stringent rent control legislation. However, property owners and developers bring significant funds and deregulation lobbying power to Berkeley politics.

Rent control is also closely tied to anti-development politics, as it disincentivizes new construction, and this has caused conflicting interests among different advocacy groups. Homeowners and environmentalists have allied with tenant rights groups over rent control, but they face opposing interests over zoning laws. The University of California at Berkeley and its students are also involved in local housing advocacy, with the University prioritizing building new student housing above maintaining existing units, which further drives the conversion of rent-controlled units into other uses.6  Increasing the availability of student housing will alleviate high rates of student housing insecurity and homelessness and housing demand pressures on the city at large.7  

In seeking to address a crisis of affordability, Berkeley’s rent control is contributing to a crisis of accessibility. Rent control benefits current tenants but makes housing less available and less affordable for immigrants, unhoused individuals, and others in transient situations. This is a major issue in Berkeley, a city with a constant turnover of new students and a significant unhoused population. In a market already characterized by high costs and homelessness rates, and low vacancies and construction rates, stricter rent control is not the solution. Nor is closing the supposed loopholes by further regulating vacancies, owner-occupancies, and rental conversions.

If rent control advocates work in their long-term interests, they will find a fundamental problem with placing the responsibility of social insurance onto private landlords. History has demonstrated the result via half a century of compounded housing shortages surmounting into the contemporary crisis. Addressing the housing crisis in Berkeley means loosening rent control and supplementing it with anti-gouging policies, good-cause eviction protections, and affordable housing subsidies and tax credits. Encouraging the market, with guidance, to meet demand will prove far more efficient and effective at creating accessible, affordable housing than rent control.

Miya Rosenthal is an undergraduate at the University of California t Berkeley and is studying media, law, and public policy. She is an affordable housing advocate, and believes in the need to provide accessible, affordable housing. She someday hopes to pursue a career in policymaking and public affairs, as well as complete real estate sales licensing.

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  1. Rosen, Kenneth T. “The Case for Preserving Costa-Hawkins: Three Ways Rent Control Reduces the Supply of Rental Housing.” EScholarship, University of California, 4 Sept. 2018, https://escholarship.org/uc/item/9dn0n4g7.
  2. Rent Control in the City of Berkeley, 1978 to 1994: A Background Report. City of Berkeley Planning & Development Department, 27 May 1998, https://lawcat.berkeley.edu/record/157285.
  3. Finding Common Ground on Rent Control. Terner Center for Housing Innovation UC Berkeley, May 2018, https://ternercenter.berkeley.edu/wp-content/uploads/pdfs/Rent_Control_Paper_053018.pdf.
  4. Diamond, Rebecca, et al. “The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco.” American Economic Review, vol. 109, no. 9, 1 September 2019, pp. 3365–3394., https://doi.org/10.1257/aer.20181289.
  5. “Rent Control 101.” Berkeley Rent Board, City of Berkeley, 2023, https://rentboard.berkeleyca.gov/rights-responsibilities/rent-control-101.
  6. Dinkelspiel, Frances. “UC Berkeley Tells Tenants of 112-Year-Old Rent-Controlled Building They Must Leave.” Berkeleyside, 4 Oct. 2022, https://www.berkeleyside.org/2021/01/27/uc-berkeley-tells-tenants-of-112-year-old-rent-controlle d-building-they-must-leave.
  7. Dineen, J.K. “UC Berkeley’s Housing Crisis Is 50 Years in the Making, and Students Say, ‘We Get Screwed at Every Turn’.” San Francisco Chronicle, 21 Apr. 2022, https://www.sfchronicle.com/eastbay/article/UC-Berkeley-s-housing-crisis-is-50-years-in-the-169 96100.php.
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