Across the United States, housing affordability has become one of the most pressing issues of the decade. Rising rents have outpaced wage growth in many metropolitan areas, squeezing both low- and middle-income renters. In response, cities have turned to rent control and rent stabilization as potential solutions to protect tenants from displacement and stabilize communities.
But new research highlighted by GlobeSt reveals something critical: rent control does not have a uniform outcome. The impact of these policies depends heavily on how they’re designed, where they’re implemented, and what local market conditions look like.
1. Rent Control Can Stabilize Rents But May Reduce Investment Incentives
One of the clearest benefits of rent control is its ability to slow rent growth for tenants in regulated units. In cities where strong rent caps are in place, households have seen significantly lower rent increases compared to market-rate tenants. This can provide stability for vulnerable renters, particularly seniors, long-term residents, and working-class families.
However, these same rent caps can also have unintended consequences.
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Reduced returns for landlords: When rent growth is limited, property owners earn less over time. For some, this discourages investment in renovations, maintenance, or expansions.
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Decreased property values: In several markets, especially where strict controls were introduced, building values fell by as much as 30% after the reforms. This is because potential buyers and investors view capped properties as less profitable.
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Fewer upgrades and maintenance delays: Owners may defer costly improvements because they can’t pass costs through rent increases.
This doesn’t mean rent control is inherently harmful but it does mean that the structure of the policy plays a major role in determining whether it stabilizes communities or stifles investment.
2. Local Context Matters: Minneapolis vs. St. Paul as a Case Study
The report underscores that two cities with similar goals can have drastically different outcomes.
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In Minneapolis, policymakers implemented a more flexible rent stabilization policy. New construction was largely exempted, and landlords were allowed modest rent increases to cover inflation and operating costs.
Result: Housing construction remained steady, and rent growth was moderate. The market balanced tenant protections with investor confidence. -
In St. Paul, the city adopted one of the strictest rent control measures in the nation, with no exemptions for new construction and rigid caps on increases.
Result: Development activity plummeted, property values declined, and several developers paused or canceled projects.
This comparison shows that context, policy design, and timing can shape whether rent control achieves its goals or backfires.
3. Unintended Consequences: Conversions, Quality Decline & Market Distortions
Beyond slowing new construction, strict rent control can reshape entire housing markets in subtle but powerful ways:
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Unit conversions: Some landlords convert rental units into condos or owner-occupied homes to escape regulation. This reduces the rental stock over time.
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Vacancy hoarding: In heavily regulated markets, small landlords may prefer to keep units empty rather than rent them out at capped rates, especially if costs are rising faster than allowable rent increases.
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Quality decline: When revenues are limited, owners may cut corners on maintenance. This can slowly degrade housing quality over years.
Moreover, as the supply of available rentals tightens, unregulated units often see higher rent increases, widening the gap between controlled and market rents. This dynamic can push new renters into more expensive segments of the market, ironically worsening affordability for those who are not already protected by rent control.
4. Policy Nuance is Key: Stabilization vs. Strict Control
Not all rent control is created equal. Many cities now prefer “rent stabilization” rather than rigid caps. Stabilization policies allow annual increases tied to inflation, exempt new buildings for a set number of years, and often include cost pass-through mechanisms for major improvements.
Why this matters:
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Flexibility keeps developers engaged: If builders know their new projects will be exempt for, say, 15–20 years, they remain incentivized to build.
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Landlords can cover costs: Moderate rent growth allows owners to keep properties in good shape, pay taxes, and invest in repairs.
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Tenants get predictability: Stabilization prevents sudden spikes while still allowing gradual, manageable rent adjustments.
This balance between tenant protection and market viability is why some cities succeed where others stumble.
5. The Bigger Picture: Rent Control Alone Won’t Solve the Housing Crisis
The study also makes one thing clear: rent control alone is not a silver bullet for housing affordability.
To truly address the housing crisis, rent regulations must be paired with complementary strategies such as:
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Zoning reform and increased supply – Encouraging the construction of new rental housing keeps overall rents in check.
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Tenant protections – Policies like just-cause eviction rules can help stabilize communities without discouraging development.
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Public investment and subsidies – Expanding affordable housing through public-private partnerships, tax credits, and subsidies.
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Incentives for maintenance and upgrades – Ensuring housing quality doesn’t decline under regulation.
Cities that take a multi-pronged approach tend to experience more stable housing markets with fewer distortions.
6. Key Takeaways for Policymakers and Housing Advocates
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Local context matters: A rent policy that works in one city may not work in another.
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Exempting new construction can prevent developers from pulling back on projects.
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Moderation is key: Stabilization policies often outperform strict controls in preserving both affordability and supply.
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Monitor unintended effects: Track impacts on property values, construction trends, and unit conversions over time.
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Combine tools: Rent control works best when integrated into a broader housing strategy.
Conclusion: Smart Rent Control Requires Smart Design
The debate over rent control is often polarized painted as either a renter’s lifeline or a market killer. In reality, as the GlobeSt study shows, the truth is more nuanced.
When carefully crafted, rent stabilization can protect tenants, support long-term community stability, and coexist with healthy development. But when implemented without flexibility, it can unintentionally suppress supply and degrade housing quality.
For cities considering rent control, the real question isn’t simply “Should we do it?” it’s “How can we design it intelligently to balance protection and growth?”
Source: “Study Reveals Divergent Outcomes from Rent Control Across U.S. Cities” – GlobeSt, June 3, 2025.