Some Illinois legislators are pushing for statewide rent control policies to take effect this year. Here is what you need to know about how these policies could impact your practice and your clients.
What rent control policies are being considered, and how do they affect Chicagoland?
Some legislators are pushing to repeal Illinois’ Rent Control Preemption Act, which prohibits local governments from enacting any form of rent control in the area. While the efforts to repeal this act are currently stalled in Illinois’ House Subcommittee on Commercial Law, proponents continue to push for change. If this act is repealed, local governments will be able to put rent control ordinances in place. Another bill, which was recently killed in committee after extensive lobbying, would have enacted a statewide rent control system. If that bill became law, landlords would not be able to increase rents above a set “stabilization rate.”
The push for statewide rent control comes from affordable housing advocates primarily located in the city of Chicago, who want to increase affordable housing opportunities. Mainstreet Organization of REALTORS® (MORe) local Government Affairs Director Jeff Merrinette, on behalf of Illinois REALTORS®, said rent control policies would actually discourage homeowners from renting their property, ultimately offering fewer opportunities for people who need affordable housing.
These potential changes will affect landlords across Illinois, including Chicagoland, and their ability to continue offering space to tenants.
What are the consequences of rent control?
Rent control policies would affect homebuyers and homesellers alike. The largest consequences include homebuyers will be less likely to invest in properties, and sellers’ properties could be sitting on the market for months or sold far below their asking price.
- Landlords will be forced to lower their prices to an unreasonable extent. A statewide rent control policy assumes landlords charge tenants far more than they need to, when in fact, Chicagoland is one of the most affordable metro areas in the country in terms of rent.
- Homebuyers who wish to rent out their property will be less likely to do so. Rather than purchase a home or multifamily unit they can charge to rent out, buyers will likely make investments outside of real estate. This decrease in buyers will cause home sales to significantly drop, negatively impacting the housing market.
- The quality of rental units will decrease. If landlords can’t charge as much as they need to, they won’t have the necessary funds to spend on upkeep of the unit. A lack of modernized, functional units will further impact the availability of quality, affordable housing in Chicagoland.
- It will limit economic development. At MORe’s 2019 Economic Outlook Luncheon, business leaders spoke of progressing economic advancements across Chicagoland. But commercial and housing developers are unlikely to invest in regions where rent control policies discourage people from buying properties in the area.
How can I take action?
Contact your local legislators, pushing them to vote against rent control policies. In the event that these changes do pass, REALTORS® have options to take action down the line.
For more information on rent control, read Real Property Alliance or Illinois REALTORS®’ resources to stay informed about progress at the state level and how you can ensure your practice and clients are prepared for any changes.