Background
Oregon’s Senate Bill 608 passed in 2019 and established statewide rent regulation. The legislation includes a seven percent cap on rent increases (plus inflation) in a given year as well as specific tenant protections, such as limits on no-cause evictions. SB 608 is often described as “statewide rent control,” but the law resembles rent stabilization more than rent control because it limits the percentage rent can increase over time (rent stabilization), as opposed to a maximum base rent (rent control). Rent stabilization and rent control are two different forms of the larger category of rent regulation, but discussions around this topic tend to use the term “rent control” when referring to either topic.
Oregon’s statewide rent regulation aims to address rising rents which have led to a housing affordability crisis. In Portland, Oregon, median rents rose by 30 percent between 2011 and 2019 (including inflation). Incomes are not rising at the same rate as Oregon’s State Government reported in 2016 that “¾ of renters with extremely low incomes are paying more than 50% of their income in rent.” Those most impacted by this legislation include Oregon renters, especially middle to low income tenants, and landlords across the state. Recipients of government-subsidized rent are exempt from this law.
Arguments in Favor
Those in favor argue that rent regulation reduces landlords’ “disproportionately high profits” which disadvantage lower-income residents and create an unequal relationship between landlords and tenants. Supporters argue that the law balances the relationship between landlords and tenants through restrictions on no-cause evictions at the end of a lease. These no-cause evictions occur when a tenant, at the end of their lease, is asked to leave without having violated any terms of the lease, but SB 608 now requires a landlord to renew leases and only evict for a breach of contract or specific circumstances, such as when a landlord wants to move into the property themselves. UC Berkeley’s Haas Institute released a brief on rent stabilization that described the physical and social benefits to housing stability and reduced risk of eviction, including improved graduation rates, social relationships, and health.
Supporters also claim that SB 608 benefits Oregon’s rental housing market because increased accessibility raises the demand and the range of people who are able to enter the market. For instance, a 2019 study on the impact of rent control in San Francisco found that residents living in rent controlled properties were 4.5 times more likely to remain living in San Francisco, rather than being displaced outside of San Francisco. As described in more detail below, opponents counter this argument by stating that this increase in demand creates a lack of supply, leading to less accessibility overall.
Proponents commend Oregon’s law for making the housing market more inclusive to lower socio-economic statuses and marginalized groups. One way the legislation accomplishes this is through mandating that private landlords accommodate lower-income individuals and families, rather than relying mostly on the government to provide affordable housing options. SB 608 includes groups in the rental housing market that have historically been marginalized from the market. Housing affordability is an issue with multiple dimensions, and people of color have historically been disproportionately impacted. This is because the many issues which collectively create the racial wealth gap result in lower incomes for people of color. In turn, issues like housing affordability, while not explicitly racial, can have an outsized effect on racial minorities. The San Francisco rent control study mentioned above found that the benefits of rent control were stronger for racial minorities, “preventing minority displacement from San Francisco.”
Arguments in Opposition
A common argument from opponents is that SB 608 creates a harmful imbalance between rental housing supply and demand. The argument claims landlords will make lower returns on their investments despite spending similar amounts on construction. As a result, supply decreases because landlords and developers will potentially have less incentive to continue to build and manage new properties. Further, this lowered supply combined with higher demand has the potential to result in lower quality of housing overall because renters will have less leverage when it comes to requesting repairs and amenities. The 2018 San Francisco study on rent control found that “impacted landlords reduced the supply of available rental housing by 15 percent,” supporting the argument that rent regulation can negatively impact rent housing supply. SB608 does not apply to new construction for 15 years, which Oregon’s lawmakers believed would prevent rent regulations from lowering new housing development. Additionally, research in New Jersey and Washington D.C. “found no significant relationship between rent control and new housing construction.”
In addition, opponents claim that lack of housing supply is the root of Oregon’s housing crisis in the first place. Instead of implementing statewide rent regulation to address demand, those not in favor of SB 608 believe Oregon needs to address its housing crisis by increasing their housing supply to improve the market. This could include expanding construction of lower-priced buildings and changing zoning laws to better accommodate lower-income individuals and families. Part of the reasoning is that if demand is rising while supply does not increase to the same extent, prices will rise overall. Since many opponents claim that housing supply is the source of Oregon’s housing crisis, they argue that addressing demand is not the solution.
Looking Ahead
Oregon has recently introduced revisions to their statewide rent regulations. On July 6, 2023, Oregon’s Governor Kotek signed a new bill (SB 611) into law, which states that annual rent increases cannot exceed ten percent with inflation. In the previous legislation, there was no limit on how much inflation could affect rent increases. Thus, this revision ensures that despite how high inflation is in a given year, rent increases will remain stabilized.
Oregon was the first state to implement statewide rent control, but will other states in the U.S. do the same? California implemented statewide rent control in 2020 not long after Oregon’s SB 608 passed. While Oregon and California are the only two states at the moment with statewide regulations, many stakeholders are wondering how Oregon and California’s actions will influence other states.