If you own rental property in California, look out.
The same old bad ideas of rent control are coming your way. California governor Gavin Newsom says he will support a rent control bill to help make sure people have affordable housing options. The problem is, rent control does exactly the opposite: Landlords take their properties off the market, which results in fewer available rentals, which in turn drives rents up. Because of the restrictions that rent control brings, fewer investors buy rentals, fewer developers will build, and on and on it goes.
Take the free market out of the equation, and you end up with an artificial market that is not sustainable. It never is.
The government could be a huge help instead of a hindrance if they wanted to bring more affordable housing to renters. It doesn’t have to be that hard. They could start by lowering the cost of entitlements for the developments (permits, hook-up fees, etc.), they could create a more streamlined process to help prevent costly delays, and they could get the EPA—with their ridiculous, non-growth agenda delay tactics—the heck out of the way. Then, they could add back in some good old-fashioned common sense.
We all want the same things: well thought-out housing, the least disruption to our environments, and a place to live within affordable standards. If the government would let the market do its thing, investors and developers could continue taking the necessary risks and reaping the rewards that come with providing an affordable housing product. And it has to be what the market can bear, or no one will be renting from them. If a landlord sets a rent that’s too high, the renter can go elsewhere to find something more affordable.
The whole reason rents go up is because supply and demand get out of whack. If you want to bring the most affordable housing to renters, you need to increase supply so that it meets or even exceeds demand. Guess what happens next? It forces landlords to make concessions that attract renters, resulting in stabilized or even decreased rents. That’s the way things roll when the free market is working the way it’s supposed to.
Read the full article here.