What Is Rent Control?

Understanding Rent Control as a Landlord

Rent control is one of the most debated topics in real estate. Whether you think it is good policy or not, if your property is in a rent-controlled jurisdiction, you must comply. Violations carry serious penalties including fines, mandatory rent rollbacks, and in some cases, criminal charges.

The core concept is simple: the government limits how much you can increase rent each year. Instead of raising rent to whatever the market will bear, you are capped at a specific percentage. In Oregon, it is 7% plus CPI. In California (under the Tenant Protection Act), it is 5% plus CPI or 10%, whichever is lower. In New York City, a rent guidelines board sets the exact percentage each year.

These caps generally only apply to existing tenants. When a unit becomes vacant and you re-rent it, most jurisdictions allow you to set a new market-rate rent (called "vacancy decontrol"). This is a critical distinction that affects your long-term rental strategy.

How Rent Control Affects Your Bottom Line

Let us look at real numbers. You own a unit in a city that caps annual increases at 5%. Your current tenant pays $1,400/month. Market rent for comparable units is $1,700.

Year 1: You can raise to $1,470 (5% increase). Gap to market: $230/month ($2,760/year). Year 2: You can raise to $1,544. Market has moved to $1,785 (5% growth assumed). Gap: $241/month ($2,892/year). Year 3: You can raise to $1,621. Market: $1,874. Gap: $253/month ($3,036/year).

After 3 years, you are collecting $253/month less than market rate. That is $3,036/year in lost potential income, and the gap keeps growing. Your net operating income is lower, which means your property's value (based on cap rate) is also lower.

This is why long-term tenants in rent-controlled units often pay significantly below market, and why vacancy decontrol (resetting to market when they leave) is so important to your financial planning.

Types of Rent Control

Strict rent control. Limits increases to a fixed percentage or CPI. Examples: New York City rent-stabilized units, some older San Francisco units. These are the most restrictive.

Rent stabilization. A more moderate version. Caps increases at a percentage of CPI or a set maximum. Often includes vacancy decontrol. Examples: California's Tenant Protection Act (AB 1482), Oregon's statewide cap.

Just cause eviction (related). Many rent-controlled areas also require "just cause" to evict or not renew a month-to-month tenancy. You cannot simply end a tenancy to reset the rent. You need a legitimate reason like non-payment, lease violations, or owner move-in.

How to Operate in a Rent-Controlled Market

Step 1: Know exactly which law applies. Read your city and state rent control ordinance. Know the annual cap, exemptions, notice requirements, and whether vacancy decontrol applies. Many jurisdictions have rent boards with websites that explain the rules.

Step 2: Maximize increases each year. If you are allowed 5% and you only raise 2%, you do not get to bank the unused 3%. Take the full allowed increase every year, even for great tenants. You can always offset it with improved service or unit upgrades.

Step 3: Track your operating expenses carefully. Some jurisdictions allow above-guideline increases if your costs have gone up significantly. You need documentation: property tax bills, insurance premiums, utility costs, maintenance invoices.

Step 4: Invest in capital improvements. Some rent control laws allow pass-through of capital improvement costs as temporary rent increases. Check your local rules. This can be a way to maintain property condition and recover costs.

Step 5: Focus on tenant retention. Ironically, in a rent-controlled market, keeping good tenants matters even more. Turnover in a non-rent-controlled area lets you reset to market. But in a controlled area with just-cause eviction rules, problem tenants are harder to remove.

Common Mistakes

Not knowing if rent control applies to your property. Many landlords assume they are exempt without verifying. Check the construction date of your building, the number of units, and whether your jurisdiction has opted in to state or local rent control.

Raising rent above the cap. Even unintentionally. If the cap is 5% and you raise rent from $1,400 to $1,480 (5.7%), you are in violation. Calculate the exact dollar amount of the maximum allowed increase and do not exceed it.

Not filing required paperwork. Some rent-controlled jurisdictions require you to register your units, file annual rent increase notices with the rent board, or respond to tenant petitions. Missing these filings can void your rent increase.

Trying to circumvent rent control. Strategies like deliberately letting the property deteriorate so the tenant leaves, or harassing tenants to force them out, are illegal. Rent control jurisdictions actively enforce anti-harassment provisions.

Frequently Asked Questions

Which states have rent control?

As of 2026, states with some form of rent control include California, New York, Oregon, New Jersey, Maryland (some cities), Maine (Portland), Minnesota (St. Paul), and Washington D.C. Most states do not have rent control and many preempt local governments from enacting it.

Does rent control apply when a tenant moves out?

In most jurisdictions with "vacancy decontrol," you can reset rent to market rate when the unit becomes vacant. This is a critical feature because it means your long-term income is not permanently capped. However, some strict rent control areas do not allow vacancy decontrol.

Can I opt out of rent control?

No. If your property falls under a rent control ordinance, compliance is mandatory. You cannot opt out, and tenants cannot waive their rent control protections even if they agree to do so in the lease agreement.