Will The Supreme Court End New York's Rent Control Laws?

"If you wanted to destroy a city's housing - short of bombing - the best way to do it is rent control," says Cato legal associate Trevor Burrus.

While most cities in America long ago got rid of rent control, New York remains a bastion of government-mandated limits on what landlords can charge renters. About 50 percent of New York's rental market is affected by rent control or rent stabilization, policies that keep rents artificially low and produce housing shortages, higher overall housing costs, and all sorts of corruption. 

The court case Harmon v. Kimmel may finally bring an end to rent control laws that have been on the books in one form or another since the 1940s. James D. Harmon owns a building in Manhattan where the tenants are paying rents that are about 60 percent below the going market rate. After losing various legal battles at lower levels, Harmon has petitioned the Supreme Court to hear his argument that rent stabilization is a form of takings that should be prohibited under the Constitution. The Court has not yet announced whether it will hear the case but has asked the state and city of New York to respond to Harmon's argument. 

Cato's Burrus wrote a friend of the court brief on the case and explains why rent control and rent stabilization are bad at promoting affordable housing and abridgments of economic freedom.

About 2.34 minutes. Shot and edited by Joshua Swain.

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Comments

[tarran]

A great discussion of rent control (amongst other things)

Walter Block's lecture on Interventionism

[Gambol Lockdown = intervention]

I bet Block loves that kind of aggressive intervention. All agricultural city-Statists do.

[Gov't for me but not for thee!]

Why not? It's the scam of every political flavor, including libertarianism.

[o3]

federal judicial activism overriding local control. which party is this ?

[John]

When the local governments violate the constitution and people's rights it is the courts' duty to step in and do something about it.

Take your sophistry elsewhere.

[o3]

seems like the "peoples' rights" are being expressed by the NY city council

[John]

Just like black people's rights were expressed by the state legislatures in the Jim Crow South.

Let me make it clear for you. Just because an elected body does it, doesn't make it Constitutional.

[Strawman]

You can argue that "Life, Liberty, and the pursuit of happiness" was violated for whites having to sit next to blacks on a bus.

We all pick and choose our battles.

Unfortunately, the Constitution is vague enough for

Liberals to claim that not having a place to live near your job is a violation.

Conservatives to claim that not having prayers in schoools is a violation.

Libertarians to claim that any intervention into someone making money (whether the corner store, a time share, a drug deal, whatever) is a violation.

[Res Publica Americana]

cant tell if serios

[Old Mexican]

Re: Strawbrain,

You can argue that "Life, Liberty, and the pursuit of happiness" was violated for whites having to sit next to blacks on a bus.

You can; that doesn't mean your argument would be cogent.

We all pick and choose our battles.

You prefer to lose all of yours.

Unfortunately, the Constitution is vague enough for Liberals to claim that not having a place to live near your job is a violation.

It's not vague at all, it so happens that liberals simply do not care.

[Res Publica Americana]

Constitutional republicanism, you dumb fucking prick, how the hell does it work?

[o3]

obviously someone so common as you wouldnt know.

[Old Mexican]

Re: O3,

federal judicial activism overriding local control. which party is this ?

The one enumerated in the Constitution, about the protection of contracts. It's there if you ever care to read the document, at least once in your lifetime...

[Welfare, Debt, and Taxes]

Welfare, Debt, and Taxes are Constitutional. So why do you get your panties in a wad about them?

[Old Mexican]

Re: Brainless, Witless and Senseless,

You should read the thread and understand the issue being discussed before coming out with such an asinine non sequitur, you sack of cat shit.

[John]

The liberal gnashing of teeth over the end of rent control would be epic, especially among Manhattan liberals, many of whom live in rent controls and benefit from a system that is supposed to help the poor.

[rather]

Not only do they live in it; they illegally sub-lease to profit too

[John]

I am shocked rather. Shocked I tell you.

[JD the elder]

Agreed. Pretty much every single newspaper in the city, with the exception of the Wall Street Journal, will be printing hand-wringing editorials about how without rent control, landlords will charge $5000/month for every apartment, and all the hardworking poor people and all the dear old grandmas will be thrown out into the street. (Pointing out to a leftist that pretty much no other city in the US has rent control, and other cities seem to be doing OK will produce in the leftist a momentary brain-freeze, followed by sputtering noises about how New York is different. Try it, it's fun.)

