Rent Wrangling

Members of Raleigh’s city council are throwing their support behind a bill introducing rent control.

BY JASMINE GALLUP jgallup@indyweek.com

Sebastian Fernandez Giraldo, like many tenants in the Triangle, has seen his rent go up by hundreds of dollars in the last few years.

“We’re all seeing double-digit rent increases,” says Fernandez Giraldo, who is a community advocate with the Triangle Tenants Union. “I’ve already seen my rent go up by like 10 percent.”

As the INDY previously reported, these rent increases have forced many to leave the Triangle, relocating to cheaper suburban or rural neighborhoods. If you have a car and a steady job, being forced to relocate outside of downtown Raleigh or Durham may not be such a big deal. But for people who are older or working a minimum-wage job, rent hikes could leave them unemployed or unable to access critical resources like health care.

“In East Durham … you have massive gentrification,” says Charles Becker, a professor of economics at Duke University. “If you’re an owner-occupier then, OK, you make a capital gain … but about half the housing in [Durham County] is rental housing. And the people who are most vulnerable are elderly and poor, and they’re being displaced.”

As the Triangle undergoes an economic boom, landlords are rapidly raising rents to meet market rates. According to a 2023 report by the nonprofit NC Housing Coalition, about 45 percent of renters in Wake County have difficulty affording their homes, compared to only about 16 percent of homeowners.

The area’s rapid economic growth means there are “winners and losers,” Becker says. “So there are hugely unfortunate consequences to this, and we’ve only been seeing it fairly recently.”

With all the pressure renters are under, some elected officials are considering what they can do to help. Last month, three newly elected Raleigh City Council members resurrected a controversial policy idea: rent control.

The argument for rent control

Back in April, Raleigh City Council newcomers Jane Harrison, Megan Patton, and Christina Jones threw their support behind a state bill (Senate Bill 225) that proposed giving cities and towns like Raleigh the power to regulate rents. The bill, introduced by senator Lisa Grafstein (D-Wake), was likely doomed from the start in the Republican-dominated legislature and died in committee, as expected.

Harrison, Patton, and Jones, however, each say they want to continue conversations about policies like rent control and inclusionary zoning that are currently banned under state law.

“In Raleigh, the median rent is now about $2,000, with prices having grown 20 percent year over year,” says Harrison. “So I think about, is that an affordable rent for a day-care worker? What about a 911 operator? We have essential workers who are struggling to stay in our city.”

Harrison admits rent control isn’t a perfect solution, but she believes it’s one major element that could help the city create housing affordability. When it comes to housing, “supply, subsidy, and stability” are essential, says the councilwoman.

“Stability, for me, is about regulating the housing market to eliminate price gouging and ensure affordable housing is built as a part of all developments,” Harrison says. “And rent control is just one tool to bring about more stability in the housing marketplace.”

When it comes to rent control, Harrison favors shortterm stabilization measures over decades-long rent caps like those found in New York City. For example, a rule that rents can only be raised by a certain percentage each year could soften the blow of rapid economic growth for renters and give them time to figure out where to live.

Patton agrees, saying such a rule would “provide a measure of predictability for renters.”

“While it wouldn’t lock their rents in at the same price, it would create some guardrails around when their rents could be raised and by how much, so that people could plan to stay in their spaces,” she says.

For Harrison, rent control is a governmental tool that may be appropriate to use as economic forces shift and the housing market changes. There’s no permanent rent cap that will fix the housing crisis, she says.

Today, with interest rates high, Harrison expects to see rent hikes slow down. So, “perhaps rent control won’t be necessary in the near term,” she says. “But what if Raleigh had had this tool at its disposal a few years ago? How many more residents could have remained in their homes, stayed near their kids’ school districts or near their jobs?”

Does rent control really work?

For renters in Raleigh, many of whom are struggling to pay their monthly bills, putting a cap on what landlords can charge sounds pretty good. But many economists agree that while rent control can have short-term benefits, there are longterm consequences.

Rent caps can incentivize landlords to sell their property, reducing the overall availability of rental housing, according to the Brookings Institution. Rent control can also disincentivize developers from building new rental housing, researchers contend.

