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Rent control will limit workforce housing

If the Nevada Legislature passes rent control, there will be a loss of workforce housing. This has happened in communities all around the country. The unintended consequences of rent caps can exacerbate housing shortages and affordability issues, particularly for low-income renters.

A well-known study on rent control in San Francisco by Diamond, McQuade, & Qian in 2019 found that after stricter rent control was implemented, landlords removed units from the long-term rental market. Many converted them into short-term rentals or sold them as condos to avoid the regulation. The study concluded that rent control policies ultimately reduced the supply of rental housing.

A UCLA study also found that after rent control efforts were implemented, landlords withdrew long-term units and repurposed them for vacation rentals.

I witnessed similar ill-effects when serving as counsel to First Federal of Santa Monica. Santa Monica enacted rent control with criminal penalties. After that, many landlords stopped painting and maintaining their rental properties, which degraded many neighborhoods. Meanwhile “sweetheart rental deals” were offered to UCLA professors, while low-income workers ended up sleeping in Lincoln Park! This trend is common across the country – where rent control is implemented, the wealthy are better off at the expense of those on low or fixed incomes.

In Incline Village, where I live, and like much of Nevada, workforce housing is already scarce. If rent control is implemented, to cover hard costs such as mortgages, taxes, repairs, and maintenance, landlords who are providing critical workforce housing may convert these long-term rentals into vacation rentals, making an already bad situation, worse. Lake Tahoe likely would not be the only Nevada community impacted in this way either. Landlords in Henderson, Summerlin and other “higher rent” communities could follow suit.

New York City has long-standing rent control laws. In the last decade, some landlords converted apartments into illegal short-term rentals, despite city regulations against it. Investigations showed an increase in Airbnb listings corresponding to areas with strict rent control. The surge in popularity of short-term rentals has led to a decrease in housing affordability. Today, there are only about 22,000 apartments covered by rent control in New York City, down from over a million in the 1970’s.

The legislature could try to mitigate the conversion to condos or short – term rentals by restricting them, but then our state or cities could face potential legal actions from homeowners who could claim they are losing their property rights. Can we as taxpayers really afford another lawsuit similar to that of Summerlin’s Badlands?

In Nevada, the need for more housing is clear. A recent report from the Nevada Housing Division found that the state lacks over 80,000 affordable rental units. Rent control won’t fix this. It will only make the problem worse.

Rather than relying on rent control, policymakers should pursue market-based solutions to improve housing affordability and expand supply. Governor Lombardo’s bill, AB540, offers practical strategies to increase affordable and attainable housing without disrupting the rental market or infringing on property rights. Zoning reforms, a streamlined development process, and incentives for affordable construction are key starting points.