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About all he can do is refuse to build new housing. Some invasion of the rights of the landlord is of course implicit in the idea of rent control. Willis also points out that, “If the history of rent control teaches any lesson, it is that once such controls have been imposed, they are difficult to remove.” Willis mentions Austria’s imposition of rent controls before World War II which through republican, authoritarian, and Nazi periods, that only ended when the national government “permanently assumed the responsibility for providing housing.
In the United States, rent control has always been controversial. As far back as the onset of World War II, when the federal government considered rent control, the National Defense Advisory Commission saw the relationship between low supply and high prices and recommended that controls only “be resorted to only when new construction is not sufficiently rapid and extensive to meet the need and where local communities can find no other means to check a disastrous rise in rents.”
Willis ends his history with an outline of arguments leveled at rent control up to the post war period, some valid in his view, and others “claptrap” and “spurious.” Those arguments are very similar to the ones we hear today.
• Rent control stifles new construction. Controls create uncertainty about whether the costs of new construction will create enough return to recoup the costs of construction and operations.
• Rent control drives existing housing off the rental market. Controls do this for the same reasons they stifle production. When revenues are low, and costs to operate rentals get too high, owners covert units into a use other than rental housing.
• Rent control leads to large public housing programs. This warrants further discussion, but even in 1950 there was a sense that once rents are
controlled, private business leaves the housing economy, and a situation like post-war Austria will arise: state ownership and management of all housing.
• Rent control causes hoarding. “Tenants therefore continue to occupy apartments larger than they need after their families have decreased in number; this results in a form of hoarding of space.” Willis goes on to say that the criticism is that, while rent and eviction control may benefit those who have a place to live, it is of less assistance and may even be a hindrance, for the reasons just stated, to those who do not.” When tenants, rationally, don’t want to give up a controlled unit, supply is again suppressed and those with no place to go suffer.
• Rent control represents a taking or theft of private property. Willis calls this a “specious” argument citing its makers as suggesting that since it results in a tenant living in his property without consent, rent control violates the basic notion that “thou shalt not steal.” We’ll see later, though, that takings law has evolved beyond this.
• Rent control violates the bedrock legal principles of a contract. Willis, in his footnotes cites an important case at the time, one that went against landlords, Block v. Hirsh. The dissent in the case written by Justice McKenna is one that articulates both the problem of taking property without due process and contract. As to taking, citing the 5th Amendment to the U.S. Constitution, McKenna found that at other times of economic distress, government “did not induce the relaxation of constitutional requirements nor the exercise of arbitrary power.”
McKenna writes that the “Rent Law” from Washington, D.C. being considered by the court in Block, “is contrary to every conception of leases that the world has ever entertained, and of the reciprocal rights and
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