Here's the funny thing: literal "rent control", in the strict sense under NYC law, does not actually affect that many apartments anymore; many more units are "rent stabilized". But people are sloppy with their thinking and their terminology and they don't really know the difference. There are some pretty good explanations here:
http://www.housingnyc.com/html.....tstab.html
http://www.housingnyc.com/html.....dhcr1.html

We should also realize that many of the people benefiting from rent stabilization are not remotely "poor"...technically, you could be living in a $3500/mo apartment and have an income of $190,000/year and still be covered by rent stabilization!

Anyway, my feeling is that the guy's got no chance in hell. It doesn't matter how right his case is, this is the kind of government power that they never give up easily.

[John]

The apartment on Central Park where Mia Farrow lives, the one used in Hannah and her Sisters, is a rent control. Mia was paying something like $1200 a month for it at one point. This, a 12 room palace in one of the best neighborhoods in the world. So much for rent control benefiting the poor.

[JD the elder]

What gets me is that a lot of the proponents of rent control don't seem to get the perverse incentives in rent control, particularly NYC's implementation. I mean, people are basically being paid handsomely to never switch apartments. How is stifling the market supposed to help anyone?

[John]

I think they don't have a problem with benefits going to the connected. That is not perfect. But it is better than benefits going to those who have money.

[Brett]

If only they could make it so the connected never lose their money.

[TrickyVic]

"" I mean, people are basically being paid handsomely to never switch apartments. ""

People are being paid handsomely to leave apartments too.

I know someone who got 40K to move out so the landlord could renivate the apartment and remove it from rent stabilization.

$40,000 for something that doesn't belong to you. That's perverse.

[Fist of Etiquette]

What's next for NYC, the end of the medallion system?

[RedDragon6009]

Hell, before you know it they'll be letting law abiding citizens carry concealed weapons on the streets of Manhattan.

Then again, maybe not.

[Res Publica Americana]

"A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed."

So fucking vague!

[TrickyVic]

Well no one in DC can read a friggin dictionary so they have no clue what infringed means.

[DC Prisoner]

"Well no one in DC can read a friggin dictionary so they have no clue what infringed means."

Infringed? Isn't that one of those frilly things that hangs off the corners of expensive throw pillows?

[Repeal Gambol Lockdown]

It's the medallion system of Land.

[cynical]

Government artificially limits the supply of land?

[Major Johnson]

Of course they do. Have a look at San Francisco. The government there even prevents the government from building anything out there. Then have a look at what it costs to rent or buy a home there.

And wherever you see the loudest cries for government mandated "affordable" housing you'll also find the most restrictive zoning laws and building/land restrictions.

[Congo]

No Gambol lockdown here. And it's parradise!

[TrickyVic]

"""If you wanted to destroy a city's housing - short of bombing - the best way to do it is rent control," says Cato legal associate Trevor Burrus.""

I don't see any proof that NYC housing has been destroyed.

I don't think there's a federal issue. It not like anything is being taken other than money which the government, fed, state, and local doesn't have a problem.

I'm not arguing for rent control, just sayin.

[John]

If I come and tell you that you must charge below market rents, aren't I taking your property? It seems to me to be a straight up Fifth Amendment issue and thus very much a federal issue.

[TrickyVic]

No, because I'm still the owner of said property and that property is still in my possession.

[R C Dean]

When you lease property to someone, it is in their possession, not yours.

[TrickyVic]

I could sell the property without permission of the tenets. The property doesn't actually belong to them, they don't pay taxes on it. Leases clearly state who owns the property and it isn't you.

[R C Dean]

I could sell the property without permission of the tenets.

Sure, but the new owner can't really take possession of it (that is, move in) until the lease runs out.

"Possession" and "ownership" are two different things, is all I'm pedantically pointing out. Don't make me get all snarky on you.

[TrickyVic]

Get all snarky if you will. 😉

"""Possession" and "ownership" are two different things""

I will agree. I using possession as the whole property, which isn't really apt.

