Illinois Rent Control Bill Could Decimate Multi-Family Housing Construction

House Bill 2192, pending in the Commercial Law Subcommittee of the House Judiciary Committee, portends dire consequences for builders and developers of multi-family rental housing in the state. The 42 page proposed legislation would repeal Illinois’ current statewide ban on municipal government rent control ordinances, and create six regional rent control boards - required by law to include 71% of the members from tenants and tenant rights groups and only 29% from landlords - with absolute power to limit annual rent increases to the amount of the consumer price index or other “rent stabilization rate” selected by the board.

The pending bill would also impose a requirement for rental housing owners of more than 12 units to set aside 10% of their rental income in a dedicated account for repairs and capital improvements.

Without the ability to establish rents sufficient to cover construction and maintenance costs that could increase at a rate higher than the imposed “rent stabilization rate” builders and developers will be driven to choose the construction of condominium units which can be sold at a profit, rather than rental units which can only be rented at a loss over the life of the property. In the long run, imposing rent control is more likely to decrease availability of affordable housing than it is to increase availability.