First, it forces landlords to suffer the continuing presence of under and non-paying tenants.Įarlier this summer, the Supreme Court held that government regulations that allow non-consensual physical invasions by third parties are a violation of the Takings Clause. The law is an unconstitutional violation of the Fifth Amendment’s Takings Clause. They argue that because the new law represents such dramatic destruction of their property interests, the old cases upholding rent control are no longer controlling.
Landlords represented by the Community Housing Improvement Program, or CHIP, and the Rent Stabilization Association (RSA) in New York, sued. These and other changes bring rent stabilization closer to the rent control of old and highlight the danger of adopting any form of “rent control lite” because it is only a gateway to the harder drug of confiscatory rent control. Further, the 2019 law made several provisions of the existing law more draconian - including requirements that a property be devoted to residential rental in perpetuity, with the owner effectively unable to reclaim the property, devote it to a different purpose, or tear it down and build a new structure, and the requirement that the incumbent tenant has a right to renewal and ability to pass down the tenancy to others. Non-paying tenants can have up to a year of eviction-free housing if they can prove certain hardships. There are new limits on the amount of money that can be spent on improvements, and only some of those costs can be recovered - over a period of 30 years. The 2019 law severely limits the ability of landlords to raise rents to recover costs invested in apartment infrastructure improvements. In 2019, they prevailed and New York adopted punitive new rent regulations. It was a system that regulated older buildings more strictly than newer ones, and contained exceptions designed to incentivize new housing construction and the improvement of older buildings.īut, alas, those reforms were a thorn in the side of renter advocates who agitated for a return to the era of stricter controls. Recognizing that too strict rent control had led to the large-scale abandonment of buildings, New York ultimately enacted a kinder, gentler form of rent control - the so-called Rent Stabilization law of 1969.
Draconian constitution free#
The lesson is simple: Free markets work.īut those lessons were forgotten by the time the next world war rolled around, and much of New York has had some form of rent control ever since. By 1929, vacancy rates approached 8 percent. Construction took off like Lindbergh’s airplane. When Washington tried to extend its law, the Supreme Court was not impressed: “ law depending upon the existence of an emergency or other certain state of facts to uphold it may cease to operate if the emergency ceases or the facts change even though valid when passed.” New York City declared a decade-long tax holiday for new housing construction to alleviate the lack of housing and exempted new units from rent control. The nation’s first rent control laws ended when the war concluded. For many renters, it doesn’t matter that they contribute to long-term distortions of the housing market, as long as their rents appear cheap.
As shortsighted as rent control might be, its perceived benefits can last at least through the next election cycle. Yet politicians also have learned that rent control can be immensely popular. Virtually all economists from across the political spectrum agree that rent control reduces the housing supply and inevitably leads to shortage-induced price increases. Most of us have learned that no rent control law, no matter how well-intentioned, has managed to repeal two fundamental laws of economics: the law of supply and demand and the law of unintended consequences. The first rent control law responded to the housing shortage caused by the return of World War I veterans. A year later, it did the same for New York’s “Emergency Housing Law.” Soon, the Second Circuit Court of Appeals will hear the most significant challenge in decades to New York’s latest version of its rent law. A century ago, the Supreme Court upheld the nation’s first rent control law in Washington, D.C.
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