[TrickyVic]

Get all snarky if you will. 😉

"""Possession" and "ownership" are two different things""

I will agree. I using possession as the whole property, which isn't really apt.

[Brett]

It's yours but your letting some else use in compliance with a contract. Rent control, occupational licensing, minimum wage are all in violation of the first amendment since they restrict the freedom of people to freely associate in accordance with written or verbal contract.

[John]

Takings mean more than that. If you can't use your property as you please or too its full market value, you don't fully "own" the property anymore.

[TrickyVic]

Do you think that arugement would win in a court of law?

[Res Publica Americana]

I don't, and I suspect John doesn't, give a single fuck about what would and wouldn't fly in a court. We're talking about what's RIGHT here, what it ACTUALLY is.

[TrickyVic]

What ACTUALLY is, is that it exists and will continue to until someone wins in court. What is RIGHT is a different story and has nothing to do with what is.

But John's above claim doesn't fly becuase you can't use your property as YOU see fit. Government makes rules such as building codes, many of the are not RIGHT. But just because you have to follow the codes doesn't mean your property was taken from you.

I get the point that rent control isn't right, that changes nothing.

[robc]

Which is funny, because that was the argument I made with John this morning, RE: Ron Paul, but he was being all pragmatic and shit.

[TrickyVic]

""RE: Ron Paul, but he was being all pragmatic and shit."'

Well it was Ron Paul, so of course.

On a Ron Paul thread John will say anything, like the Constitution is a "living" document or something.

[John]

It has in some cases. There was a famous case involving a beach property where the state said the guy could literally do nothing with his property. The SC ruled that if was possible to restrict the use of property to such an extent that it becomes a takings. It was a huge case back in the 1990s. Before that they had to take your possession for it to be a "taking" under the 5th Amendment. The devil of course is in the details. How much do they have to take to make it a taking? That is why this case is a big deal. It would be yet another expansion of the definition of a taking.

[TrickyVic]

There's plenty of actual taking going on in NYC. The Atlantic yards project, Columbia University expansion, ect.

This is nothing like that.

[John]

They had to pay for the property in the Atlantic Yards project. This is a different issue Vic.

[TrickyVic]

Tenets still pay rent too.

[JW]

Not market value.

[RedDragon6009]

Owning property means controlling said property.

[TrickyVic]

By that standard, we don't even own our own lives.

The taking of money, which is what this is, doesn't offend the government.

[RedDragon6009]

"The taking of money, which is what this is, doesn't offend the government."

No it doesn't, but it sure offends the hell out of me!

[Tak Kak]

To be fair, "own our own lives" doesn't really make any sense anyway.

[RedDragon6009]

It does for the boys down at the Department of Redundancy Department.

[TrickyVic]

""the Department of Redundancy Department.""

That one never gets old.

[Res Publica Americana]

It's not truly YOUR property when the government tells you what you can and can't do with it.

[TrickyVic]

I won't argue against that. But if we follow that arugment, it's not owned by the landlord either therefore the tenet takes nothing from them.

[Fluffy]

That's like saying that if I pass a law saying you can own hamburgers but not eat them I haven't violated the Takings Clause because you still "own" the hamburgers.

I don't "own" anything unless I can sell it for terms I have negotiated.

[TrickyVic]

Not fully apt. We are not talking about the property, but the money.

It's more like saying the government says you can only sell that hamburger for X dollars.

While they are interfering with your ability to set your own price, they are not forbiding you from selling the hamburgers.

Utility companies often can't set their own rates. Some states have laws on the max amount gasoline is sold.

There are many example of government interfering with how much you can sell something. Is the government "taking" according to the Constitution?

[robc]

Yes.

[TrickyVic]

In a perfect world, all our tax money would be returned because the government was taking.

[Rather]

No, the perfect world would be doctors kept in cages; as it is, golf courses have too many places to hide

[EcoDude]

Actually, that quote is a paraphrase of Assar Lindbeck's quote on the subject:

http://www.econlib.org/library.....ntrol.html

Lindbeck was a socialist, by the way...

[Sevo]

"I don't see any proof that NYC housing has been destroyed."

