North Carolina Rent Control Laws in 2024

Introduction to North Carolina’s Rent Control Laws

NC's Ban on Rent Control

North Carolina passed a law in 1987 banning rent control statewide. This law prohibits cities and counties from enacting rent control policies within their jurisdictions. North Carolina is one of 38 states that currently ban or restrict local rent control laws. 

The rationale behind the statewide ban is that rent control can negatively impact housing supply and investment. Proponents argue that limiting how much landlords can raise rents discourages new construction and maintenance of rental units over time. As a result, rent control could paradoxically lead to housing shortages and higher rents in the long run.

The statewide ban prevents local governments in North Carolina from implementing rent stabilization policies, even if they believe it could help tenants in their communities. While some states allow cities and counties to enact rent control if they choose, North Carolina prohibits any form of rent regulation.

Arguments For Rent Control

Rent control policies aim to help make rents more affordable and attainable for tenants in cities with rising housing costs. By capping how much landlords can raise rents each year, rent control can curb rapid rent increases that often happen in hot real estate markets. This provides stability and predictability for renters, allowing them to budget and plan their housing expenses without worrying about sudden large hikes. 

Rent control also aims to protect long-term tenants who would be displaced or evicted if their landlord raised the rent significantly above the market rate. It provides incentives for tenants to maintain long-term housing, which can contribute to community stability. Additionally, rent control may allow lower-income residents to remain in gentrifying neighborhoods undergoing demographic shifts.

Proponents argue rent control is one policy solution that can help address growing concerns about housing affordability, stabilize communities experiencing displacement, and protect vulnerable tenants from predatory rent increases. They believe it grants renters rights and protections in cities where demand far exceeds housing supply.

Arguments Against Rent Control 

Rent control policies aim to keep rents affordable for tenants, but critics argue they can negatively impact housing markets in several ways:

Discourages New Housing Construction and Investment

One of the main criticisms of rent control is that it disincentivizes building new rental housing units. By capping rent prices, rent control reduces potential profits for landlords and developers, making new construction less appealing from a financial standpoint. This slowdown in new construction can lead to housing shortages over time.

Decreases Quality and Maintenance of Rental Units

With rent control policies, landlords may struggle to sufficiently maintain properties or make upgrades while also earning enough rental income. If rents are capped, property owners have less revenue available for repairs and improvements. This can gradually cause the overall quality of rent-controlled units to decline.

Can Create Housing Shortages When Supply Can't Meet Demand

By deterring new development and reducing supply, rent control makes it difficult for the rental housing market to keep up with population growth and demand. Rent control aims to help tenants access affordable housing, but housing shortages mean fewer units available overall, restricting options for renters. This disproportionately impacts newcomers to an area.

Effects of Rent Control on Housing Markets

Rent control policies often lead landlords to convert rental units to non-rental housing like condos or apartments not for rent, reducing the overall rental housing supply. Rent control provides stability for current tenants, but makes it much harder for newcomers or renters looking to move to find available units. This disproportionately impacts low-income renters the most, as they have fewer resources to compete for the limited rent-controlled units available. Landlords have little incentive to maintain rent-controlled buildings, leading to a decline in housing quality over time. Overall, rent control can provide short-term relief for sitting tenants but negatively impacts housing availability and affordability in the long run.

Rent Control in Other States 

While North Carolina bans rent control, some states have adopted policies to limit how much landlords can raise rents each year. 

Oregon made headlines in 2019 when it became the first state to pass a statewide rent control law. The law caps annual rent increases at 7% plus inflation throughout Oregon. Cities are prohibited from enacting lower caps. Proponents argued the state law offers needed protections for tenants without being overly restrictive for landlords. Critics counter that it could stifle new housing construction.

California has long allowed local governments to impose rent control. Cities like Los Angeles, San Francisco, and Oakland have policies limiting rent increases to around 10% per year. Landlords can apply for larger increases under certain conditions. The state also has laws against excessive rent hikes after tenants move out. 

New York City has the longest standing rent stabilization system in the country. Over 1 million units fall under NYC rent caps that limit increases for renewing leases. Landlords can deregulate units under certain circumstances. Critics say the complex system of rent laws reduces economic mobility.

So while rent control does exist in select states and major cities, it remains banned across most of the U.S. including North Carolina. The debate continues around whether rent caps do more harm or good.

Recent Efforts to Change NC Rent Laws  

• In 2019, a new bill was proposed in the North Carolina legislature that aimed to repeal the statewide ban on rent control. The bill would have allowed cities and counties to enact policies stabilizing rents if they wished.
• The bill did not advance out of committee or come up for a vote. However, the issue could resurface in the future as concerns continue to grow over rapidly rising rents across North Carolina, especially in cities like Raleigh, Charlotte, Asheville, and Durham.  
• Local elected officials, tenant advocacy groups, and some state lawmakers argue that cities should have the option to institute some form of rent regulations to help make housing more affordable if their rental markets are seeing spikes in rent.
• They contend the statewide ban reduces local control and prevents cities from taking actions to address housing affordability issues in their communities. However, so far legislative efforts to lift the rent control ban have made little headway in the Republican-controlled General Assembly.

How Landlords Can Raise Rents in NC

In North Carolina, there are no limits on how much a landlord can raise the rent when a lease expires or for a new tenant signing a lease. Landlords have full discretion to raise rents to any amount when leases turn over. 

