Opponents of rent control and rent stabilization are dialing up their vocal opposition to the housing affordability tactic as an “empty promise,” even as more major U.S. cities move to strengthen tenant protections.
Economists and investors increasingly argue that such policies tank new housing development and investment at the very moment concerns about affordability intensify.
Their warnings come as rent regulations gain political “electability” momentum in some of the nation’s largest and most expensive markets.
Los Angeles recently tightened its rent stabilization. New York City elected a new mayor who promises to expand rent stabilization.
Washington state passed a new law on rent control earlier this year, while Oregon strengthened its 2019 laws.
Massachusetts has a 2026 ballot initiative to bring back statewide rent control.
Critics, however, seize on new evidence showing a decline in new building permits in Montgomery County, MD, since rent stabilization took effect last year. For this side of a longstanding but intensifying debate, a focus on Montgomery presents a vivid example of how quickly development can stall under rent stabilization.
Rent control and stabilization critics also jumped on a recent Wall Street Journal article highlighting the contrast in construction between St. Paul, which passed the country’s strictest rent control in 2022, and Minneapolis, which chose to encourage building. St. Paul construction dried up while Minneapolis flourished.
Reckoning with the negative impact of their rules on new residential development, St. Paul’s city council walked back rent control by passing exemptions for new ground-up construction and any number of apartments built since 2004.
Cities persist in pushing the tactic, nonetheless, despite mounting evidence of unintended consequences that ultimately mean one thing: a stall-out of new building, planning, and development.
LA tightens its rent cap
For the first time in decades, the Los Angeles City Council strengthened rent rules for pre‑1978 apartments.
It rewrote the city’s Rent Stabilization Ordinance and permanently capped annual rent increases for roughly 624,000 stabilized units at 1%-4%, tied to 90% of the Consumer Price Index. The reform eliminated the extra 1% surcharge on gas and electricity bills and scrapped the 10% increase for additional dependents.
Tenant advocates framed the 4% ceiling as a necessary brake on rent hikes in a city where more than half of renters pay over 30% of their income for housing, and pandemic-era protections have expired.
“It’s a step in the right direction to provide tenants with some economic relief from rent increases,” Larry Gross of the Coalition for Economic Survival told the Commercial Observer.
Gross added, however, that the council missed an opportunity to take even bigger steps with more substantial amendments.
California has broad rent stabilization under a 2019 law. Yet, the state has been passing laws to increase the housing supply, particularly this year. It’s effectively pursuing the contrasting housing solutions simultaneously.
These frameworks tug in different directions politically. Tenant advocates emphasize short‑run stability via rent caps and eviction limits. In contrast, pro‑supply advocates prioritize long‑run affordability, based on the math that says more units, period, will bring rent levels down, especially near transit.
Massachusetts advances a statewide cap
In Massachusetts, organizers with the Keep Massachusetts Home campaign have cleared a key signature threshold to place a 2026 ballot question before voters that would reverse the state’s 1994 ban on rent control.
The proposal would cap annual rent increases statewide at the rate of inflation, up to a maximum of 5%, using the rent in place as of Jan. 31, 2026, as the baseline. It would apply automatically in all 351 cities and towns.
Supporters describe the measure as a defense against displacement fueled by corporate acquisitions and sharp rent spikes.
The state banned rent control in 1994 because it led to fewer rental units, which supports opponents’ argument about its impact on supply.
Montgomery County building permits vanish
Rental housing economist Jay Parsons uses data from Montgomery County in a LinkedIn post to argue that rent control can freeze new construction even in affluent, high-demand markets. The county sits at the Washington, D.C., border, and its notable cities include Bethesda and Chevy Chase.
In the first eight months of 2024, before the county’s new rent stabilization law took effect, Montgomery County issued building permits for 2,093 multifamily units. That nearly matched the total for all other Maryland counties combined.
And then “Poof!” Parsons wrote. “Multifamily building permits have almost entirely evaporated in one of the nation’s most affluent areas.”
Citing county and state data, he illustrates that the county issued only 54 multifamily permits in the first eight months of 2025. The rest of Maryland held steady at 2,248 units, and that “rent control crushed” the county’s development pipeline, he said.
Parsons argues that county leaders tried to soften the blow by exempting new construction from rent caps for 23 years, but misjudged how long-term investors think about risk and exit strategies.
“Every investor is concerned about exit strategy,” he said.
A time-limited exemption still depresses valuations because future buyers must underwrite the moment rent control takes effect, he added, which in turn reduces appetite for financing new projects.
A widening policy fault line
The arguments, though, fall on deaf ears among many voters. Rent control’s political popularity has risen as affordability remains a key issue, with voters—particularly younger adult households—demanding solutions now.
Building more takes time and is constrained by other market forces, such as interest rates and construction costs.
As voters and councils weigh the next wave of rent stabilization, they must decide how much immediate security for today’s tenants they will trade for the longer-term risk.
As the Montgomery County and St. Paul examples suggest, future apartments never get built at all, rent control critics argue.
