Posted: Jan. 9, 2012 | 1:59 a.m.
In parts of America, an apartment is a place to live for a few years while saving for a house.
That’s less likely to be true in a dense urban metropolis, where land values are so high that even well-to-do families can occupy apartments for a generation or more.
That means tenants — who vote — generally outnumber landlords. When costs go up, landlords seek to raise rents. The tenants squawk. The political result? Rent control.
Supreme Court Justice Antonin Scalia “exposed the deeply antidemocratic nature of rent control in Pennell v. City of San Jose,” points out New York University law professor Richard Epstein in the Jan. 4 Wall Street Journal. “If the government thinks some high social end is served by allowing tenants to sit on someone else’s property in perpetuity, then it should use public funds … to buy or lease the premises for market value which it can then lease out to particular tenants.”
At last, it appears the full U.S. Supreme Court may be willing to re-examine this issue. James and Jeanne Harmon own a townhouse in New York City. The upper floors are occupied by tenants entrenched under New York’s “rent-stabilization” law, paying rents at only a fraction of the value of their units. Mr. Harmon seeks to strike down this law.
The 2nd U.S. Circuit Court of Appeals rejected his lawsuit, “but Mr. Harmon has filed petition for certiorari in the Supreme Court, and, miracles of miracles, the high court has asked New York City and the tenants to respond,” Mr. Epstein reports.
All versions of rent control violate the takings clause of the Fifth Amendment, refusing landlords just compensation for the requirement that they rent at below-market rates — in essence, a welfare benefit to tenants (not all of them poor) that city councils decline to fund.
Rent hikes are unpleasant, but so are grocery price hikes. Politicians might be tempted to impose grocery price controls, as well, but the inevitable result is a shortage of groceries, leading to rationing.
What about the would-be new tenant, who never has a shot at these prime apartments at any price?
The Supreme Court should restore their rights, as well as those of the landlords.