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Would rent control work? Opposition says it will hurt, not help

Posted at 5:56 AM, Mar 23, 2022
and last updated 2022-03-23 09:50:03-04

PHOENIX — If you thought last year's rent increases were high, get ready for another round this year. A recent forecast calls for an average of 20% increases in metro Phoenix rents for 2022.

It means more talk about limiting how much landlords can raise rates.

"From our perspective, rent control is definitely not the answer," says Courtney Levinus.

Levinus is CEO of the Arizona Multihousing Association, representing the state's apartment industry.

With Valley renters facing huge increases, forced to move with nowhere to go, rent control seems at least worth talking about. But Levinus says limiting what landlords charge can end up hurting the people it's supposed to help.

"It further reduces the housing that is built which exacerbates the issue," she says.

Right now, state law prevents cities from using rent control in most cases.

A House bill (HB2401) to change that has gone nowhere. Same thing for a Senate bill (SB1587) that would limit yearly increases to 10% max.

Levinus' argument is a common one for those opposed to rent control- that putting limits on investors will drive them away.

"If they cannot adjust their rents to meet what is happening in the marketplace, they will avoid that environment," Levinus says.

She says less building will mean continued low apartment supply. Combine that with high demand and she says prices would remain high.

Levinus points to St. Paul, Minnesota, which passed a new rent control ordinance.

While it doesn't start until May, already new building permits are said to be far below what they were this time last year.

But it's a very strict ordinance limiting yearly rent increases to just 3%, not allowing for inflation costs and affecting all existing and new rentals.

Other state and city policies allow larger rent increases and considerations for inflation. They can also make new construction exempt from the limits for years to encourage new building.

Bottom line, Levinus says rent control is another barrier.

"We have a lot of builders who want to build what we refer to as attainable housing. But unfortunately, because of regulations placed on them by municipalities, the only projects that will pencil out and cash flow are luxury," she says.

Meanwhile, renters here continue to hurt. Most agree housing has come to a crisis point in Metro Phoenix.

But there's little agreement on what to do about it.

Contact your legislator and let them know how you feel.

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