Just parts of it:
http://www.brianrose.com/journ.....omises.jpg

[rather]

onetime I drank a whole bottle of root beer and my stomach got big and then I burped and root beer came out my nose.

[*]

No, no they won't.

[Seer]

I really think the case ought to hinge on whether the owner of the property held the land before the law went into effect. If it was already on the books, he knew what to expect (or should have) and thus isn't having anything taken from them.

That doesn't mean the laws are good, but it's not a takings if he knew that the law treated property like that going in.

[R C Dean]

I have to disagree.

The issue isn't whether the owner had notice of the regulations, the issue is whether the government had the authority to impose the regulations in the first place. The answer to the second question does not turn on the answer to the first.

[Res Publica Americana]

And the answer, by every single imaginable standard, is no. Good for us.

[Zeb]

One could make the argument that the restrictions on the property would be accounted for in the selling price.

[Strawman]

"If you wanted to destroy a city's housing - short of bombing - the best way to do it is rent control,"

That's a bunch of BS.

New York City is doing fine...and we don't need the Fed moving in on this.

Landlords are doing fine...even the ones that have rent controlled apartments.

[Res Publica Americana]

"New York City is doing fine..."

Nice one.

[Yet Another Dave]

Yeah, New York is doing great. Really - saw it in a movie, everybody looked just so darn happy to be living there. It must be even better than Disney World.

[cynical]

Pull Wall Street off the public tit and tell me how fine New York City is doing.

[Warren]

Rent control is straight up gawdawful. I hates everything about it. Still, I don't see it as a constitutional issue. Are building codes a "taking"?

I start frothing at the mouth every time some piece of tyranny is passed under the General Welfare or Interstate Commerce bar. The last thing I want to do is turn the Takings clause into a one size fits all.

"We just passed another banking regulation. Hey that's a "taking"! Here's a hundred billion in "just compensation" Bear Sterns."

[TrickyVic]

Exactly.

[robc]

Are building codes a "taking"?

yes.

[Strawman]

Property ownership is an illusion.

No one owns property in the USA. We're mere custodians.

The only reason libertarians are interested in Rent Control is because they don't like it when government tries to help the little guy...which of course, affects the Big-Guy.

If you are a libertarian/Conservative and are not a BIG-GUY you are a Stooge.

The truth is Cato will support any crime of Theft involving big business using their influence, size, wealth, and power to take from the common man AS LONG as the BIG-GUY doesn't use a GUN. The pen is fine. Many libertarians (including Freedman and Alan Greenspan) felt the the statues of FRAUD should be eliminated as well.

[Old Mexican]

Re: Strawman,

Property ownership is an illusion.

For instance, you don't own your ass, it's public property. Right?

Idiot.

[Humans aren't mere Property]

The Libertarian scam is to dehumanize everyone and everything in life down to mere property.

[Tak Kak]

I don't thing it's a scam to dehumanize "things". Rather, it seems quite proper to do so being that they aren't human and all.

[Old Mexican]

Re: Imbecile who confuses ass with the whole human,

The Libertarian scam is to dehumanize everyone and everything in life down to mere property.

Is your ass public property or is it yours?

[Tak Kak]

Some humans are wholly asses.

[UvalDuvalCuckoo]

I think you mean the Statute of Frauds and it doesn't have anything to do with Fraud in the sense you imply. Milton Friedman was so unequivocal in his support for keeping govt out of transactions free of fraud and coercion that it's hard to see how you can make that claim seriously. And just for the record, one can be adamantly against fraud in the sense you're using it and still believe it should be handled outside of the criminal courts. I know quiet a few libertarians and don't know any that are for Fraud, but that's a different discussion.

[Michael]

So according to your logic, the "little guy" is defined as pretty much anybody that can't manage to scrape together enough cash to buy a piece of real estate of which they can rent out a portion to someone else, and anybody that owns, say, a small two-flat is in the ranks of the "big guys", right? Am I reading you correctly?

Because that's really quite pathetic.

[Rhywun]

On the off chance he's not trolling, I'm curious to know what "the little guy" has to do with this. Only a tiny minority of "the little guy" gets this benefit - the vast majority are in fact screwed by this minority.

