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Solimar Research

Renters vs. Tenants: A Distinction with a Difference

Josh Stephens on
May 22, 2016

Like 45 percent of other Californians and 52 percent of other Angelenos, I live in a home owned by a stranger. It’s not quite the American dream. Nationwide, 65 percent of households own the units they occupy. But it suits me fine.

The question I’ve asked myself lately, though, is, am I a renter or am I a tenant? I happen to be both, so the point is moot. For renters who aren’t yet tenants, or who want to be a tenant someplace else, the difference is more important than you might think.

A few months ago I spoke on a panel on affordable housing, sponsored by Enterprise Community Partners. The panel included Larry Gross, the executive director of the grimly named Coalition for Economic Survival (CES) and longtime Los Angeles-area housing advocate. I contended, based on study and anecdote, that relief from the city’s crushing rental rates will come only from increased housing production – for residents of all socioeconomic strata.

I recalled this discussion as I did my reporting for this month’s article on rent control in the Bay Area.

CES primarily lobbies not necessarily for more housing but rather for housing policies like, among others, rent control, which is his signature issue. As he stated his case for rent control, I found us speaking different languages. They aren’t mutually unintelligible. But they reveal fundamentally different ways to approach the problem of housing affordability.

I think of renters expansively, as more than just parties who signed a piece of paper. Renters are demographic group, and an enormous one at that. They are people who, by necessity or choice, are committed to the lifestyle that renting connotes. Renters might be new in town. They might be inherently transient. They might like low-maintenance situations. They might not be able to afford to purchase a home, or they might simply have better things to do with their money.

The renter demographic has notable subsets. All those Millennials we hear about who are repopulating center cities? Almost all of them are renters. Seniors who want to downsize? They might be renters too. Minimum wage workers? Surely renters. Same with young families, and many others. Whatever their reasons, they approach the housing market as customers. In theory, the more choices they have, and the lower the cost for their choices – at any given level of quality, location, and amenities – the healthier a city’s economy and urban environment will be.

A tenant is defined by a contractual relationship. They are people who live in someone else’s property and pay rent. Policies that support them, such as those advocated by CES, are crucial. But they confer narrow, isolated benefits. Legal protections generally serve only the tenants in question and then only when disputes arise. (Though they surely deter malfeasance.)

Many tenant protections, including rent control, reflect philosopher John Rawls’s maxim of the “Veil of Ignorance” by which any action must serve those who are least well-off. And they generally uphold negative rights: they prevent bad things from happening; they do not cause good things to happen. I’ve rarely heard from an economist who didn’t argue that rent control drags down an urban economy. Those arguments are well known. Granted, they mean little when a family is faced with an unfair eviction.

I am pretty much the poster child for the perverse effects of tenant protections. I live in a rent-controlled apartment in a part of Los Angeles where rents are, to use the technical term, bonkers. I can afford more. I’d be glad to try a different part of town. But I can’t afford that much more, and I’m not that eager to move. So I stay put. I get to enjoy my market distortion as a tenant and yet I feel trapped as a renter.

The dire, immediate perils that tenants face have given rise to organizations like the Coalition for Economic Survival. As well they should. They do crucial work. But make no mistake: groups like CES, and rent control itself, are necessary primarily because housing, both market-rate and affordable, has been unnaturally suppressed for decades. The slow-moving renters’ crisis, because it is enormous and amorphous have had no such advocates. Until recently.

Groups like the San Francisco Bay Area Renters Federation (with everyone’s favorite schoolyard acronym, SFBARF) has enthusiastically taken up the cause up north. Similar groups are quietly forming in Los Angeles (disclosure: I am involved with one of them), and there’s even going to be the first-ever YIMBY -- Yes In My Backyard -- conference in Boulder, Colorado, next month.

As rent control spreads like wildfire across the Bay Area, even its advocates admit that it’s not a complete solution. It is a solution for tenants, of course. But it will only create a game of musical chairs in which many of the state’s renters end up without a seat. (Literally – once you’ve paid your deposit and first month’s rent, how can you afford furniture?)

As the renters movement grows, I hope renters and tenants will ultimately find themselves on the same page and speaking with common voice. Ideally, that page is a brand-new lease, listing a rent that everyone can afford.

This article has been updated since its original publication.