How Do Some Cities Manage Rising Rent, and How Can Philadelphia Do the Same?

Although AHCOPA primarily focuses on homeownership, we understand that rent prices in Philadelphia are a point of concern for our clients and their families. Nearly 50% of Philadelphians are renters of that 50%, over half of them are also cost-burdened. Unlike other major cities, Philadelphia has no form of Rent stabilization, control, or freeze regulations. While these sorts of programs vary in each city and municipality, they all can have large benefits for renters.

What is Rent Stabilizations, Control, and Freeze?

Before diving into what each of these options are, it’s important to understand who is in charge of these programs. These programs are solely regulated and operated at the local level. While states are able to implement them, only Oregon and California have state wide laws in place. The federal government has no control over any of these programs as they solely provide Section 8 housing. Section 8 vouchers are implemented at a local level, but are available nationally through the federal government.

If you’ve been following national news, especially New York City news, you’ll know that these topics have been very prevalent there, even leading some to question why Philadelphia doesn’t have these options. So let’s first talk about rent stabilization and rent control. Both of these policies are largely the same and simply come down to optics. In places like NYC, rent control provides benefits to elderly individuals living in buildings prior to 1971, and provides continuous leases. Rent Control programs were primarily phased into NYC’s Rent Stabilization program for eligible buildings built after 1971. Rent Stabilization programs cover 1 & 2 year leases and offer many of the same benefits that the previous rent control program offered. Many cities offer the same sort of program, but vary on if they’ll call it Rent Control or Rent Stabilization. One of the reasons NYC changed to Rent Stabilization is because the term “stabilization” PRs better than “control.”

NYC isn’t the only city to have these policies. Some major cities include: Los Angeles, San Francisco, Washington, D.C, Saint Paul, Portland Maine, and Atlantic City. Many of these cities operate their rent stabilization programs the same way, where a central body, like a Rent Guidelines Board (RGB), sets a Maximum Base Rent (MBR) for each apartment building. (These numbers are usually calculated by factoring in operating costs, real estate taxes and other smaller values). From this base value, the Rental Boards will adjust every 2 years based on operating costs determined by the board and not by landlords. These programs are primarily used to prevent landlords from raising rent every year, and sometimes at rates higher than needed. In places where the average median income is higher than the national average, like Philadelphia,  the need for these programs are paramount in ensuring that Philadelphians are not shackled by out of control rent prices. Contained rent prices means more financial empowerment for Philadelphians, and a more prosperous city.

Now for the big question, as NYC recently implemented this. What is a Rent Freeze? The RGB in New York City primarily approves just a 3% rent increase for a 1-bedroom and 4.2% for a 2-bedroom+ every 2 years. But they recently approved that all rent stabilized units will not have a rent increase on any 1-2 year lease signed over the next two years, and low-income senior citizens and tenants with disabilities can apply to freeze their rent permanently. This temporary measure helps to alleviate cost burdens on rent stabilized tenants who are cost-burdened.

The Pushback

Now there is pushback to these policies, primarily towards the NYC Rent Freeze. Most of it comes from landlords and corporate developers arguing that their bottom lines will be hurt and that landlords will not be able to afford to upkeep the buildings that are now stabilized or frozen. Yet, in both of these cases, most of these programs provide incentives to offset these concerns. For rent stabilized units, the 2 year increases are specifically for operating costs to ensure that upkeep is met, and allows tenants to sue landlords for failure to upkeep their properties. Specifically in the case of the NYC rent freeze, there are tax reimbursements to offset these costs. Since landlords cannot opt out of this freeze, they will get a property tax reimbursement to offset the operating costs they would be losing. The only thing that landlords would actually be missing out on is the ability to jack up prices meant to pad their pocket books.

How Can Philadelphia Adapt?

Philadelphia once led the nation in low rental costs. In 1947, the city unanimously implemented one of the first municipal rent control policies. 8 years later, the Pennsylvania Supreme Court would rule that the city did not provide enough evidence that rent control relief was needed in order to maintain the health and welfare of Philadelphians, although they said that the city had the right to enact rent control in an emergency. 

In 2023, Philadelphia got the closest it’s been to some form of legislation. Following her successful reelection campaign, Council Woman Kendra Brooks proposed programs and legislation. Rent stabilization practices were debated and discussed in City Council hearings for one of the first times this century. But, due to heavy lobbying from landlords, a majority voted against the resolution.

Since then, Philadelphia City Council and the Mayor have discussed the need for affordable housing at length. While the H.O.M.E Act makes a historic investment in housing, it primarily focuses on future and current homeowners, with only a couple investments in renters. Philadelphia needs to begin exploring rental stabilization options. We used to lead the country in these policies, now we are lagging behind. We already have the precedent of the Pennsylvania Supreme Court. It’s just solely up to our City Council to determine just when our rental crisis is enough of an “emergency” for them.