Rational eviction: How landlords use evictions in response to rent control

Abstract

When designing rent control regulations, policy makers aim to create regulations that ensure affordable and stable housing for current tenants while minimizing exits from the rental market by landlords. Vacancy decontrol provisions that allow rent re-sets between tenants intend to strike a balance between a lower rent burden for current tenants and future potential profitability for landlords. However, such provisions also increase the incentive for landlords to evict tenants. Such evictions reduce both the anti-displacement and rent reduction effects of rent control. To study the effects of rent control on eviction behavior, we exploit variation across ZIP codes in policy exposure to the passage of the 1994 rent control referendum in San Francisco. We find that a ZIP code with the average level of treatment experiences an additional 34 eviction notices—an 83% increase—and an additional 13 wrongful eviction claims—a 125% increase. These effects were concentrated in low-income ZIP codes and were larger in years when average rent prices rose faster than the allowed rent increases for controlled units.