Rent Control Folly

In response to the soaring cost of housing in DC, the DC Council recently approved sweeping rent control legislation. Whatever you think of rent control, the Council is ignoring the fact that rising property taxes, which they spend without abandon, are a huge factor in rents.

In a personal example, I until recently owned a loft in Boston that I rented out. My mortgage payment was steady at $1,200 per month. My objective was not to make money on the rent but to have great long-term tenants and hold the property. Over five years the property tax increased to the point where I was losing money at $2,000 per month in rent. So I say to advocates for affordable housing, pressure your government to stop spending like Ted Stevens. Btw I sold the place, so that is one less rental on the market. Many people do that, thereby increasing rental prices as supply dwindles.

And forget about the American Dream. My current (capped) property taxes are about $5,000. If I never sell and get dinged to current market value, with the 10% cap when I retire at 65 in 26 years my property tax bill will be a whopping $59,590 per year.

Does that scare you? It should.