New Study Finds Rent Control Harms Housing Supply and Choice for Residents
Providence, R.I. – The Providence Foundation (The Foundation) today announced findings from an extensive report on rent control policies to inform ongoing discussions locally. The report found that rent control policies have consistently had negative long-term impacts on housing markets, including reducing supply and worsening overall affordability. Meanwhile, reforms that intentionally increased supply and provided means-tested rental assistance have led to more positive outcomes for renters. The report recommends that policymakers focus on expanding housing production, implementing targeted rental subsidies, and utilizing tax stabilization agreements to facilitate commercial-to-residential conversions.
The Foundation commissioned the Rhode Island Public Expenditure Council (RIPEC) to examine the potential impacts of rent control policies in Providence, drawing on data and outcomes from cities across the country and evaluating alternative approaches to improve affordability and expand housing options.
“Getting housing right is paramount,” said David Salvatore, Executive Director of The Providence Foundation. “As rent control is being discussed in cities across the Northeast, including Providence, it is crucial to gather recent and relevant data for the public and government officials. Rental control has been found to be a flawed policy in cities across the country.”
He continued, “RIPEC has an impeccable reputation for conducting thorough research and delivering smart public policy solutions. The report lays the foundation for discussions here in Providence.”
Key Findings:
Rent Control does not lower rents. It offers no immediate relief for those already struggling with high monthly payments and can incentivize landlords to raise rents to the absolute legal maximum every year.
Rent Control’s benefits are untargeted, tying the largest subsidies to the most expensive housing. In a 3% rent cap scenario, a tenant paying rent of $3,000 per month would realize three times the annual savings ($1,584) of a tenant paying $1,000 per month ($528).
Price caps swiftly chill housing production. St. Paul, Minnesota saw multifamily permits plummet 86.2% in a single quarter following its 2021 ordinance.
Revenue caps disincentivize maintenance and encourage condo conversions. San Francisco's rent-controlled housing supply fell 15% as landlords avoided regulation through conversions, while 64% of controlled units in New York City were found to have maintenance deficiencies.
Rent control devalues the tax base, triggering a potential tax shift onto homeowners. As rental property values plummet—evidenced by a 5.4% reduction in Portland, Maine's tax base—cities must either raise property tax rates or cut essential local services to offset the revenue gap.
Supply-side reforms and rental assistance outperform regulations. Zoning changes in Austin, Texas cut rents by 22 percent, while Boston’s rental assistance program surpassed Seattle’s mandates in preventing displacement.
Tax stabilization agreements and commercial-to-residential conversions are essential for unlocking housing supply. Boston and Philadelphia successfully use these incentives to make redeveloping underutilized commercial and industrial assets financially viable for developers.
“We found that, while rent control carries serious negative consequences for the housing market, there are alternative evidence-based policies that could be implemented to address the city’s housing needs,” said Michael DiBiase, President & CEO of RIPEC. “Increasing housing supply and implementing direct, means-tested financial assistance to renters have been successful in communities across the country. The more options renters have, the more rents will stabilize.”
Salvatore added, “Leaders across the city all want housing to be more affordable. However, it’s clear that rent control is not the way to achieve this goal. In fact, rent control may result in increased rents on uncontrolled units, a reduction in available rental units, and less affordability throughout the market. Now, with straightforward, tested solutions, we must work together to increase the number of units across the city in order to make housing more affordable.”
Download the Report
The Providence Foundation is an organization of more than 140 business and nonprofit leaders committed to creating an economically vibrant downtown.