EDITORIAL: Rent control destroys cities
Rent control is how you destroy a city without even trying.
February 3, 2023 - 9:01 pm
Swedish economist Assar Lindbeck gets credit for observing, “In many cases, rent control appears to be the most efficient technique presently known to destroy a city — except for bombing.” So naturally, the progressives in the Biden administration have announced their intention to impose a form of rent control on the nation as a whole.
What could go wrong?
Last week, the White House floated the idea of issuing a handful of executive orders to “strengthen tenant protections and encourage rental affordability.” The list includes a slew of bad ideas that will only make things worse.
The priority is to force Fannie Mae and Freddie Mac to create “anti-price gouging protections” and “just cause eviction standards” on landlords with government-backed mortgages. As the Wall Street Journal notes, this would make it harder for property owners to raise rents or evict deadbeat tenants. In addition, the administration wants “the Federal Trade Commission to issue ‘new regulation defining excessive rent increases’ as an unfair trade practice.” This would greatly expand Washington’s power over housing markets.
The executive orders, Reason magazine reports, would also potentially limit the use of background checks by landlords and limit evictions in public housing.
It’s unlikely that this push could survive constitutional muster, but the Biden administration has proven it recognizes few constraints in that regard. Former federal housing official Mark Calabria, now with the Cato Institute, called the proposals “legally dubious.”
This power grab also does nothing to address the actual problem, which involves supply and demand issues exacerbated by government itself. If the Biden administration truly wants to make things easier for renters, it would encourage states and local governments to pare the regulatory thicket that discourages investment in new housing and deters landlords from entering the marketplace.
The president acknowledged reality last year with a proposal to give federal grants to jurisdictions that reform zoning and land-use policies to encourage housing construction. The policy in practice, however, has morphed into litte more than a slush fund.
These proposals won’t improve housing affordability. What landlord will seek a loan from a lender that demands a rent control provision? How does making it more difficult to vet problem tenants encourage the construction of more rental properties? How does empowering the FTC to harass local landlords advance the cause of affordable housing?
The Biden economic braintrust has already brought us soaring inflation and record gasoline prices. Unfortunately, it appears they’re not done yet.