Washington State rent control bill will shrink housing supply and worsen affordability

The Washington State Legislature recently passed House Bill 1217, often referred to as the “Residential Landlord-Tenant Act,” or the “Housing Stability Act.” The legislation was delivered to Governor Ferguson on April 27 and is still awaiting signature. This bill, essentially a form of rent control, is intended to prevent displacement and enhance housing stability for tenants. However, in truth, the legislation will encourage long-term deterioration of the housing market by potentially limiting the availability and quality of rental units.

The bill caps annual rent increases at 7% plus the consumer price index (CPI). For instance, if the CPI—a measure reflecting average price changes in a basket of goods and services—is 3% for a given year, landlords would be able to increase rent by a total of 10% that year (7% base cap plus 3% CPI adjustment). This looks like a significant buffer, because most landlords generally increase the rent price by 5 to 15%. However, passing any sort of state cap on rent increases opens the door for a future legislature to lower this cap.

This bill exempts owner-occupied units in smaller buildings—duplexes, triplexes, and fourplexes—if the owner resides onsite at tenancy inception and continues living there. While this may protect small-scale landlords from the rent cap in the short-term, this provision discourages these landlords from investing and expanding into other properties and reduces incentives for any new, small-scale housing of the kind.  Over time, this policy will significantly diminish the number of mom-and-pop rental operations, effectively leaving only large corporations or government entities willing to navigate stringent rent control regulations.

The legislation’s restrictions on rent increases would also destabilize the short-term rental market. Landlords won’t be able to charge a premium for short stays, so they will have to adjust their business models to long-term stays or exit the market. Short-term leases—particularly essential for traveling professionals—may become scarce. Nationally, one-quarter (25.2%) of renters stayed in their homes for 12 months or less before moving in 2022. This change could undermine Washington state’s appeal to transient skilled labor–think traveling nurses and infrastructure development contractors–that are made up of professions likely to be in demand in the state in the foreseeable future.

Extensive research underscores the unintended consequences associated with rent control policies. A seminal study by Massachusetts Institute of Technology researchers David Autor, Christopher Palmer, and Parag Pathak demonstrated that the elimination of strict rent controls in Cambridge, Massachusetts, substantially increased housing stock values and improved housing quality, benefiting even previously uncontrolled properties through positive market spillovers. Similarly, research published in the American Economic Review by Rebecca Diamond, Tim McQuade, and Franklin Qian on San Francisco’s rent control expansion in the 1990s highlighted significant long-term reductions in rental housing supply. They found corporate landlords, with superior access to capital, evaded rent control through redevelopment. Ultimately, rent control disproportionately harmed smaller landlords who lacked similar financial flexibility.

Historically, rent control has shown severe negative impacts in places like New York City. Decades of stringent regulations have culminated in substantial housing shortages, deferred maintenance, and an increasingly stagnant market. By 2024, estimates suggested that 20,000 to 60,000 New York City apartments sat vacant as landlords found renovations and market re-entry economically unviable due to stringent rent caps. These unintended consequences significantly reduce rental availability, deteriorate property conditions, and increase housing scarcity, precisely counteracting the policy’s initial affordability goals.

The recent rent control bill contradicts other housing efforts within Washington. For instance, during the 2023 legislative session, lawmakers passed House Bill 1110, a measure that overrides restrictive local zoning laws by allowing duplexes, triplexes, and fourplexes in most neighborhoods. This zoning reform was intended to increase housing density, encourage the construction of new rental properties, and expand affordable housing options. However, by enacting rent control, the state undermines these objectives. Rent control policies typically discourage investment in rental housing by reducing profitability and incentivizing property owners to convert rental units into owner-occupied homes or for-sale properties. When rent control is paired with zoning reforms, the unintended outcome can be a significant shift toward homeownership rather than rental housing. As a result, this reduces available rental stock but benefits potential homebuyers by increasing the supply and affordability of homes on the market.

Instead, lawmakers should focus on alternative policies to help keep housing affordable.

For example, during the recent legislative session in Washington, lawmakers considered House Bill 1099, a tenant assistance program designed to provide targeted support to low-income renters. Although this bill ultimately failed to pass out of committee, it deserves reconsideration in future sessions. Unlike blanket regulatory measures such as rent control, HB 1099 proposed utilizing existing tax revenues to fund direct financial assistance similar to housing vouchers. According to research by the Urban Institute, voucher programs offer significant flexibility, empowering tenants to select housing that best suits their individual needs without distorting market incentives. Reviving HB 1099 or similar legislation could effectively address housing affordability issues by directing support specifically to renters most in need, rather than imposing broad regulatory constraints that risk discouraging landlords from maintaining and upgrading their properties. Targeted assistance programs like this—especially when leveraging existing funds rather than increasing taxes—represent a more efficient alternative to extensive housing regulation.

Washington state’s experiment with rent control is a fundamentally flawed solution to housing affordability. If signed into law, HB 1217 will inevitably shrink housing supply, discourage investment, and undermine ongoing efforts to increase housing density. Rather than preserving affordability, rent control creates artificial scarcity, benefiting only a fortunate few at the expense of broader economic health and housing availability. Lawmakers should instead embrace targeted solutions like tenant assistance programs. These measures directly address affordability without sacrificing incentives for landlords and developers. Ultimately, Washington’s path to sustainable housing stability lies in policies that encourage investment, construction, and flexibility, empowering both renters and homeowners to thrive in the state.

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