Report: Rent control limits new multifamily developments

A new report from US News & World Report indicates that rent control laws stifle the development of new multifamily communities. 

"Although rent control laws can provide immediate relief, in the long run they generally limit new development as market-rate developers (and even some affordable housing providers) will simply build elsewhere, and investors direct their dollars to other opportunities," according to the Rental Housing Market Trends report.

A 2023 study by NPD Analytics economic consultants in Washington, D.C., on rent-controlled markets showed that 71 percent of housing providers are reducing investments or canceling plans to develop or invest and 67 percent would not consider investing at all in such markets. For current owners of rental properties in rent-controlled markets, 61 percent have postponed or expect to defer nonessential maintenance and improvements, and 54 percent are more likely to consider selling their properties.

"Seventy-five percent of Americans want policies that increase funding for local programs by attracting more residential and commercial development," said The National Apartment Association, which commissioned the NPD study. "However, rent control drives away investments and reduces potential tax revenue contributed by rental housing providers. Two-thirds of housing providers said they would absolutely not consider investing in markets with strict rent control policies."