It “deters people from building structures if they think they’re not going to be able to charge market price,” Becker says. In Durham, he expects rent control would prompt a shift in construction from rental housing to owner-occupied housing.

“It’s not like you’re redistributing from wealthy young professionals to the elderly poor,” he says. “There will be some of that initially, but in the long run, there’s not going to be a whole lot of it.”

One study of rent control in San Francisco found that landlords were 8 percent more likely to convert rent-controlled apart- of rent control, Harrison says, “We definitely need to be careful.”

“If a municipality were to set a cap on rent increases, that cap cannot be so blunt or so extreme that it then curtails a healthy marketplace for rental units,” she adds. “We don’t want our landlords to say, ‘I don’t want to be in this business any longer.’ There has to be a focus on preventing price gouging more than anything, not to overregulate the housing market.”

In addressing the affordable housing crisis, Becker suggests a more targeted solution, like a county fund to subsidize the rents of the most vulnerable renters, the elderly and the poor. “Subsidy,” or financial support for low-income residents, is also a piece of Harrison’s strategy to create affordable housing.

The only problem is that, once again, the state legislature has made it difficult for local cities and towns to enact such policies. According to Becker, a development impact tax—a tax on new construction that these issues despite lawmakers’ opposition.

“I understand that the legislature is not going to want a specific bill,” she says. “They’re not going to let this one go through the Rules [Committee], or they may not let the next one go through. But if we continue to pursue it and show that this is what we’re about, this is what we stand for, then hopefully we can gain some traction.”

“If we don’t try something, then we don’t have anything,” Jones adds.

Others have reservations about lobbying the state legislature like this, however. Eric Braun, a former land use attorney and chair of the Raleigh Planning Commission, says with rent control unlikely to receive support from the Republican-dominated state legislature, supporting it is “performative politics.” ments (as opposed to non-rent-controlled apartments) into condos they could sell at market price. The study also found that a 1994 expansion of rent control in the city led to a 15 percent decline in non-rent-controlled apartments and a 25 percent decline in rent-controlled apartments, according to the Brookings Institution.

“[It] distracts from the efforts of those working on improving housing affordability using the tools available today,” Braun wrote in an email. Moreover, supporting rent control could alienate lawmakers, Braun argues.

The overall decline in the supply of rental housing in San Francisco raised the costs of all housing in the long run, contributing to gentrification, the report concludes. As far as the Triangle is concerned, “I don’t think rent control is an answer,” says Becker.

“It mucks up the market,” the economist adds. “New York City has had serious rent control for ages and in the long run, the winners and losers tend to be almost randomly distributed. You have some people who are low-income who benefit enormously; they pass it on to their children. Other people who are not fortunate end up paying more for comparable housing elsewhere.”

Asked about the potential consequences is designed to finance the need for additional public services—could help finance such a fund. But, like rent control and inclusionary zoning, the tool is currently prohibited under state law.

The future of housing legislation

Throughout the Triangle, people disagree on rent control. But one thing some do agree on is that local governments should have the power to enact policies that could help address the housing crisis.

“As a city, we are often limited and preempted by the state government on [using] tools that … might be appropriate for our city,” Patton says. “Rent control is one of those.”

Patton doesn’t unconditionally support rent control, she says, but she would have liked to see the bill get out of the committee so the city council could at least discuss it. Jones, likewise, says she wants to raise

“Because Raleigh is the state capitol, legislators closely follow what the city and its leaders are doing,” Braun wrote. “Posting support for a bill that is viewed as extreme by Republicans and that has no chance of passing could come back to haunt the city when it asks the General Assembly to pass its broader legislative agenda.”

For Fernandez Giraldo, the Raleigh renter, state legislation supporting rent control is essentially a pipe dream. For renters, solutions are going to come from the ground up, he says. Protections like rent control and maintenance regulations will only come if renters organize and put pressure on landlords.

“If people want to take control over their rent, they need to organize with their neighbors, take collective action, and take back control,” he says. “We can’t really rely on legislators, landlords, and capitalists to do that for us …. The legislature is run by landlords, whether they have an R or a D next to their name.” W