What is Rent Control...?
Rent control is an economic redistribution tool where the state intervenes in the private property market to address housing needs, particularly amidst crises like the economic fallout from COVID-19, which exacerbated the precarious position of "30-day'ers". It aims to place more surplus in the tenant's hand, safeguarding them and helping them maintain their class status.
Historically, rent control has evolved:
- First Generation (early 1900s) involved politically determined rent ceilings that restricted charges, forbade premiums, and regulated evictions, typically as temporary emergency measures during economic crises like WWI.
- Second Generation (1950s) introduced more flexible price stabilization schemes with regular, predetermined rent increases, often linked to the Consumer Price Index (CPI). This form was more agreeable to economists as it protected tenants while allowing landlords to meet inflationary costs.
In South Africa, rent control was implemented in 1920, but strictly along racial lines, regulating rents and increasing security of tenure for the white population until the 1970s. Local Rent Boards determined reasonable rents, considering property value, services, and cost of living.
The impacts of rent control include:
- For controlled properties: stabilized rents and extended tenant occupation, offering housing stability. Concerns about landlord maintenance can be addressed by legal enforcement, as research shows little difference between controlled and uncontrolled units.
- For uncontrolled properties: potential for higher, unregulated rents if housing stock is inadequate, and a risk of developers converting rental units to private ownership, which can be mitigated by regulations.
Crucially, rent control is not a "panacea" but one arm of a wider strategy. Effective implementation requires:
- Targeted rent controls in gentrifying areas, supported by rent boards with public, landlord, and government representation.
- Empowered Tenant's Unions to demand rent stabilization and negotiate increases based on CPI.
- An educated and determined populace willing to advocate for housing rights, recognizing that the housing stock crisis is a fundamental determinant of rent prices.
