Would rent control slow new housing construction if it passes in Seattle?

The Seattle City Council is scheduled to vote Tuesday on a new rent control law.

The city’s proposal would not exempt new construction, just like a similar but controversial measure voters passed a couple years ago in Minnesota.

No exemptions means every new unit of market-rate housing would be subject to rent control.

Voters in St. Paul, Minnesota, passed a no-exemptions rent control law in 2021. But five months after it took effect, the St. Paul City Council jettisoned that part of the law.

Council members said they made the change because applications for new building permits plummeted 30% after the rent control law went into effect. By comparison, in nearby Minneapolis, permits increased 30%.

St. Paul lawmakers thought their law was having a negative effect on the development of new rental housing, so they reversed course. Now, there’s no rent control in St. Paul for the first 20 years of a new building’s life.

Jenny Schuetz, an expert on rent control with the Brookings Institution, told KUOW the change put the new version of the St. Paul law in line with “most rent control policies in the U.S.,” which include an exemption for new construction.

Here in Seattle, the draft rent control law is like the original in St. Paul: No exceptions for new market-rate housing construction. Heading into Tuesday’s vote, it’s not clear how well-informed Seattle City Council members are about what occurred in St. Paul.

A report by “central staff,” which is supposed to help the Seattle City Council with “objective research, and analysis,” does reference the St. Paul law. But the report doesn’t explain what happened after it went into effect, or why most elected officials voted to carve out an exception soon after. Central staff did not agree to be interviewed on the record for this story.

Seattle’s draft law would also limit rental price increases to the regional inflation rate, which is often called rent “stabilization.”

Earlier this month, a City Council committee voted 3-2 against recommending the rent control law. But the proposal still moves on to a full council vote Tuesday.

Even if it does pass, there's a big hitch. Rent control is currently banned in Washington state. So, the proposal, if it does pass, would remain a “trigger” law, which would only go into effect if the state ban is ever lifted.