Rent Control Causes and Implications

Rent control is nothing new, and has always come with causes and implications. Wars, natural disasters, epidemics and tyrannical rule fostered legal regulation of rents throughout history. Some writers suggest that rent control has existed since ancient Rome. However; as early as 1470 attempts of the Popes to prevent exploitation of the Jews enacted rent control in Rome. The issues of rent control usually arise when an overwhelming influx of people flow into areas that have too few homes and require some form of financial stability.

Recently, Colorado Senate bill 225, a bill that would have lifted the 1981 ban (C.R.S. 38-12-301 ) on rent control did not move forward. The proposed rent control bill would have effectively given local governing bodies the ability to enact rent control on private property and apartments. There are many pros and cons to rent control legislation.

Pros include but are not limited to:

  • Limits the amount of rental increases
  • Encourages tenants to stay
  • Stabilizes budgets for those of low income or fixed incomes.

Cons include but are not limited to:

  • Reduces housing availability due to investors selling properties
  • Reduces maintenance on existing properties due to caps on rent
  • Decrease property tax revenue- lowering property value.

The debate whether or not rent control actually does what it’s designed to do is something economists can agree on. Generally, rent control is seen as doing more harm than good in the long run destroying free market principals. Forbes even called rent control one of the dumbest ideas of the century.

Fortunately for the investor in Colorado, rent control is not regulated by state legislators currently. That does not mean there are no laws governing rent in the state. There are specified rules and regulations that real estate owners must comply with regarding rent and how increases proceed. Colorado state law regulates several rent-related issues, including the amount of notice (at least ten days in Colorado for month-to-month leases) landlords must give tenants to raise the rent. Colorado state law does not limit how much landlords may charge for the security deposit. However, it does dictate when it must be returned (within one month after a tenant moves, unless the lease specifies a longer period of time, not to exceed 60 days).

Real estate management companies will help with understanding state laws and help investors understand the pros and cons of proposed legislation. Please contact us at Blue Mountain Real Estate & Property Management if you have any additional questions about rent control or management fees. We can help you manage your Colorado Springs investment property.