Rent Regulation for the 21st Century: Pairing Anti-Gouging with Targeted Subsidies

Rent regulation is designed to protect low-income renters against sudden rent increases that threaten their housing stability. However, market distortions and the lack of means testing or targeting limit the effectiveness of many rent regulation systems. This policy brief outlines an approach combining anti-gouging regulations with shallow, targeted subsidies to maximize the benefits of rent regulation for low-income households.

A central purpose of rent regulation is to provide stability against unexpected increases in rent. Low-income renters are especially vulnerable to rent shocks. Most rent regulation systems, however, confer the largest benefits on higher-income renters, prompting the question of how rent regulation can offer more effective protection to lower-income households. Expanding rent regulation to impose tighter rent restrictions on more of the housing stock has adverse consequences for housing markets; meanwhile, means testing rent-regulated housing would be highly burdensome and potentially counterproductive. In this brief, we argue that pairing anti-gouging rent regulation with shallow, targeted subsidies to low-income renters is a better way to ensure that the benefits of rent regulation reach vulnerable households.