Recently, California joined the ranks of states like Oregon and New York in enacting a law controlling the maximum amount of rent a landlord may charge a tenant. These laws, commonly known and rent control laws, prevent landlords from raising rents to levels which the state deems unreasonable. Since 1997, restrictions of this kind have been banned in Illinois. This year, Illinois legislators and advocates alike have proposed a bill to remove this ban. Legislators are split over whether rent control is a good thing for the state or if it will negatively affect the rental market.
THE CURRENT BAN IN ILLINOIS
The Rent Control Preemption Act prohibits units of local government from enforcing an ordinance or law that would control the amount of rent a landlord may charge for a residential or commercial property. This limit does not apply to residential properties in which the unit of local government has an interest, such as Section 8 or other government residential projects. This ban effectively allows landlords to raise or lower rents at their own discretion.
WHAT ARE THE BENEFITS OF RENT CONTROL?
Rent control can be very advantageous to renters looking to live in areas which may be out of their price range and to prevent landlords from charging a lower rent the first year and then greatly increasing the rent for subsequent years once the renter is settled in and does not want to invest time and money in moving. Rent control operates by limiting the frequency of rent increases and regulating when a rent increase may occur. Additionally, rent control regulates the amount that rent may be increased by the landlord. This affords the renters stability and allows renters to create long term budgets without the worry of massive rent increases impacting their savings.
Rent control can also have advantages for landlords. Typically, if a tenant selects to have a rental agreement which includes a rent control provision, the landlord retains the right to reduce services offered to that tenant. Another benefit for landlords is that most rent control agreements include a provision requiring tenants to use arbitration or mediation to settle any landlord/tenant disputes. This avoids costly litigation fees for the landlord.
Further, rent control can benefits the community in its entirety. Rent control policies increase diversity by allowing individuals who may be unable to afford to live in the area the opportunity to do so.
WHAT ARE THE DOWNSIDES OF RENT CONTROL?
Some studies have shown that rent control provisions can be detrimental to both renters and the community as a whole. For example, to compensate for lower rent on rent-controlled spaces, landlords may charge higher prices for unregulated units. Furthermore, if the rent control provisions prevent a landlord from recouping their costs, landlords may offer fewer amenities and delay maintenance and updates. Rent control provisions can also encourage a tenant stay in a unit for a longer period then they originally intended. While this may sound as though it promotes stability, it can actually reduce the area’s available rental stock and can cause market prices to increase overall. A final downside of rent control provisions is that they do not always affect the individuals which would benefit from the policy the most. Rent control provisions are intended to benefit individuals who are low-income or at risk for financial instability. However, one study in San Francisco found that 25% of renters living in rent-controlled units made over $100,000.00 annually.
ALTERNATIVES TO RENT CONTROL LAWS
Considering both the benefits and the downsides of rent control laws, it is important to distinguish alternative solutions. One such solution is to ease development laws for creating rental properties. If more rental housing were available, competition between landlords would increase, causing rent prices to lower. Another alternative solution is to allow rents to rise freely, but to assist lower-income renters with tax credits or subsidies. This would ensure that the benefits go to the renters who truly need the assistance.
The future of rent control laws in Illinois currently sits in the hands of the Illinois legislators. Until the law is passed, Illinois will continue to honor the ban enacted to prevent rent control. If you have any questions regarding your rights as a tenant or landlord, contact Sherer Law Offices for more information.
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