Rent-Control Laws Hamper New York’s Housing Market
LETTERS | January 13, 2012
Richard Rafal’s letter (Jan. 10) replying to my “Rent Control Hits the Supreme Court”(op-ed, Jan. 4) shows a slender grasp of economic principle when he defends New York’s stringent rent-control laws by observing, “New York, the most rent-regulated city in the country, has always had some of the most expensive real estate in the world.” So it does, for two reasons.
The rent-control laws perpetuate the low level of utilization of key properties. Also, New York’s punitive Uniform Land Use Review Procedure places enormous local hurdles in the path of new development, to further constrict the supply. The high real-estate values to which Mr. Rafal refers are confined to those lucky enough to survive the process. Huge swaths of land remain undeveloped, perpetuating these monopoly rents.
Richard A. Epstein
Palo Alto, Calif.
Richard Rafal dismisses the movement to abolish rent control by stating that such abolition would only benefit the owners. Of course it would, in the same way that restoration of stolen goods benefits the victim of a robbery. The beneficiary of rent control is legally taking advantage of an immoral law.
The elimination of rent control and rent stabilization would benefit society in general by eliminating market distortions that keep rentals higher for those not in a position to take advantage of such discriminatory legislation, and by creating free-market real-estate investment incentives.
It is hard to understand how Mr. Rafal equates the restoration of stolen property as a “windfall.”
Robert B. Fougner’s letter (Jan. 10) omits a salient fact. Rent control did not start “as a program of price controls implemented by my [Mr. Fougner’s] father who was assigned the task of controlling rents in metropolitan New York due to anticipated scarcities in the civilian economy while he worked for the Office of Price Administration during World War II,” as he writes.
New York’s first rent-control program began after World War I, in 1920. As returning veterans had trouble finding housing, then-mayor John “Red Mike” Hylan determined that “the law of supply and demand should not apply so far as the renting situation [is] concerned,” as the New York Times reported at tht time. Gov. Al Smith let rent controls expire.
Mr. Epstein’s article reminds me of my late father’s bitter opposition to rent control. He was an ethical landlord who strived to maintain his buildings but was simply overwhelmed by expenses and inflation which required reasonably higher rents than were obtainable under rent-control laws.
My father frequently pointed to vast tracts of abandoned Brooklyn apartment buildings whose owners, many of them friends and business colleagues, walked away from the properties because rent control had financially gouged them, leaving the neighborhoods bereft of housing and contributing to a downward spiral that persists to this day.
Rent control is a case study in how political pressures end up destroying opportunities for the many, in the name of some ideal that, to say the least, is not workable.
Jamaica Plain, Mass.