Florida Realtors Commissions Florida-Based Rent Control Study

Florida continues to experience an affordable housing crisis that is being exacerbated by low inventory, surging home prices and high rent costs. To help address the rent cost issue, some local governments in Florida have been exploring potential solutions that could have long-term negative repercussions, such as rent control measures.

A multitude of studies conducted on rent control in different parts of the country have shown that these types of policies cause a ripple effect in the housing market that ultimately leads to less available housing and a downturn in the local economy. These policies also have been shown to cause a decrease in the upkeep of rent controlled units and an increase in property taxes for all residents in the affected jurisdiction.

Although these studies have painted a very alarming picture, none of them have examined the negative impacts of these policies if they were to be implemented in Florida.  To help educate state and local leaders on the harmful effects of rent control, Florida Realtors® commissioned a study by the Regional Economic Consulting Group of the economic impact of rent control on five Metropolitan Statistical Areas (MSAs) within the state: Miami-Fort Lauderdale-West Palm Beach MSA, Orlando-Kissimmee-Sanford MSA, Tampa-St. Petersburg-Clearwater MSA, Jacksonville MSA, and Naples-Immokalee-Marco Island MSA. This study focuses on multi-family renters in the middle-income and low-income brackets, which traditionally have fewer housing options resulting in stronger political pressure to implement some form of rent control.

The findings show that vacancy influences rent and rent influences construction. Rent control breaks that relationship where vacancy cannot influence rent, and rent is unable to influence construction. The result is a drop in supply, tighter vacancy rates as populations grow, and no mechanism to alleviate pressure on open market prices.  

In total, the study found that rent control leads to a multi-family development opportunity loss of 80,296 jobs for all MSAs over five years, losing $4.2 billion in labor income. The total value-added GDP loss amounts to $7.8 billion, and the total economic output is reduced by $10.5 billion. For State and Local governments, reduced economic activity translates to $473.3 million in forgone tax revenue collections, of which $294.3 million originate from the local level. 

Based on the findings and analysis, it is safe to conclude that rent control is not the answer to the current problem. Instead, local and state policies looking to alleviate high rent should focus on increasing the supply of housing units to meet the rising demand. Housing programs to increase supply, governments providing tax incentives, and waiving impact and permit fees could give a more reasonable outcome. The only way to combat rising rent is not to force the market into price control schemes but rather work with the market to expand supply.