The financial impact of rent control legislation on multifamily property management in 2025

Rent control is a widely debated policy that directly affects property managers, investors, and tenants. While it aims to stabilize rental markets and protect renters from skyrocketing housing costs, it also creates big challenges for property managers and multifamily property investors.

As of 2025, eight US states have rent control laws in place, but with regulations becoming increasingly popular, you need to understand the financial implications of rent control to help make informed decisions about your investments.

This guide analyzes the impact of rent control policies on multifamily property valuations and investor strategies. We compare states with strict rent control laws against those without, highlighting key advantages and disadvantages for property managers.

What is rent control?

Rent control is a government policy that limits the amount landlords can charge for rent, aiming to keep housing and rental units affordable for tenants.

These laws can take various forms, including caps on rent increases, restrictions on evictions, and guidelines for lease renewals. While rent control provides stability for tenants, it creates financial and operational constraints for property managers and owners.

The specifics of rent control laws vary by state and locality, impacting rental property profitability and long-term investment strategies.

Rent control vs. Rent stabilization

Rent control and rent stabilization are often used interchangeably but have key differences. Unlike affordable housing, rent control applies to privately owned rental units and buildings and typically sets strict limits on how much landlords can charge, often freezing rent at a fixed rate.

Rent stabilization, on the other hand, allows for periodic rent increases within a government-mandated range. While both policies aim to maintain affordability, rent stabilization offers slightly more flexibility for property managers.

‍How rent control works

Rent control laws vary across states, with some imposing strict regulations while others maintain landlord-friendly policies. Here’s how rent control regulations function in different states:

California

California’s rent control policies are shaped by the Costa-Hawkins Rental Housing Act, which restricts local governments from imposing rent control on single-family homes and properties built after 1995.

The law also ensures that landlords can reset rent to market rates once a tenant vacates a unit. However, many cities, such as Los Angeles and San Francisco, have their own rent control ordinances that apply to older buildings, capping annual rent increases.

Additionally, the Tenant Protection Act of 2019 introduced statewide rent control, limiting rent increases to 5% plus inflation for certain properties.

New York

New York has one of the most complex and long-standing rent control systems in the U.S. Rent-controlled apartments are rare and apply primarily to units occupied by the same tenants since 1971. These apartments have tightly regulated rent increases, often significantly below market rates.

More common are rent-stabilized units, which cover a larger portion of the rental market and allow landlords to increase rents only within limits set by the Rent Guidelines Board. The Housing Stability and Tenant Protection Act of 2019 further tightened regulations by restricting landlords from deregulating units and limiting eviction protections.

Oregon

Oregon became the first U.S. state to pass statewide rent control with Senate Bill 608 in 2019. The law caps annual rent increases at 7% plus inflation for buildings older than 15 years while preventing landlords from imposing excessive rent hikes when tenants renew leases.

Additionally, the law prohibits no-cause evictions for tenants who have lived in a unit for over one year, making it harder for landlords to remove tenants without justifiable reasons. While these regulations provide affordability for tenants, they create challenges for property owners who face rising costs but limited rent adjustments.

New Jersey

New Jersey enforces rent control policies at the municipal level, leading to a diverse landscape of regulations across the state.

For example, in cities like Newark and Jersey City, rent control ordinances limit the percentage by which landlords can increase rents annually, often tying permissible increases to the Consumer Price Index (CPI). These measures aim to maintain housing affordability in densely populated urban areas.

However, the specifics of these regulations, including the exact percentage increase allowed and the types of properties covered, can vary a lot between municipalities. It’s up to you to navigate varying regulations like this carefully, to ensure compliance and effectively manage properties within the constraints of local laws.

Maryland

In Maryland, rent control is determined at the local level, with notable regulations in Montgomery County and the city of Takoma Park.

In July 2023, Montgomery County passed Bill No. 15-23, which limits annual rent increases to 3% plus the rate of inflation, capped at a maximum of 6%. This law also requires landlords to provide renters with a minimum of 90 days' notice before implementing rent increases.

Similarly, Takoma Park enforces rent stabilization measures, capping rent increases at 3.7%. These regulations aim to balance tenant protections with the financial viability of rental housing providers.

