Rent control is a hot-button issue for the overall multifamily housing industry.

The history of rent control, aka rent stabilization, abounds with examples of unintended, adverse consequences. One recent one is the collapse of new construction permits in St. Paul, Minnesota, after the city council passed a rent control measure in 2021. Meanwhile, permits for new housing in neighboring Minneapolis increased over the same period.

Lessons learned? Not quite. Today the National Multifamily Housing Council tracks active rent control initiatives in nearly two dozen states. The White House’s recent release of a Renters Bill of Rights has a statement on page six some view as an implied rent control endorsement. The buzz surrounding rent control is growing and will only get louder as the 2024 election approaches.

What can you do to offer more affordable and sensible housing solutions?

Sheri Thompson has some ideas. “It’s all about supply,” says the executive vice president and head of affordable housing and investment management at Walker & Dunlop. “Fewer housing choices naturally pressures rental rates. Rent control decreases supply because it disincentives development. The effect of that ripples throughout the entire housing system.”

To help ramp up supply, Thompson suggests five strategies multifamily owners, operators, and other stakeholders should consider:

1. Advocate for More Federal Support. “We haven’t seen HUD [Department of Housing and Urban Development] and the GSEs [government-sponsored enterprises] lean in hard during this challenging time,” observes Thompson. “More liquidity and financial leadership is needed now.” HUD and the GSEs are authorized to lend about $185 billion this year, Thompson explains. “Through July they’ve deployed just about $62.5 billion, or about 35% of available funding. HUD is one of the best construction financing alternatives right now but they aren’t lending enough. Developers want to put shovels in the ground. The government needs to engage and get capital flowing,” she says.

2. Lockup Affordable Housing Stock. As projects move out of their low-income housing tax credit (LIHTC) period, they may transition to market-rate housing. Rent control disincentivizes property owners from investing in their buildings and makes them more apt to transition them to market-rate at the end of the compliance period. New owners renovate, raise rents, and income-qualified tenants vacate. “We need to preserve affordable housing through resyndication, preservation initiatives, and other tax incentives,” Thompson asserts. “Let’s maintain and improve the affordable stock instead of trying to impose rent control in our market-rate projects.”

3. Use the Tools We Have. Thompson cites HUD Section 8 and the VASH program (Veteran Affairs Supportive Housing) vouchers as great success stories. “We’ve done some analysis. In most states it costs less for a Section 8 housing voucher than it does to fund a homeless shelter, and the outcome is vastly better,” Thompson reports. However, there is a limited supply. On average nationally, there’s now over a two-year wait for a tenant-based Section 8 voucher.

4. Reconsider Housing Codes. States like Colorado and Florida are taking steps to challenge zoning restrictions and break down NIMBYism. “The perception that affordable housing results in rundown buildings and creates undesirable neighborhoods is false,” Thompson says. “Rent control only fuels NIMBYism rather than combatting it because it drives neighboring property values down. It’s time to reconsider regulatory constraints, which limits supply and drives up rents.”

5. Speak Up. Thompson admits there’s no easy way out of the affordable housing crisis. “There’s plenty of cautionary data out there. Our task—everyone’s task—is to keep people informed. Look before you leap. We need to focus on solutions that serve the best long-term interests of our communities.”

Learn more about Walker & Dunlop’s commitment to affordable housing creation, maintenance, and preservation.