How Rent Control Laws Can Affect Your Rental Business

how rent control laws affect property rental businesses

Having a good grasp of real estate laws can help you navigate pitfalls and keep your accounts green. To that end, many landlords hire skilled property managers to help them run their businesses. Professional Property Management of Northern Virginia can help owners keep up with laws and regulations to maximize their investment. 

Are you a newbie or an expert with questions about rent control? This article explores how rent control laws can affect your rental business. So stick around if you want to learn the nitty-gritty details. By the end of our post, you’ll understand its effects on landlords and tenants, if it makes housing more affordable, and the importance of researching local laws. 

What Is Rent Control Law? 

Before diving into how rent control laws can affect your business, let's define them. These are city-based policies that cap the maximum rent a landlord can charge for a specific unit. Besides the monthly rent, they also limit the increase in rent per year. 

In other words, rent control laws are legislation that restricts pricing in the housing market. These codes are often detailed and extend to maximum rent based on utility arrangements. For instance, in Chicago, the maximum rent for a one-bedroom where the tenant pays for utilities is $1,122. On the other hand, if the tenant pays for electric and cooking gas, the new max would be $1,014. 

As we highlighted earlier, these laws are city-based and vary from one municipality to another. Thus, it would be in your best interest to research and adhere to the rules of your jurisdiction. 

rent control regulation

Rent Control's Effects On Landlords And Tenants 

Effect On Landlords 

• Limited Vacancy 

Landlords often have to prepare themselves to deal with vacancies when getting into real estate. However, with rent control, housing is less costly for low - middle-income earners. That, in turn, means fewer empty units for property owners. 

• Less Profit 

As you might expect, rent control laws tend to favor tenants more. Since this legislation restricts how much increase landlords can cap on their monthly dues, it also limits the profit they can make. In other words, even if you could find a renter willing to pay well over the limit, it would be against the law to accept it. 

• Disincentivize Rental Housing 

Following the previous point, when landlords and land developers cannot make as much profit, they lose the incentive to invest in rental properties. As a result, some property owners may sell their apartments, taking them off the market altogether. 

Effect On Tenants 

• Rent Stabilization 

The most apparent effect for tenants is that control laws lead to rent stabilization. Without this legislation, a renter might go from paying $200 a month to $300, a 50% increase. However, with policies against such drastic increments, renters can rest easy. 

• Less Displacement 

It is not uncommon for specific neighborhoods to undergo rapid development. Consequently, property owners might want to increase their rates drastically since their units are more valuable. While they can do that, they have to do it steadily, which reduces the likelihood of displacing current tenants in the short - mid-term. 

• Diminished Housing Condition 

The short end of the stick for tenants is that control laws inadvertently diminish housing conditions. Since these policies cut into landlord profits, they can also limit their ability to keep up with maintenance and upgrades. Consequently, minor repairs and excessive wear might go unattended, reducing living conditions. 

Does Rent Control Make Housing More Affordable? 

The primary purpose of rent control is to make housing more affordable. It is partly set up in areas where housing is costly, or in short supply, and sometimes both. However, with these laws in place, it prevents landlords from exploiting the market situation and hiking prices further. 

On the other hand, rent control laws might be costly to landlords. Since it puts a cap on rent prices, it limits their profits. If these legislations aren't revised often enough, they can negatively impact property owners. Some might even lose money, considering they have to pay for repairs, mortgage, utilities, and taxes. Thus, rent control laws can be a double edge sword. 

Importance Of Researching Local Laws 

Landlords that do not adhere to rent control policies risk facing legal consequences. Hence, to avoid such legal pitfalls, research local laws concerning rent control. 

Besides staying out of trouble, it can give you some leverage in investing. The limits on various rental properties can give you an idea of which ones are the most profitable. You can then plan and expand your properties portfolio accordingly. 


That concludes our concise guide on how rent control laws can affect your real estate rental business. These property policies are set to put a cap on rent prices and yearly increments to protect tenants. While they can negatively impact landlords by curbing their profits, savvy investors can work around it if they understand local laws. If you need assistance, you should consult with a real estate expert who can help you make the most profitable decisions.

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