Minnesota

Minnesota does not have statewide rent control, but individual cities have taken action to regulate rents. In 2021, St. Paul voters approved a rent control ordinance capping annual rent increases at 3%, one of the strictest measures in the country.

However, this policy led to a significant slowdown in new housing developments, prompting city officials to consider amendments.

As of December 2024, proposals to exempt new housing from the rent control ordinance have been delayed due to disagreements between the mayor and city council. This situation underscores the complexities and potential unintended consequences of implementing rent control policies at the local level.

Impact of rent control: Advantages and disadvantages

Rent control has far-reaching effects on property management, influencing operational costs, investment decisions, and tenant relations. While most discussions focus on tenant benefits, this section examines the impact on property managers and investors.

Advantages

• Predictable rental income: Rent control provides stability in rental income, making financial forecasting easier. This allows property managers to plan for long-term expenses with greater accuracy.
• Lower tenant turnover: Tenants are less likely to move out due to stable rents, reducing vacancy rates and minimizing the costs associated with tenant acquisition and unit turnover.
• Community stability: Long-term tenants contribute to neighborhood cohesion and a stable tenant base, which can improve property reputation and foster a sense of community.
• Reduced marketing costs: Fewer vacancies mean lower spending on advertising and leasing efforts, as well as reduced time spent screening and onboarding new tenants.

Disadvantages

• Maintenance challenges: Rent control reduces incentives for property maintenance, leading to deferred repairs and property deterioration. Landlords may struggle to justify expensive upgrades if rental income remains stagnant.
• Lower profit margins: Controlled rents may not keep up with rising property taxes, utility costs, and inflation, squeezing profit margins and limiting the ability to reinvest in property improvements.
• Regulatory complexity: Compliance with rent control laws adds administrative burdens and legal risks. Property managers must stay updated on evolving regulations and ensure adherence to avoid fines or lawsuits.
• Investment disincentives: Rent control reduces the attractiveness of rental property investments, discouraging new developments and limiting the expansion of housing supply in affected areas.
• Illegal subletting issues: Tenants may attempt to profit from controlled rents by illegally subletting units at market rates, creating management difficulties and potential legal disputes.
• Reduced flexibility in financial planning: Property managers face constraints in adjusting rental income to match economic conditions, making it challenging to manage long-term financial sustainability.
• Diminished property values: Properties subject to rent control often see slower appreciation in value, which can impact an investor’s ability to secure financing or sell at competitive rates.

Adapting property management strategies under rent control

Given the challenges of rent control, property managers must adopt new strategies to maintain profitability and efficiency.

Optimize efficiency and tenant retention

• Implement proactive maintenance to prevent costly repairs and ensure tenant satisfaction.
• Leverage smart technology such as IoT sensors, property insights platforms and property management software to monitor property conditions, automate rent collection, and streamline operations.
• Foster strong tenant relationships by offering prompt responses to maintenance requests, providing excellent customer service, and engaging in community-building initiatives.
• Encourage long-term leases to reduce turnover and ensure stable occupancy rates.

Explore alternative revenue streams

• Offer premium amenities such as fitness centers, coworking spaces, and high-speed internet as value-added services.
• Monetize parking spaces and charge for premium or reserved spots.
• Introduce pet fees or pet-friendly services to attract pet-owning tenants.
• Implement concierge services such as package handling, dry-cleaning pickup, and housekeeping for additional revenue.
• Rent out advertising space in communal areas to local businesses.

Understand legal compliance and financial planning

• Stay informed on local rent control laws and attend landlord association meetings to keep up with regulatory changes.
• Work with legal experts to ensure lease agreements comply with rent control regulations and eviction protections.
• Consult with financial advisors to optimize tax benefits, utilize 1031 exchanges, and explore opportunity zones to enhance investment returns.
• Develop contingency plans for economic downturns to maintain financial stability despite revenue limitations.

Navigating rent control for long-term success

Rent control is a reality that more property managers and investors are having to navigate. The good news is that, as we’ve seen, smart strategies can help.

Focusing on tenant retention, exploring new revenue streams, and staying on top of legal and financial planning can make a big difference. Instead of seeing rent control as just another hurdle, property managers who embrace creative solutions will be the ones who thrive.

When it comes down to it, success in a rent-controlled market comes down to staying informed, being proactive, and making strategic decisions that keep your properties running smoothly—even when the rules are changing around you.

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