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Executive Summary

Form of Rent Regulation Programs

Approximately 200 municipalities and two states across the United States currently have a form of rent regulation. Rent regulation programs have taken on many forms. The variation in laws occurs across five dimensions: 


1. Choice of cap. Programs vary by how they cap rent increases. Most programs tie the cap to the Consumer Price Index (CPI), a widely used measure of inflation. The most restrictive programs set the cap at a percentage of the CPI, while more lenient programs set the cap at the CPI plus an additional percentage point increase. The range is illustrated by Berkeley, California, which caps rents at 65% of the CPI, and the state of Oregon, which allows rent increases at the CPI + 7%.


2. Exceptions to the cap. Many programs allow owners to pass through costs for a range of items. Most common are allowances for major capital improvements, utilities increases, and property tax hikes. Some programs allow for owners to appeal on the basis of a “right to reasonable return,” which allows the owner a base return from the property. Some jurisdictions allow owners to bank increases and then convert the banked increases at a later date. Even when exceptions such as these are allowed, many programs nevertheless limit the total increase that an owner is allowed.


3. Exemptions. Various exemptions to rent caps exist. The most common is an exemption for new construction. Some programs also exempt small buildings, either across the board or when owner-occupied.


4. Decontrol. Vacancy decontrol, which allows a landlord to return the rent to market level when a tenant vacates the unit, is used widely. A vacancy bonus is allowed in some jurisdictions that allow for a higher-than-cap increase, but that is not unlimited (as in total vacancy decontrol).


5. Compliance and education. Programs vary by how compliance is monitored and how disputes are handled. Generally, some programs require tenants to initiate complaints and challenges while others aim for more proactive implementation.


Rent stabilization program components

Impact of Rent Stabilization Programs

Many studies of existing rent stabilization programs have produced a variety of findings related to affordability and housing costs, impacts on new construction, housing stability, conversions, teardowns, and other impacts on the rental stock, maintenance and capital improvements, and distribution of benefits from rent control. Outcomes in individual cities depend on the unique features of not only the rent regulations themselves but also the characteristics of the local housing market.

The Minneapolis Rental Market

Average Rent Growth by Bedroom, 2000–2020

Average Rent Growth by Bedroom, 2000–2020
Source: CoStar (aggregate data).
  • Rent trends in Minneapolis since 2000 have shown three distinct patterns. In the years 2000 to 2007 there was a steady but modest increase in rents annually. The housing crisis of 2008 to 2012 saw a stagnation of rents at the median. The third pattern emerged after the housing crisis—the years 2013 through 2018 saw steeper rent increases and a wider variation in rent increases across the market.

Growth in Income and Rent by Income Percentile, 2006–2019

Growth in Income and Rent by Income Percentile, 2006–2019
Source: ACS.
  • From 2000 to 2019 incomes increased faster than rents for renter households at the median and above. However, tenants in the bottom quartile saw steep rent increases (44% increases from 2006 to 2019) and almost no growth in income (2.9% increase in the same period).

Cumulative Change in Rent and Household Income for Median Renter by Race/Ethnicity


 BIPOC: Cumulative Change in Rent and Household Income for Median Renter by Race/Ethnicity
Source: ACS.


Black: Cumulative Change in Rent and Household Income for Median Renter by Race/Ethnicity


White: Cumulative Change in Rent and Household Income for Median Renter by Race/Ethnicity
  • BIPOC renters generally, and Black renter households in particular, saw a worsening of affordability for most of the study period. Black households saw rent increases in this period while incomes fell in real dollars. White households fared best, with incomes steadily and consistently rising more rapidly than rents.

Rent Caps and Actual Rent Increases, 2001–2019

Rent Caps and Actual Rent Increases, 2001–2019
Source: Author’s calculations based on U.S. Bureau of Labor Statistics data.
  • We used rent trends in Minneapolis to model what might have happened to rents had various rent caps been in place. A rent cap set at 75% of CPI and one at the CPI would have had a consistent but relatively small impact on the middle of the Minneapolis rental market. Rent caps at higher levels (CPI + 3% and CPI + 7%) would not have constrained rent increases in Minneapolis until the postcrash period. These caps would have limited the most aggressive rent increases in the city but would not have affected median increases.

Building-Level Economics

We also investigated the potential impact of rent control from the perspective of building owners and the housing industry more generally. We interviewed 30 industry people to collect their thoughts and concerns about a rent stabilization program. We also modeled the impact of various rent caps by creating an example apartment pro forma based on actual Minneapolis rents in the study period, illustrating how those rents and the economic measures that apartment owners consider would change under different rent caps.

Industry Perspectives


The informants we spoke with expressed a range of concerns about the potential impact of rent stabilization.

  • Many of the owners said that their rents would not actually be impacted by any of the example rent caps we shared with them, as they say they charge below-market rents and raise rents gently. They questioned the need for rent regulation.
  • Nevertheless, almost all informants expressed as their greatest concern the potential for a rent stabilization program to constrict rent growth while operating expenses continue to rise. Some noted that they would be incentivized to increase rents prior to enactment of a program of rent regulation.
  • Informants expressed additional concerns that ranged from a negative impact on new housing development and reduced maintenance and decline in housing quality, to changes in lending terms and the withdrawal of units and investors from the Minneapolis market.
  • Most informants felt that the actual impact of rent stabilization would depend on the specific features of the program and market factors.

Scenario Modeling

Scenario modeling was done for a hypothetical, class C or Naturally Occurring Affordable Housing (NOAH) unit. Returns were expressed in percentage terms to allow scaling to an apartment building of any size. We specifically examined five metrics that capture the economic performance of apartments:

  1. Cash-on-cash return (average annual returns)
  2. Cash-on-cash return in the final year (2018)
  3. Average annual change in value (appreciation)
  4. Total change in value (appreciation)
  5. Internal rate of return (IRR)


The model indicated that rent caps at 75% of CPI and at CPI would have allowed for returns, across all of these metrics, comparable to what was achieved at the middle (defined by both the average and median rent increases seen in Minneapolis since 2009) of the market.

A rent cap at CPI + 3% would have allowed returns comparable to what would have been achieved by raising rents at the 90th percentile. The CPI + 7% cap would have allowed returns far in excess of what would have been achieved at the top of the market in Minneapolis during these years.