from the Liberty Unyielding blog
Raising rent to keep up with inflation isn’t what most people would consider “rent gouging,” even when the landlord has to increase rent by more than 7%. For example, Washington, DC’s rent control board allowed landlords to raise rents on most tenants 8.9% in 2023, to compensate for the 6.9% inflation in Washington, DC that occurred in the previous year. But pending bills in Virginia’s legislature would allow local governments to adopt “anti-rent gouging” ordinances, that would define raising rent by more than the lesser of 7%, or inflation, as illegal “rent gouging.”
The legislation states that once a local government has adopted “anti-rent gouging provisions,” it “shall prohibit any rent increase … of more than the locality’s annual anti-rent gouging allowance,” defined as the “percentage increase in the Consumer Price Index...or seven percent, whichever is less.” So if inflation is 8% — as it was nationally in 2022 — the landlord can only raise rent by 7%, at most. And the landlord might not be allowed any inflation adjustment at all, because under the legislation, a local government “may” — not must — “allow rent increases” to compensate for inflation.
So landlords will become poorer and poorer due to inflation under the ordinances authorized by the legislation.
This seems unfair. Why shouldn’t landlords be able to raise rent to keep pace with inflation? Most tenants get pay raises or cost-of-living increases to compensate for inflation. American workers’ wages grew faster than inflation in most of the past decade, and over the cumulative ten-year period. Federal workers commonly get pay raises to offset inflation. Retirees get annual increases in their social security payments based on cost-of-living adjustments. With their increased wages, tenants should be able to pay rent that rises with inflation. But under the legislation, they could avoid doing so, and pay less than the market rate.
Effectively, this legislation would allow local governments to adopt very harsh rent control. Currently, Virginia does not have any rent control laws, either at the local government level, or at the state level. Like most states, Virginia has viewed rent control as a bad idea. Thirty-three states preempt local governments from adopting rent regulation laws.
But this legislation — which is pending in both houses of Virginia’s legislature as HB 721 and SB 366 — would for the first time give local governments in Virginia the power to impose rent control. Continue reading →