[EcoDude]

The quote is a paraphrase of Assar Lindbeck's quote:

"In many cases rent control appears to be the most efficient technique presently known to destroy a city?except for bombing."

Lindbeck was a socialist, by the way...

[Capitalism destroyed America]

And I'm a capitalist.

[There is no "we"]

We abolished rent control in Massachusetts by referendum. I, a proud Micheal Dukakis Liberal, voted against rent control. It was redounding to the benefit of wealthy-but-lucky tenants, and hurting modest-income owners. More fundamentally, it forbid owners from living in their own properties. It forced them to keep their property in the rental market. That was just evil, and I would not abide it. A price cap is one thing. Forcing you to sell at the capped price is quite another.

Rent control is pretty good at destroying housing once it's built, but the easier way to screw up the housing market is with exclusionary ("snob") zoning -- prevent the housing from being built in the first place.

Waiting for Cato to bring a constitutional challenge against snob zoning? Don't hold your breath.

[John]

CATO hates zoning. Do you ever read their stuff? They will gladly go after snob zoning and do.

[robc]

They wont go after ONLY snob zoning, which is why liberals have a problem with them.

[There is no "we"]

Nope. Even a small gesture could earn some liberal good-will. But again, we ain't holding our breath.

[joshua corning]

Waiting for Cato to bring a constitutional challenge against snob zoning? Don't hold your breath.

Constitutional challenge? Well I think showing that rent control is a taking goes a long way in showing that all land planning and land use regulations are takings.

Anyway on a policy front CATO does a lot in showing how "snob zoning" is bad policy.

Start here to cure your ignorance on what CATO does:

http://www.cato.org/people/randal-otoole

[There is no "we"]

Not seeing it, Josh. Looks like a lot of screeds against public transit and high-density development. That isn't the "snob zoning" problem.

The snob-zoning problem was just capsuled by a high-profile blogger who dubs herself "Jane Galt":

"You'll agitate against zoning that would bring poor people in (though of course, not because of the poor people, it's just that, you know, the character of the town is quiet single family houses and the infrastructure won't support multi-family plus we don't really have the social services here and they'd be much better off in Camden, actually.)"

Whole thing here:

http://tinyurl.com/789wa6c

[joshua corning]

Not seeing it

You are an idiot then.

Your confusion appears to stem from the fact that Randal does not use your "snob zoning" nomenclature...but he describes the same phenomena, and explains in blinding detail how government land use planning (you call it snob zoning) hurts the poor and their ability to house themselves.

By the way how is forced density not snob zoning?

Lastly your link says nothing about zoning (snob or otherwise)....if you are just going to randomly link bullshit at least make it something interesting. I recommend images from some NASA space probe, that would be cool.

[There is no "we"]

(1) the block-quote was from the linked item. Reading. Learn how.

(2) the closest Randal gets to prominently addressing the exclusionary-zoning issue is hurling on Portland Oregon's high-density planning and on affordable-housing slush funds.

There may be some discussion of minimum-lot sizes and such somewhere in his thicket of tedious scribblings, if you sift through them long enough, but don't expect anything serious. Cato has every incentive to soft-pedal Right-wing zoning excesses while playing up Left-wing zoning excesses.

[Strawman]

Cato won't go after Snob Zoning because it shits on the little guy. They don't really have a problem with this.

There are many wealthy people living in rent-controlled apartments in NYC. However, that number is small compared to all of the poor and working class...which is not in CATO's best interests as they have NO MONEY and we need them to have NO MONEY or there would be no one to change bed pans and take out garbage.

[Old Mexican]

Re: Strawbrain,

There are many wealthy people living in rent-controlled apartments in NYC. However, that number is small compared to all of the poor and working class

The wealth status of the renter does not trump economic law. Rent control is no more than a price control, and like all price controls, leads to artificial scarcity.

[joshua corning]

Cato won't go after Snob Zoning

Strawman meet Randal O'Toole

http://www.cato.org/people/randal-otoole

[Market Rate Tenant]

Market-rate tenants in NYC who want to help fight rent regulation laws, please join the Renters' Alliance at facebook.com/nycrenters

[Strawman]

New York City is pretty unique.

During this entire downturn in real estate, property values NEVER really go down. Even when they do inch down, foreign interests are here ready to buy.

