New York's rent laws are a gross violation of property rights
It started, as much mischief does, with government augmenting its power by declaring an “emergency.” It continued despite the predictable fact that the “emergency” measures made matters worse. It might end, as some but not enough mischief does, with the Supreme Court declaring the policy unconstitutional. New York City's breathtakingly aggressive rent “stabilization” regime illustrates this paradox: Sometimes the more comprehensively a bad policy is, the better, because it provokes a strong reaction.
The Constitution says private property shall not “be taken for public use without just compensation.” New York City politicians say the Constitution has its opinion, but we have ours. The Supreme Court, at its Tuesday conference, should say: We'll just see about that. It can begin by agreeing to hear the case challenging the city's Rent Stabilization Law (RSL).
To normal people, “emergency” implies “temporary.” In government's parlance, a declared “emergency” can be renewed in perpetuity — exacerbating the problem that supposedly justified the declaration.
The city's first housing “emergency” was declared 103 years ago because World War I had curtailed construction, causing rents to rise. For 10 years, rent increases and evictions were limited. Federal World War II “emergency” legislation freezing New York rents at 1943 levels came and went, then Congress authorized states to regulate rents, and in 1969, amid another “emergency,” New York City's RSL regime began. It covers approximately 1 million units, half the city's rental units. Under the “emergency,” which had been redeclared every three years for half a century, ownership of RSL-covered apartments has become attenuated to the point of nonexistence:
Government-approved rents increase at only half the rate of owners' increased costs. Owners must renew tenants' leases forever, except under a few conditions, such as a tenant refuses to pay even the artificially low rent, violates the lease, becomes a nuisance or uses the apartment for unlawful purposes.
Furthermore, tenants' rights can be inherited by any member of the tenant's family who has been living in the apartment for two years — or one year, if the family member is elderly or disabled. And “tenant's family” is defined to include grandparents, grandchildren and in-laws. And a renter's rights can be inherited by anyone living in an apartment who has an “emotional and financial commitment and interdependence” with the tenant. And sometimes an owner who demonstrates “an immediate and compelling necessity” for resuming control of a unit must pay the costs of finding the tenant an equivalent unit with an identical controlled rent.
The city says this thicket of restrictions on apartment owners' property rights constitutes mere “regulation” of, not a physical “taking” of, property. The Supreme Court, echoing two luminaries of jurisprudence, has already said otherwise.
William Blackstone (17231780), the British jurist whose thinking informed that of America's Founders, said “the right of property” is “the right to exclude.” It is the “dominion” that an individual exercises “in total exclusion of the right of any other individual.” Thomas Merrill, a professor at Columbia Law School, says, “Exclusion lies at the root of property because the institution of property is dependent on possession, and exclusion lies at the root of possession.”
In an amicus brief challenging the RSL, the Manhattan Institute and Cato Institute note that New York City's micromanaging of rental property degrades owners' rights “to a far greater degree” than did a 1975 California “emergency” law that the court struck down in 2021. This law compelled owners of agricultural properties to permit labor unions, four times a year, 30-day periods of access, for up to three hours a day, for the purpose of soliciting the support of employees. The court affirmed the owner's property right to exclude.
With policies like those under RSL, politicians can effect indirect wealth transfers without directly voting for them. As Justice Antonin Scalia said of many such transfers, they are “achieved `off budget,' with relative invisibility and thus relative immunity from normal democratic processes.” Such “off budget” financing of public policy is disguised taxation. And it is the taking of private property, which constitutionally requires “just compensation.”
An Institute for Justice amicus brief in the New York City case notes an unsurprising fact: “Rent-control laws have been shown to reduce a city's housing supply by double-digit percentages.” Artificially suppressing monetary demands for something, and thereby decreasing the incentive to provide that something, is a recipe for getting less of it.