Rent control efforts in St. Paul, Minn. have benefited more white, higher-income tenants, a new study found. For low-income homeowners who were renting out their homes, many of whom were of a minority race, rent control didn’t exactly benefit them.
Rent control was supposed to make housing more affordable for lower-income Americans. Turns out, it may be doing just the opposite.
“The intention of St. Paul’s rent control is to reduce the burden of housing costs for low-income renters,” the authors said, but the results “indicate that the winners and losers from rent control are the opposite of its intended goal.” “If society desires to provide social insurance against rent increases, it may be less distortionary to offer this subsidy in the form of a government subsidy or tax credit,” it adds. “This would remove landlords’ incentives to decrease the housing supply and could provide households with the insurance they desire. A point of future research would be to design an optimal social insurance program to insure renters against large rent increases.
— Urban Institute “However, evidence is also mixed for rent control’s ability to promote economic opportunity or reduce racial disparities,” it added. “Part of this stems from a trade-off: promoting stability may, over time, lead to a growing mismatch between people who live in a rent-controlled unit and people who need one.”
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