I have no problem with Rent Control

[Tak Kak]

I take it you hate foreigners.

[joshua corning]

During this entire downturn in real estate, property values NEVER really go down.

This is the effect of rent control. If the supply is constrained by government actions then prices will not go down....a constrained supply (why build if you cannot make any money?) is exactly what is expected when rent control is enforced.

If you are going to argue in favor of Rent control at the very least you should make an argument of why it is good...not give the very reason why it is bad.

The fact that you are a racist and blame foreigners rather then the real cause is amusing though.

Exactly what I would expect from a moon bat such as yourself.

[TrickyVic]

That's not why property values were largely stable.

If so, then rent control would be a good thing since that which keeps property values high is considered good. Like laws that say you can't park a car on your yard, or have a car(s) in you backyard because it will reduce property values.

[joshua corning]

That's not why property values were largely stable.

No not stable...New york had a bubble...only when it came down it did not come down to their previous levels, or even inflation adjusted levels....this is no different then California or where ever you find heavy handed manipulation of land and housing markets by the government.

Again go to this guy: http://www.cato.org/people/randal-otoole

he does not specifically talk about rent control but the effect is the same as any constraint on growth by land use regulations.

[joshua corning]

also this:

http://blog.redfin.com/newyork.....010-08.png

see the bubble?

See how it did not go all the way back down?

[TrickyVic]

Where in NYC can you buy a house for 200K?

[R C Dean]

New York City is pretty unique.

That it is. You might research its history sometime, because New York was on the decline, in a serious way, after rent control and up until the tech and financial booms.

It has become a town that feeds off of the finance sector, which has been feeding, in its turn, off of Washington and the Fed.

[joshua corning]

Will The Supreme Court End New York's Rent Control Laws?

You mean will the Supreme Court read the plain text of the constitution that limits the power of government to take property from land owners and judge it on that plain text?

It is either no or hell no.

[R C Dean]

Actually, the issue when a "regulation" that leaves nominal title in the owner becomes a "taking" is not an easy one. Its hard to say where to draw a consistent, principled line.

I got no problem with fire codes, for example. Not a taking, IMO.

Rent control, though, strikes me as being on the wrong side of the line, even though I can't come up with a pithy way to say what I think the line is.

[robc]

The reason the line is hard to draw is because you arent being principled.

Would there be fire codes in libertopia? If so, why? (I think the answer to the why draws the line)

If not, line also drawn.

Of course, I think the answer under the current model is simple: fire codes are a taking, but there is no payout because property values arent decreased (more than likely).

[Sevo]

1) Rent control is a taking; it is wrong as a result on principle. The fact that there are other takings does not justify adding more; quite the opposite.
2) Rent control does not do what it is claimed to do; it is wrong as a result on utility.
So it is a failure measured by both principled and utilitarian criteria.
Now, can anyone suggest a reason it should continue to exist? Other than the typical government inertia, that is.

[nonluddite]

Here's how I take it--Are price controls legal at the state level?

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[Sevo]

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[rent is too damn high]

I miss my home
I miss my dad
I miss my dog, hercles
I miss it all.
I'm going to Carolina in my mind.

[esthergoldhammer]

Speaking of "taking," why aren't any of you whining about how ALL of this land was stolen from the only people who could truthfully claim to be rightful owners - Native Americans.

But of course, most of you are just hypocrites with no genuine interest in doing what is right, fair, or moral.

So corrupt.

[Hugo S. Cunningham]

Playing off the old adage that "hard cases make bad law," NYC rent control shows that "war cases make bad law." The USSC was correct to uphold rent control during WW II, a time of "total war: wage/price freezes, conscription of millions, rationing, and income tax brackets over 90%. The usual economic justifications for higher free-market rents did not apply:
(1) drawing more money in to motivate apartment-building made no sense when every spare dollar was needed to fight the war, and
(2) breadwinners conscripted into the wartime military were not able to change jobs or take second jobs to pay higher rent.

It was unfortunate, however, that the USSC did not specify that their approval of rent control applied to "total war" only, and that different standards ("just compensation," "due process of law," etc.) would apply in a peacetime economy.