Voters in a Florida county with the nation's highest apartment rent growth are poised to decide whether the local government can control rent increases.

Orange County, home to Disney World and Orlando, approved an ordinance this week that sends the rent-control measure to the ballot box in November. The ordinance, which calls the current rental market a “grave housing emergency,” would prevent owners of existing apartment properties from raising rents at a rate higher than inflation as measured by the federal Labor Department for the South, significantly less than the current annual rent growth for the area.

With this step, the county joins states and municipalities around the country grappling with what to do about apartment rents that soared last year and into this year, increasing worries that existing shortages of affordable housing were growing more severe. The concern comes even as rent growth is slowing and is expected to slow more into next year.

Rising home prices have kept more renters renting, exacerbating what analysts say is a shortage in apartments. The National Apartment Association released a study recently that said the U.S. needs 4.3 million new units by 2035.

According to the Orange County ordinance, the county has a shortage of as many as 26,500 units, while an estimated 80.3% of households at the area’s median income, which the county shows for a family is $80,100, are paying more than 30% of their income for housing.

The latest figures from CoStar Group’s Apartments.com show that the Orlando area’s rent growth in July was 16.2%, the highest in the country, down from 18.7% at the end of this year’s second quarter.

Under the ordinance, allowable rent increases would be tied to the Labor Department’s consumer price index for the South. July’s index showed inflation at 9.4%, 0.4% lower than the June number the ordinance cited.

CoStar projects rent growth slowing to 10% in the fourth quarter when Orange County voters will hit the polls.

As many as 104,000 units of the roughly 230,000 existing units in the county could be affected if the ordinance passes, county officials said while meeting Tuesday evening. But they also said the number could be as low as 4,800.

The ordinance said that the county has received more federal rental assistance than any other county in the state and that there have been 6,970 evictions filed through the first half of this year, a 70.1% increase over the first half of 2021.

Efforts across the country to control rent have brought stiffer opposition from apartment owners who fought against rent and eviction freezes, including the nationwide moratorium that carried over from 2020 into last year.

“Rent control — no matter the scope or form — doesn’t work, plain and simple,” Nicole Upano, the National Apartment Association’s assistant vice president for housing policy and regulatory affairs, said in an email. “Decades of academic research and real-life case studies have reiterated the same finding: rent control devastates rental housing and harms affordability.”

NAA was among those that sued the federal government in July 2021 to recover rent that apartment owners lost because of the eviction moratorium.

Rent control “targets relief to people who don’t need relief,” Brad Case, chief economist of Northern Virginia national apartment developer and investor Middleburg Communities, told CoStar News. Case said renters who have higher incomes benefit the most while those whose wages aren’t rising with rents still struggle, and that is where relief should be focused more directly.

Middleburg Communities, which targets the middle-income renter, recently bought a property in Davenport, Florida, in neighboring Polk County roughly 20 miles from Disney World and just started construction on another apartment project in the same city. Rents are up roughly 16% annually in Davenport, according to CoStar data.

Case echoed publicly traded real estate investment trusts and others in the industry saying renters renewing don’t see big rate increases because the major rent growth is in new leases. And REITs have been reporting higher renewal rates as renters stay put rather than move out to buy a house.

Opposition to the Orange County ordinance may also come from the state level. During the hearing, Orange County Mayor Jerry Demings, who voted against the ordinance, said Florida’s attorney general has yet to deliver a requested opinion on the measure. “That’s the biggest threat we have,” Demings said.

Wes Hodge, an aid to Orange County Commissioner Emily Bonilla and ordinance proponent, told CoStar News that the battle over the ordinance could end up in court if voters approve it. The state Legislature may also seize on the issue when it reconvenes next March to nullify the vote by altering existing legislation that is driving Orange County’s move, Hodge said.

The key phrase in Orange County’s effort is “housing emergency,” which is a narrow avenue in Florida state law. Florida is one of 26 states with preemption laws on the books to prevent rent control. In Florida, the exception is a municipality declaring a housing emergency.

Orange County isn’t alone in declaring a housing emergency. Miami-Dade County has done so as well and started with a tenant bill of rights in March, which requires landlords to give a 60-day notice if they raise rents more than 5%. Orange County has taken this step as well. Miami's rent growth in July was second to Orlando's at 14.6%, according to Apartments.com data.

Miami was the most overvalued U.S. rental market in June, according to an index from researchers at Florida Atlantic University, Florida Gulf Coast University and the University of Alabama. Renters paid a 20.6% premium in June, defined as the rate of growth that exceeds the historical average of about 3% to 5% annually. The Tampa area was at 16.25%, while Orlando was at 14%.

Tampa considered limits on rent increases, but the City Council last week rejected sending an ordinance to voters. Neighboring St. Petersburg is considering putting a similar ordinance to voters.

In the Northeast, Montclair, New Jersey, froze rents in 2020 during the early days of the pandemic and kept extending the freeze. Landlords sued. The township and the landlords eventually agreed to a 6% one-time increase and 4% every 12 months after that, a deal that took effect in May. But those limitations don't apply to new construction. Orange County's ordinance also makes an exemption for new construction.

In Minnesota, Minneapolis voters approved allowing rent control. Elected leaders there are still shaping what it will look like. Neighboring St. Paul voters approved rent stabilization last November that limits monthly rent increases to 3% in any 12-month period and has the most restrictive policies in the country with the inclusion of new construction in the mix.

The number of building permits in St. Paul issued for projects with five or more units has dropped significantly with the new law, according to data from the Housing and Urban Development Department. In the first quarter last year, permits were issued for 1,302 units. For 2022, after the new rules went into effect, there were permits issued for 109 units during the first quarter.

Opponents to the Orange County ordinance cited St. Paul's law in arguments. But Orange County Commissioner Nicole Wilson, whose district includes Disney World, said during the meeting that “it’s not a fair comparison” since St. Paul's law also included new construction while Orange County’s doesn’t.

The ordinance is just one step of several to address the problem, including looking at “zoning and how we increase that inventory in order to boost what we know is a long-term solution,” Wilson said. She said the ordinance amounts to a pause so the county can get new development through the pipeline more quickly.

According to CoStar data, there are nearly 24,000 units under construction in the Orlando area, or roughly 12.4% of the existing inventory, which is not enough to keep up with the area's population growth.

Those new units “will not fully correct the supply-demand imbalance that exists,” said Lisa McNatt, CoStar’s director of market analytics for Orlando, in her report on the area.