Sharp elbows and controlled rents

The news that rents in London will soon be double what people pay in the rest of the country has led to a campaign to get the Mayor of London take action.

This comes at the same time as a highly commented on article in the American magazine The Atlantic on rent controls. The argument is a familiar one but is worth re-stating;

at best, rent control does little harm but probably not much good and, at worst, it has negative impacts on landlords and tenants.


I have already written here about the fact that too much discussion of rent controls does not consider the importance of public housing. In short, having rent controls and little to no public housing is very different to having rent controls and well funded public housing.

But it’s also worth noting that there are different varieties of rent controls. New York city, for example, is famous for having some apartments that are “rent controlled” and others that are not. What effect does this have?

This study found that tenants in rent controlled properties were not anymore likely to be on low incomes than tenants in other properties. The authors also looked at how much money different types of people saved by getting rent controlled properties. They found that middle class households  saved a lot more on rent by securing rent controlled units (when compared to other middle class households) than lower income households did.

This is an important aspect of partial or voluntary legislation. When there are no rules controlling access and when take up is voluntary or partial middle class households often disproportionally benefit.

Take the example of conservation areas. The idea behind conservation areas is that certain areas have distinct or special architecture and therefore additional restrictions apply when developing new houses or altering existing one.

An area is designated as a conservation area through a complex set of negotiations. Often middle class home owners are better at pressing for this designation. They are then rewarded by increased property prices. In fact, a recent report by English Heritage found that houses in conservation areas sell for 37% more than other houses.

Similarly, while it is still early days for ‘neighbourhood planning‘ based on my own experiences in Camden, I would hazard a guess that more middle class areas are further along with developing neighbourhood plans. I would also guess that in mixed income areas middle class views on what should be included in the plans is taking precedent over the views of working class residents.

What does this mean for rents in London?

I think it means that there is a risk that middle class households will disproportionally benefit from reforms which lead to some properties being rented out at controlled prices while others are not, if there is no control over who gets these tenancies.


DC displacement facts

The White population of DC is growing, from 217,000 in 2007 to 244,000 in 2010.  The black population is declining, from 326,000 to 314,000
Black households usually earn less than White households. More than one in four Black DC residents lived in poverty in 2010 (8.5 percent for non-Hispanic White residents)
Black residents are less likely to be in work than White residents. The unemployment rate for Black DC residents has doubled since 2007, from 10 percent in 2007 to 20.6 percent in third quarter 2011. From 2007 to third quarter 2011, the unemployment rate for White (non-Hispanic) DC residents rose from 1.9 percent to 3.7 percent.  
The number of households earning over $75,000 per year has increased, the number of families earning less than $50,000 per year has decreased.

Percentage change between 2000 and 2009

Household incomes




Less than $50,000

-24 percent

-32 percent

-26 percent

$50,000 to $75,000




More than $75,000

+81 percent

+58 percent

+63 percent

The number of low cost rental properties has decreased. The stock of low-cost rental stock has shrunk by more than one-third since 2000. The number of rental units with rent and utility costs of $750 or less fell from 69,000 in 2000 to 45,000 in 2007.  (all figures are adjusted for inflation to equal 2007 dollars.)

Low-cost homeownership options also shriveled, the number of DC homes valued at $250,000 or less fell from 58,000 to 15,000 between 2000 and 2007.

There is a shortage of housing that people on less than 50% of the Area Median Income can afford.

Certain neighbourhoods are becoming less black and more white.

A growing number of DC households are finding it difficult to afford housing. Nearly 100,000 DC households — or two of five — spent more than 30 percent of their income on housing in 2007 (20,000 more than in 2000)

Four of five DC households with incomes below 30 percent of the Area Median Income (about $28,000 for a family four) spent more than 30% of their income on housing. 62 percent of this group spent half or more of their income on housing in 2007 — up from 50 percent who had housing costs this high in 2000.

In 2009, 24.8 percent of District renter households (34,140 households) had severe housing costs (spending 50 percent or more of their income on housing)

In 2006 the National Low Income Housing Coalition estimated that a full-time worker would have to earn an hourly wage of $24.73 — three and a half times the minimum wage — to afford the rent for a modest two-bedroom house or apartment. The minimum wage is $8.25 per hour in DC. A person making that much would have to work 153 hours a week to afford to rent a two bedroom apartment in the open market.

Funding for all of DC’s major housing programs has been cut in recent years, however, which means that the city is unlikely to have made much progress on the affordable housing problems highlighted in this report.  The budget for core housing programs in FY 2010 is $64 million, a nearly 50 percent cut from 2008 and the lowest level since 2004.  The Housing Production Trust Fund will receive $18 million in 2010, compared with $62 million in 2008.

The 160 unit Columbia Heights Village development 14th Street and Columbia Road Northwest recently started accepting applicants. It is a project-based Section 8 development that bases tenant rents on their income level. People waited in line for over 4 hours for a chance to put their name down on the list for these properties. One woman in line said

“They are pushing us out! … Average people deserve to live in the city.”

Another said

“I was born and raised here I’m not moving. I will find affordable housing.”

D.C.’s old Capitol Gateway housing project during demolition in 2005

Capitol Gateway today.

Capper/Carrollsburg site in 2006

The unfinished site in 2008

Partially completed in 2010 with properties going “from $781,300”