The only requirement is that landlords must provide adequate written notice before increasing rent on a renewing lease. Typically, the notice period needed is 30 days for a month-to-month lease, or 60 days for an annual lease.

If the tenant accepts the rent increase and stays, they are legally obligated to pay the higher rent under the terms of the new or renewed lease. There is no rent control law restricting rent hikes between leases.

Landlords cannot raise the rent during the existing term of a lease unless the lease specifically allows for rent increases - this is rare in North Carolina. The most common lease term is 1 year. So tenants are protected from rent hikes for the duration of their annual lease. But once the lease ends, landlords can raise rents without limit.

So in practice, tenants in North Carolina may see large rent increases when their lease ends and they must renew at higher prevailing market rents. There are no legal restrictions on the amount, as long as proper notice is given. The tenant must then decide whether to accept the increase or try to move.

The Legal Gray Area of "Inclusionary Zoning"

Some cities and towns in North Carolina have adopted policies that require developers to include affordable housing units in new residential construction projects. The goal is to create mixed-income communities and ensure affordable options are available alongside market-rate units. 

These "inclusionary zoning" ordinances typically require developers to set aside a certain percentage of units, such as 10-20%, that have rent or price controls in place to make them affordable for lower income residents. The specific income thresholds and rental rates are set in the local ordinances.

However, developers and landlord groups have argued that these types of affordable housing mandates essentially amount to a form of rent control, which would violate North Carolina's statewide ban. The legality of inclusionary zoning policies is disputed and remains untested in courts so far.

Proponents claim inclusionary zoning does not dictate rents for specific units, but rather requires a portion of units to meet affordability standards. Therefore, they argue it should not conflict with the state's prohibition on rent control. Opponents say setting maximum rents on some units contradicts the intent of the rent control ban.

As cities grapple with rising housing costs, more are likely to explore inclusionary zoning as a policy option. But until the state courts weigh in, the legality will remain a gray area subject to interpretation. For now, it presents a way for local governments to indirectly promote affordable housing despite limits on rent regulations.

Outlook for Rent Control in North Carolina

Rent control remains a controversial issue in North Carolina, with powerful lobbying groups opposed to changing the statewide ban that has been in place since 1987. The North Carolina Realtors Association has actively lobbied against and helped defeat previous legislative efforts to repeal the rent control prohibition. They argue rent control would discourage real estate development and investment in the state. 

With Republicans holding a majority in the state legislature, it's unlikely the existing law banning rent control will be overturned in the near future. The GOP generally favors free market policies and opposes government imposed price controls. However, rapidly rising rents across North Carolina have led some city officials to call for more flexibility to stabilize rents locally. Rent control advocates argue the statewide ban ties the hands of local governments trying to address housing affordability issues in their communities.

As rents continue to climb in cities like Raleigh, Charlotte, and Asheville, pressure may build for state lawmakers to revisit whether the rent control ban makes sense for all parts of North Carolina. But any change would face significant opposition from the real estate lobby. The issue highlights the divide in North Carolina between pro-business conservatives and progressive city leaders concerned about housing costs for lower income residents. For now, the status quo of prohibiting rent control remains firmly in place.

Options for Tenants Facing Large Rent Hikes

If you receive notice that your rent will increase significantly, you have several options:

Negotiate with your landlord

• Explain how the increase would cause financial hardship and ask if they can limit the increase or phase it in over time. Emphasize that you're a good tenant who pays rent on time. Offer to sign a longer lease if the landlord will keep the rent increase affordable.
• Get cost estimates for similar units in your area to negotiate that your rent remains in line with current market rates. 
• If it's a corporate-owned property, ask about hardship exceptions to standard rent increase policies.

Move to a less expensive unit

• Start looking for a cheaper apartment or rental home nearby that meets your needs and budget. Rents can vary widely even within the same neighborhood.
• Consider downsizing to a smaller unit or one with fewer amenities to save on rent.
• Ask your current landlord if they have less expensive vacant units you could switch to.

Understand your lease terms

• Review your lease carefully to confirm the landlord is allowed to raise your rent at this time and by the proposed amount. 
• Check if you can terminate the lease early due to the rent hike without facing penalties. But read the fine print.
• Lease terms requiring 60 days notice before increases over 5% are not enforceable in NC.
• If you have a fixed-term lease, rent cannot be raised during the lease period.

Frequently Asked Questions

Is there a limit on rent increase in North Carolina?

No, North Carolina does not impose a state-wide limit on how much a landlord can increase rent. Landlords are free to set and adjust rent prices as they deem necessary, provided they give proper notice, which is typically 30 days for month-to-month leases. For fixed-term leases, rent increases can only occur at the time of lease renewal unless otherwise specified in the lease.

Is rent control legal in North Carolina?

Rent control is not legal in North Carolina. State law prohibits any local government from enacting or enforcing rent control ordinances, making it clear that all rent regulation measures are off-limits within the state.

What are the renters' rights in North Carolina?

Renters in North Carolina have several rights under state law, including the right to a habitable living environment, the right to have repairs made in a timely manner, and protections against illegal eviction. Landlords must provide a safe and habitable living space and cannot evict tenants without proper legal procedure, which includes notice and an opportunity for the tenant to address any lease violations.

Is North Carolina a landlord-friendly state?

North Carolina is generally considered to be a landlord-friendly state. The laws tend to favor landlords, particularly in terms of flexibility in lease terms, minimal regulation on rent increases, and relatively straightforward eviction processes.