Why post-pandemic tenant protections are fueling a new crisis—and what a second Trump presidency could do about it

Rent, Regulation, and Repercussions

Tenant-friendly states often double as the nation’s most expensive rental markets. A recent study rated California, New York, and Massachusetts among the most tenant-protective—and all three rank among the top ten in rental cost. California’s average rent is over $500 above the national average; Massachusetts’s is $262 higher.

In contrast, states with fewer tenant restrictions—such as Texas, North Carolina, and Indiana—consistently offer lower rents and attract more real-estate investment.

Where People (and Capital) Are Moving

Migration trends confirm the pattern. People are leaving tenant-friendly states and moving to landlord-friendly ones. Investors follow suit, favoring markets that welcome new housing development. A 2023 study found that cities with the highest rates of new multifamily permits—like Dallas, Charlotte, and Miami—are in landlord-friendly jurisdictions. Cities with high tenant protections lag behind in construction.

One investor summed up the sentiment: “I will never invest in tenant-protective cities or states again.”

The Rent Control Problem

No policy illustrates the unintended damage better than rent control. Former Obama adviser Jason Furman labeled it “as disgraced as any economic policy in the tool kit.” New York City’s long-standing rent regulations have driven housing losses, discouraged construction, and stifled investment.

After rent control tightened in the 1970s, the city lost 300,000 units in one decade. Housing starts plummeted. Only when Governor George Pataki allowed partial deregulation in 1997 did construction rebound—until further restrictions reversed the gains.

Still, cities like San Francisco and Los Angeles, and states like Oregon and New Jersey, continue to double down. Maryland’s Montgomery and Prince George’s counties recently imposed caps of 6% or inflation-plus-3%, whichever is lower. But landlord costs—from insurance to labor—often exceed these limits, prompting maintenance deferrals and unit vacancies.

In New York alone, over 24,000 rent-stabilized apartments sit vacant because owners lack the capital to fix them.

Legal Challenges and Right-to-Counsel Laws

Other recent laws add to the burden. Eight states and 23 cities now fund tenant legal representation. While pitched as a way to prevent evictions, these programs have clogged courts, extending eviction timelines to six months or more. Landlords bear the cost of rent loss, with little hope of recovery—even after successful evictions.

Caps on security deposits—like California and New York’s one-month limit—expose landlords to greater losses during these drawn-out proceedings.

Some laws stretch legality. “Source of income” rules force landlords to accept government vouchers, effectively mandating Section 8 participation. This raises Fourth Amendment concerns, as participation entails federal oversight and property inspections. Courts in Pennsylvania and other states have struck down such laws, but 17 states still enforce them.

Cracks in the Policy Consensus

Even pro-tenant jurisdictions like Washington, D.C., have started reversing course. Emergency rental programs allowed tenants to defer payments, resulting in massive debt: $10 million in 2020 ballooned to $100 million in 2023. As many as 20% of tenants still weren’t paying rent. The city scaled back protections in October 2023 to stem the crisis.

Some cities, like Philadelphia and parts of Maryland, now promote mediation programs over court trials. In Maryland, 80% of cases settled outside court—far faster than taxpayer-funded litigation. But such programs remain limited and underused.

A Federal Opportunity

A second Trump presidency offers a chance to reshape housing policy. During his first term, Trump supported the eviction ban. But now, with clearer hindsight and mounting data, a revised approach is possible.

His May 2 budget proposal includes defunding Section 8. More importantly, federal housing funds—nearly $50 billion annually—could be tied to reform. States like California and New York, with expensive and inefficient housing programs, currently receive large shares of that aid.

The federal government should link funding to housing production outcomes, not regulatory compliance. Removing mandates like union labor and excessive environmental reviews—politically motivated policies that drive up costs—could lower per-unit construction prices dramatically. A GAO report found costs ranged from $126,000 per unit in Texas to $326,000 in California.

Conclusion: A Warning and a Call

Tenant-friendly legislation may seem compassionate, but its long-term effects include reduced investment, lower availability, and higher rents. As landlords exit markets and courts become overburdened, tenants are left with fewer options and deteriorating housing stock.

Trump, with his real-estate background, is uniquely positioned to act. The war on landlords is also a war on housing affordability—and the time to act is now.

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This article first appeared on City Journal

Steven Malanga is a senior fellow at the Manhattan Institute and City Journal’s senior editor. He writes about the intersection of urban economies, business communities, and public policy. Malanga is the author of The New New Left: How American Politics Works Today (2005); The Immigration Solution: A Better Plan than Today’s (2007), coauthored with Heather Mac Donald and Victor Davis Hanson; and Shakedown: The Continuing Conspiracy Against the American Taxpayer (2010). In 2013, former Florida governor Jeb Bush called Malanga “the best thinker on state and local fiscal matters” in a tweet; in a 2014 Manhattan Institute speech, he said that Malanga’s warnings on states’ coming debt and pension crises had influenced fiscal reforms undertaken in Florida.