In the first half of 2022, rent in Tampa skyrocketed over 30% compared to last year - a testament to how hot the Florida housing market was going into our third year of the pandemic. Cooped-up people from all over the country were craving the sunshine, ocean breezes, and outdoor lifestyle Tampa offers, and they flocked here in droves, leaving less than 5% of all rentals empty. With limited move-in-ready affordable housing options and higher demand, some Florida residents are desperate for a solution to ever-rising rents, while landlords desiring a positive return on investment for their properties want to keep their rentals available and profitable. It’s a hot debate: is rent control coming to Tampa?
Rent Control Downvoted in Tampa
No, rent control is not coming to Tampa. On July 28, 2022, city council members decided to move forward with an ordinance proposal that would officially declare a housing emergency in Tampa and potentially cap rent increases on multifamily units by 5% year-over-year. One week later, on August 4, 2022, Tampa City Councilors voted the ordinance down by a 4-2 vote.
According to Florida statute:
“No law, ordinance, rule, or other measure which would have the effect of imposing controls on rents shall be adopted or maintained in effect except as provided herein and unless it is found and determined, as hereinafter provided, that such controls are necessary and proper to eliminate an existing housing emergency which is so grave as to constitute a serious menace to the general public.”
In short: Florida law prohibits rent control except in emergency situations. The proposed ordinance would officially declare a housing emergency, therefore allowing rent control measures to be enacted for at least one year. The ordinance provided exemptions for most housing types, including single-family dwellings, luxury apartments, condos, and more. It was poorly written and unclear, with vague or totally absent definitions of what defines a “luxury apartment” or even a “housing crisis” in the first place. These types of fallacies in the writing of the ordinance would invite lawsuits all over the city of Tampa, wasting millions of taxpayer dollars. The ordinance was ultimately downvoted due to these flaws.
Adverse Impacts of Rent Control
During the meeting on August 4, 2022, Vintage Real Estate founder Dave Sigler and City Attorney Rebecca Johns argued that rent control (using this specific ordinance) is simply not able to be effective in Tampa. Tampa Development and Economic Opportunity administrator Nicole Travis argued the following list of points against rent control, including but not limited to:
Conversion of rental housing to owner-occupied housing
If landlords are restricted from seeing a positive return on investment for their rental units, many would be forced to move into their rental properties as their primary residence, thus reducing the amount of total available rentals.
Conversion of existing multi-family rentals to condo units
Since the ordinance would apply rent control only to multi-family rentals, owners might skirt the new restrictions by converting their existing multi-family rentals to condo units which would then be rented at any rate desired, reducing the total number of multi-family units available.
Lead to the decay of the rental housing stock as landlords are no longer incentivized to invest in maintenance
Reducing profitability for landlords might mean they would cut corners regarding rental property maintenance, leading to long-term issues for the rental housing inventory in Tampa down the road. Cutting corners now means leaky roof systems, big plumbing issues, and reduced curb appeal resulting in lower real estate values for entire communities surrounding rent-controlled buildings.
Decreased investment in multifamily rentals due to uncertainty
The proposed rent control measures would apply to multifamily rental buildings and not single-family home rentals … yet. This could mean reduced interest in developing multifamily rentals as investors would be uncertain of their potential return on investment and red tape dealing with this type of property.
Significant increases in rent price upon deregulation or once “the housing crisis” is deemed to have ended.
Capping rent increases now could mean a far worse problem once the declared “housing crisis” officially ends, with landlords sharply increasing prices in an attempt to make up for lost profits due to rent control.
Rents will significantly increase before rent control becomes effective.
The ordinance would have gone to vote in November’s elections if approved. In the meantime, the probability of rents surging over the next three months in advance of the election is high, immediately and severely worsening the housing crisis.
Evidence that Rent Control Does Not Work
Vintage Real Estate founder Dave Sigler said, "housing has always been a supply and demand scenario; if you try to control the prices in rent, you’re ultimately reducing the availability of rentals.” St. Paul, Minnesota, is an example of a place where rent control has gone array. In November 2021, voters approved a rent stabilization ordinance that went into effect in May 2022. The results have been disastrous, with home values plummeting by $1.6 billion in a matter of months, housing permits during the same time period have declined by a whopping 80%, and scores of multifamily housing developers have been left unable to finance new projects. As a result, low-income property owners and, therefore residents have been disproportionately impacted by the ordinance intended to help them.
Bringing rent control to Tampa would have similar negative effects as seen in St. Paul, Portland, Oregon, and other cities with rent control. Currently, property values are increasing, raising property taxes for landlord owners. Insurance rates are also rising - we’ve had five major insurance companies pull out of the State of Florida in the last six months. On top of that, the general cost of inflation has increased repair and maintenance costs for landlords, cutting into their bottom line. According to Sigler, “If you’re trying to force a certain rent and costs are going up to maintain said rental, your problem will get worse.”
Tampa’s Rental Market is Cooling
Vintage Real Estate has managed thousands of rental units across five counties in greater Tampa Bay for 15 years, and we have significant data on the fluctuations Tampa rent rates have seen over the last few years. Tampa's rent and sales market peaked in January-March 2022, and it is now showing signs of organic stabilization. The “rent rush” and price increases seen across Tampa were the direct result of huge COVID-related demand, which has decreased. We have seen numerous multifamily units come onto the market recently, and, according to Sigler, “between that increasing supply with the drop in demand, rent will stabilize itself here very shortly.” It is better to allow this to happen naturally rather than forcing rent control which would have immediate and long term negative effects.
At Vintage Real Estate, we are empathetic to the financial situation of people of all income ranges. We work with thousands of tenants whose lives and well-being we genuinely care about. While we desire for the residents of Tampa to be able to afford rent and stay in their homes, we do not believe a rent control ordinance will ultimately achieve this. Historically, rent control ordinances in other parts of the United States have had the exact opposite effect as intended: housing availability plummets, driving up costs for all units. We don’t want these effects coming to Tampa and believe riding out the COVID demand and allowing the market to stabilize naturally is the best solution to rising rents.