D.C. Rent Control Should Go, Says Study
July 17, 2000
Last week (July 10), the District of Columbia Financial Responsibility and Management Assistance Authority issued a new study of rent control in the District. The study conducted by Nathan Associates, a respected economic consulting firm, concludes that rent controls should be lifted immediately.
Washington's rent controls date from the demise of price controls implemented nationally by the Nixon Administration in 1971. Fearful that rents would spurt once the federal controls were lifted, the D.C. City Council established rent controls in 1975.
Almost immediately, D.C. rental housing began to decline. As early as 1977, the Washington Post reported, builders withdrew plans to build new rental units, and many landlords converted their properties to condominiums, while others cut back on maintenance and upkeep.
The lack of rental housing has been a major factor in the steep decline of D.C.'s population.
- In 1970, there were 756,510 people living in the District.
- By 1998, there were just 521,426, a decline of 31 percent.
As a result, the city has lost billions of dollars per year of tax revenue. Thus the cost of rent control is ultimately borne by all the people of Washington, not just the landlords.
Once the District eliminates rent controls, builders and developers will have a strong incentive to erect new housing and renovate vacant units. Rents could decline within a very short time, as happened in Santa Monica, Calif., which abolished rent controls on January 1, 1999.
Boston and some of its suburbs had rent control for about 25 years, during which there was steady deterioration of the rental housing stock. A state referendum eliminated controls effective June 1, 1995. By 1998, housing construction in Cambridge was up 50 percent. The result was a broadening of the property tax base that led to tax cuts for homeowners.
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, July 17, 2000.
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