Evicting rent control
If there is glee in the US landlord community these days, we are not surprised. The Reagan transition team's urban task force has unanimously recommended that federal funds be withheld from communities having rent controls. If eventually translated into national policy, that could mean a serious challenge -- if not eventual end -- to rent control provisions in 200 ore more municipalities throughout the US. While having reservations about the timing and manner of lifting controls, we think that doing so would be an encouraging step toward finding ways to increase the US housing stock.
Because of a combination of factors -- soaring interest rates and high building costs; conversion of rental units to condominiums; and abandonment and destruction of older units, primarily through fires -- the US multifamily housing stock (especially rental units) has been seriously eroded in recent years. According to a federal study, the overall US vacancy level for apartment housing is "dangerously low." One congressman who has closely followed the housing market, Maryland Democrat Michael Barnes, has even labeled the expected shortage of rental untis in the 1980s as a potential "national emergency."
What seems particularly significant in the current discussion about rent control is that criticism is now coming from Democrats as well as Reagan Republicans. Last summer the US House of Representatives voted to deny funds to jurisdictions placing rent controls on new housing. That effort failed, but it indicated growing disquiet within Congress. In last month's election voters turned down rent control laws in Seattle, Oakland, and San Diego. The same day as the release of the Reagan team's urban affairs report a federal study group formed by Carter administration Housing and Urban Development Secretary Moon Landrieu recommended scuttling of rent controls.
Building owners and developers allege that controls (including rent stabilization laws which place limits on icreases allowed on new dwelling units) discourage construction. Investment dollars, they argue, will go where there is certainty of profit. And that is not into constructing rental units in localities where they re precluded from hiking rents enought to cover soaring fuel and maintenance expenses. Their arguments should not be ignored.
Rental stocks in the US are now declining by something like 420,000 apartments annually. Against this background, a congressional study earlier this year called for a blue-ribbon commission of federal, state, and industry officials to develop a national rental housing policy. The proposal warrants consideration and in fact should be expanded to consider a national housingm policy in general. The problem is not just development of rental housing but, in fact, all housing, particularly affordable first-time housing for young families who are finding themselves locked out of the current market. If these families were able to buy their own homes, it would help reduce pressure on the rental market.
A number of questions ought to be examined by the incoming administration:
* Would ending controls actually lead to increases in new construction or in rents themselves? Some economists argue that major contributors to the decline in building activity are high interest rates and construction-maintenance costs, and not just controls. Also there is doubt that ending of controls would mean a huge upsurge in rents, since in many areas rents are already believed to be about as high as the market will bear.
* If Congress were to declare itself on record as against rent control, why halt all federal funds to rent control communities (as proposed by the GOP urban affairs task force) rather than specific funds, such as housing funds?
* Should the US be seeking to encourage new forms of housing, such as "mutual housing" associations common in Europe -- limited equity cooperatives that develop, own, and manage multifamily units?
* What about relocation help for families that would have to leave their housing if controls were lifted? Should there not be some type of national policy to ensure that landlords help find housing for displaced tenants, who, after all, have benefited the owner as much as themselves by their tenancy? And what about the control laws themselves, which vary widely between communities? Should there be a careful differentiation of which laws should be deregulated first?
While favoring an eventual return to the free market system in rental housing , we would urge that any lifting of controls be undertaken on a gradual basis, with due regard for the persons and families that rent. What must not be forgotten in the whole legalistic discussion of controls is that, for them, the rental units are their homes.