Why Rent Control Makes Housing Worse (What Really Works)
When a city like New York proposes sweeping rent control and massive public housing expansion, it often sparks headlines and heated debate. But beneath the political talking points lies a simple truth: the very policies meant to help renters can actually make housing more expensive and less available over time.
Let’s unpack what’s happening in New York and explore what history and economics say about rent control, public housing, and real solutions to the affordability crisis.
The Big Problem Rent Control Tries to Solve
First, let’s be clear: we have a housing affordability problem. In cities across the U.S., working-class residents are getting priced out. Wages haven’t kept up with rent, and inflation has spiked the cost of living. Developers, discouraged by high interest rates and regulatory red tape, are pulling back on building new units.
Enter the political solution: freeze rents or impose rent control.
The logic? Cap what landlords can charge, and you’ll protect tenants. But the reality is far more complicated and dangerous to the long-term health of a city’s housing supply.
What Rent Control Actually Does
When a city freezes or caps rents, it removes the financial incentive for developers and property owners to invest in housing. After all, why build or maintain apartments in a market where your revenue is capped, but your expenses like insurance, property taxes, and maintenance—keep rising?
Look no further than Berlin, Germany, which froze rents in 2020. The result?
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Construction dropped by 40%
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Rental listings fell by 50%
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The policy was reversed within a year
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Renters were forced to pay back the difference between the capped rent and market rent
And Berlin isn’t alone. San Francisco, Portland, and New York all share a common trait: they’ve implemented some form of rent control, and yet they have some of the highest rents in the nation.
Why? Because rent control creates scarcity. Existing units don’t turn over. New units don’t get built. And people who need housing the most get priced out.
What Happens to Public Housing?
New York’s new mayoral candidate, Zohran Mamdani, wants to add 21,000 new public housing units a nod toward solving the supply issue. But history tells us this rarely works as intended.
Public housing is notoriously expensive to build and even more expensive to maintain. Bureaucratic inefficiencies, political gridlock, and deferred maintenance have left many public housing projects in disrepair.
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The U.S. currently has over $70 billion in deferred public housing repairs
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New York alone needs $40 billion to fix its existing housing stock
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Mold, lead paint, broken elevators, and crime are common complaints
These units often degrade quickly because there’s no accountability. Unlike private developers, the government has no incentive to reinvest, improve, or compete for tenants. And when these areas decline, they drag down surrounding neighborhoods too.
Real Solutions That Work
Here’s what actually helps affordability without strangling the housing market:
1. Increase Housing Supply
More units = more options = lower prices. It’s basic economics. Cities must encourage development through zoning reform, reduced impact fees, and streamlined permitting processes.
2. Work With Developers, Not Against Them
Instead of freezing rents, offer incentives: public land, tax breaks, fast-tracked approvals for projects that include affordable units. Cities like Phoenix and Austin have already started experimenting with these kinds of partnerships.
3. Expand Rent Assistance, Not Controls
Voucher programs like Section 8 allow people who truly need help to live where they choose without distorting the entire housing market. This targets the issue without punishing landlords or discouraging development.
4. Maintain Accountability
In privately owned apartments, landlords must maintain properties or lose tenants. In government-run housing, that accountability disappears. The best way to ensure long-term livability? Let market forces do their job with oversight and support where necessary.
Why This Matters Now
Policies like rent freezes may win elections, but they lose in reality. The biggest investors pensions, insurance companies, private equity are already avoiding markets with strict rent caps. And when capital dries up, so does construction.
That’s why affordability continues to worsen in rent-controlled cities. The money goes elsewhere. Developers go elsewhere. And renters are left with fewer choices and rising prices.
