Rent Control - What the Data Doesn't Show

La Bohème is Giacomo Puccini’s opera about young artists trying to build lives in Paris in the 1830s. The opera also serves as a basis for Jonathan Larson’s musical Rent, which brought the artists to New York’s East Village in the 1990s.

Both works tell the story of artists and their ordinary struggles. In the opera, an author burns his work to provide heat. When the landlord comes to collect the rent, the tenants ply him with alcohol, eventually getting him to go away. In the musical, the landlord turns off the artists’ electricity after they refuse to pay the rent.

Both musicals end with tragedy, as Mimi dies in poverty from an incurable illness. In the opera, she dies of consumption, and in the updated version, she dies of complications from HIV.

Stories like these are why rent control (and its close cousin, rent stabilization, which I’ll refer to collectively as “rent control”) intuitively seem fair - it’s easy to sympathize with tenants who are struggling to make ends meet. People want to think that passing a rent control law helps tenants by minimizing the burden of remaining housed. And unlike government rent subsidies, the perceived cost of rent control is borne by landlords, rather than the public.

But as with many things, the situation is not that simple. Rent control’s impact goes beyond putting a ceiling on rent. Like many laws, rent control changes incentives and can have far-reaching economic and societal impacts.

Rent control can help tenants remain in their homes. However, because landlords can typically raise rent when new tenants move in, rent control can trap tenants in unsuitable housing; if their current rent is very low, it’s simply too expensive to move.

Landlords, pressed to make up for revenue “lost” due to rent control, may need to cut costs or find other ways to increase revenue. Landlords may offer fewer concessions to new tenants, defer maintenance, or reduce amenities. Over time, the quality of the housing and rental income may decline.

With those declines, there can be a reduction in potential real estate and income tax revenue, which, in turn, requires a reduction in government spending. So rent control can ultimately affect other programs, such as rent subsidies also designed to help tenants – when those programs must be reduced or eliminated due to spending cuts.

This article discusses these indirect consequences of rent control, how they can result in unintended changes, and why data might not reveal the effectiveness of a rent control program. This article is based on Montgomery County, Maryland’s rent control law, but the discussion involves common issues with most rent control laws and tracking the effectiveness of those laws.

Indirect Impact of Rent Control

Rent control can reduce the impact of rent increases for residential tenants, which helps keep them in their homes and can reduce the number of unhoused individuals. However, most of the impact of rent control is seen in the indirect economic and rental market impacts.

Rent control isn’t designed to reduce the demand for rental housing – the number of individuals who need housing remains unchanged. But rent control does change how landlords and real estate developers respond to housing demand, often changing the quantity and type of housing supply.

Landlord and developer responses to rent caps include slower renovation cycles, increased tenant screening standards, and removal of units from the rental market through condominium conversions, which are exempt from rent control. Eventually, rent control results in a reduction in the quantity and quality of the entry-level housing options.

Rent control also can adversely affect tenant behavior and actually increase demand for rental housing. Tenants in rent-controlled units may stay in units that no longer suit their needs as their families grow.And rent control can cause the cost spread between rental housing and home ownership, so fewer individuals may choose to purchase homes.

The result can be a shortage of smaller, entry-level housing as the number of new potential tenants increases, while the length of tenant occupancy in entry-level housing increases. And since landlords may only renovate units after they become vacant, longer tenant occupancies can further slow the renovation cycle.

The Montgomery County Law

Montgomery County’s rent stabilization law became effective in July 2024 and applies to all County-licensed residential rental units that are at least 23 years old. Properties in the incorporated municipalities, such as Gaithersburg, Rockville, Takoma Park, Barnesville, and Laytonsville, aren’t subject to the law.

There are a number of additional exemptions for specific property types, such as group homes, religious facilities, transient lodging, school dormitories, assisted living communities, nursing homes, accessory dwelling units, and two-unit buildings where the owner lives in one of the units. There’s also an exemption for landlords who own two or fewer rental units in the County, but only if the landlord is an individual (or the trust or estate of a decedent). Since most real estate investors own their property in limited liability companies (sometimes due to mortgage lender requirements), that exemption isn’t very useful.

Under the law, during any given year (from July 1 through June 30), rent may be increased only once every 12 months, except that rent may not be increased during the term of multi-year leases. And the rent may increase by no more than the CPI-U plus 3%. That formula is capped at 6%, so if CPI-U plus 3% is greater than 6%, the cap will be 6%. Properties on the County’s Troubled or At-Risk Properties Report list may not increase rent at all until the property is removed from the list.

Landlords also have to give tenants 90 days’ written notice before increasing rent. And the notice must be sent via USPS or in person. If the notice is delivered in person, the landlord must receive a signed receipt from the tenant.

Landlords have the option of not increasing the rent by the full allowable amount and “banking” the “unused” rent increase for a future year. So it’s possible a tenant still can experience an unexpected rent increase that’s above the allowed amount in a year if the landlord banked part or all of a previous year’s allowable increase. However, increases under lease renewals (even if characterized as a new lease) are capped at 10%.

Exceptions to the rent cap can be approved by the Department of Housing and Community Affairs (DHCA) if the landlord makes capital improvements or substantial renovations (defined as costing at least 40% of the building’s value). DHCA also may allow landlords to increase rent above the cap if necessary for the landlord to receive a “fair return” on their property.

Montgomery County’s 2026 Rent Stabilization Report

On February 19, 2026, DHCA issued its first report on rent stabilization outcomes. The report indicates that DHCA received 1,390 resident inquiries and ordered $91,759 in refunds, including $68,516 in rent refunds across 195 units and $23,244 in fee refunds across 207 units. The report also says the Office of Rent Stabilization “enforced or negotiated an average 56% reduction” in proposed annual rent increases per tenant.

These numbers only indicate that some tenants have successfully pursued complaints. The report doesn’t reveal what happened to renters who didn’t complain, nor does it include data regarding the indirect economic impacts the program had on supply and demand.

The report estimates that as of December 31, 2025, there were about 114,000 licensed rental units in the County and that an estimated 65,669 (57%) of these were subject to rent stabilization. The remaining 48,783 units (43%) were exempt from rent stabilization. Therefore, based on this data, tenants in only about 1.2% of the county’s rental units filed complaints. So, there is no data on the impact of rental stabilization on the 98.8% of tenants in covered rental units.

The complaint-driven data in DHCA’s report only measures the impact of rent stabilization on tenants who were aware of the program, knew how to use it, and chose to file complaints. The data doesn’t reveal why the remaining 98.8% of tenants in covered units didn’t take advantage of the program. It could be because they weren’t aware of the program or because they felt they had been treated fairly.

The data also does not reveal the cost of administering the program. Nor does the data show the impact on other options, such as rent subsidies or whether those programs might be more cost-effective than rent control.

Conclusion

DHCA’s report shows that the agency’s enforcement of the rent stabilization law is producing tangible outcomes for the few tenants who chose to file complaints. Since the data in the report is incomplete, it’s impossible to determine whether the County’s rent stabilization program is truly effective or cost-effective. And without more information, it’s impossible to know whether tenants might be better served (at the same or lower costs to taxpayers) through other options, such as rent subsidies.

The data also doesn’t reveal the potential negative outcomes of rent control: fewer upgrades to aging housing stock, stricter screening standards that exclude lower-income tenants, removal of rental units from the market, and impact on new development. These negative consequences of rent control may not appear in the data for years, even though they could have an immediate real impact on tenants.

© 2026 by Elizabeth A. Whitman

Any references to clients and their legal situations have been modified to protect client confidentiality.

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