Rent-Control Fiats Foster Urban Blight
Callahan, F. Patricia, Insight on the News
What do New York City, Boston, Jersey City, N.J., and Los Angeles have in common? Devastated neighborhoods, deteriorating housing stock, increasing foreclosures -- and rent control.
Rent control is a community cancer that is robbing urban areas of their vitality, diminishing mobility, stifling economic growth and costing billions of dollars to the taxpayers. Only four states -- New York, New Jersey, California and Massachusetts -- and the District of Columbia permit jurisdictions within their borders to maintain rent control. Ironically, the four states are led by Republican governors whose national party leadership is promoting an agenda of deregulation and individual property rights.
Originally intended to help the poor, elderly and other disadvantaged citizens, rent control is exploited by residents who are better off than the average citizen in their communities and often better off than their landlords.
Rent control is more than a matter of price controls. It is an oppressive, confiscatory and punitive regulatory system that denies property owners any meaningful control over their properties. It has a devastating impact on property owners and their families. Consider two cases from Massachusetts:
Barbara Pilgrim of Cambridge works at a food pantry while her husband, Carl, an invalid due to a stroke, stays at home. Their life savings went into their four-family home. Under rent control, Pilgrim was allowed to charge only $500 a month in rents, but her monthly costs exceeded $900. Meanwhile, her tenants could afford vacations in Florida during winter and on Cape Cod in summer.
Anne Cox, 72, of the Jamaica Plain section of Boston, was ordered by the Boston rent board to resume renting rooms in her two-family house under threat of prosecution, despite the fact that she was ill and wanted to retire. To operate a rooming house would have put her in violation of the city's building and zoning codes, a fact of no importance to the rent board.
Rent control presents a study in contradictions. First adopted during the era of rationing and shortages in World War II, it was reimposed 25 years ago in a number of communities in response to a perceived housing "emergency." For more than two decades, the alleged emergency has provided the legal basis for states and localities to continue rent control. But while the purpose of the policy is to make housing both available and affordable to low-income residents, numerous studies have shown that the primary beneficiaries of rent control are the well-to-do who have displaced lower-income tenants in many of the neighborhoods in which rent control is in effect. And, because rent control does not allow rental-property income to be sufficient for necessary maintenance, deterioration of housing stock, abandonment and foreclosures invariably follow. Like many other well-intentioned government programs, rent control has had perverse consequences.
Rent control is welfare, pure and simple. But it is a private welfare system imposed by local government on one class of citizens, the private-property owners. Like public welfare, it is an income-transfer strategy, except that the private-property owner is the one compelled to transfer his or her wealth to tenants who often have incomes greater than the property owner. …