Renovating Rent Control

California weakens price controls. Will New York be next?

If it's true that California is a bellwether for the rest of the country, then rent control may be on its last legs. This past summer, in a move widely attributed to the Republican gains in the state Senate, the California legislature voted to replace rent control in five Golden State cities with a policy known as "vacancy decontrol."

Vacancy decontrol, which is in force in Los Angeles and a number of other cities across the state, allows landlords to charge market rates to a new renter whenever a tenant voluntarily leaves a given unit. Annual rent increases for continuous occupants may still be regulated by various local authorities.

"It's not abolition, but it's a major change," says economist Michael St. John, head of St. John & Associates, a Berkeley-based consulting group and author of a 1993 study that documented the negative impact of restrictive rent control on poor and elderly residents in Berkeley and Santa Monica, two cities often cited by rent-control advocates as models to follow.

The California vote follows a 1994 referendum in Massachusetts that abolished rent regulation statewide. The next battleground over rent control is likely to be New York City, whose rent-control regulations expire in 1996 and must be renewed by a now-Republican state legislature and governor. Both Gov. George Pataki and State Senate Majority Leader Joseph Bruno are outspoken opponents of rent control.

"The prospects look good for a rollback—if not a complete elimination—of rent control in New York," says James Taranto of the Manhattan Institute, a public-policy think tank based in the Big Apple.