Rent control is back in front of voters this election season, with caps tied to inflation appearing on ballots alongside housing bonds and supply reforms. Most of the debate focuses on what renters pay each month. Operators see the more immediate effect in a different place: the spending decisions that keep a building in good condition.
Ron Kutas, Chief Executive Officer of OneWall Communities, which operates workforce housing across multiple states, says the sequence after a cap passes is predictable.
The Day A Cap Passes
“First off, all discretionary spending stops,” Kutas says. A roof scheduled for replacement gets patched instead, for as long as it will hold. Renovations pause. When an owner’s costs keep rising, and rents can’t follow, the money for upkeep shrinks, and the condition of the property starts to decline.
In his view, the larger consequence is supply. Developers stop building in a market where the numbers no longer work, so construction slows or stops.
Where Caps Help
Kutas recognizes why caps appeal to renters. For an individual household, a cap brings predictability and often a rent below what the market would otherwise charge. “For you as an individual, it’s awesome,” he says.
The problem appears at the level of the whole market. Kutas argues that supply is the biggest driver of housing costs: when more housing is available, rents come down, and when supply is constrained, rents rise. A cap that discourages building and reinvestment works against its own goal. If existing units deteriorate badly enough, some go offline altogether, which shrinks supply further. “While it freezes the rent,” he says, “it really freezes your supply.”
Caps Paired With Supply
Some of this year’s measures pair rent caps with housing bonds, zoning changes, and efforts to lower construction costs. Kutas calls that combination smarter, because it shows lawmakers are paying attention to what actually moves the market. He would still direct the effort entirely toward supply.
Where caps do exist, he would want two provisions in place. The first is a documented way for owners to pass through cost increases they don’t control, such as a property tax increase larger than the cap allows. The second is an exemption for new construction, so that building still makes financial sense.
Regulation As An Underwriting Factor
For investors, a state’s regulatory direction now carries real weight in deciding where to buy. Kutas points to a suburban Maryland county where multifamily sales fell from about a dozen a month to one or two a year after its regulatory environment changed. In his view, regulatory direction “most certainly should be a factor,” and he expects it to matter more over time.
Election results will take several days to filter through the reporting. Regardless of how individual measures fare, Kutas argues that whether rent caps help renters over time depends less on this year’s rent and more on whether the housing supply keeps growing and existing buildings keep getting reinvestment.
About OneWall Communities: OneWall Communities is a vertically integrated property management and investment firm specializing in workforce housing. With 15 years of owner-operator experience, OneWall has evolved to offer institutional-level 3rd party management services that combine operational excellence with a community-first approach. For more information, visit onewallcommunities.com.
This article is intended for informational purposes only and does not constitute legal, financial, or investment advice. The views and opinions expressed herein reflect those of the individuals quoted and do not represent an endorsement of any company, product, or service mentioned. Readers should conduct their own due diligence and consult qualified professionals before making any investment decisions.
Disclosure: Individuals or companies mentioned may have a commercial relationship with KeyCrew.
