Long-term renters will benefit at the expense of newcomers
People who stay for lengthy periods of time in the same apartment often pay rents substantially below market value, while newcomers are faced with exorbitant prices for units sublet from other tenants. Distortions and inequities result. A book on housing and the homeless by William Tucker reports several examples: Actress Ann Turkel spends only two months each year in
New York. Turkel pays $2,350 per month for a seven-room, four-and-a-half bathroom duplex she has rented for many years. Identical apartments in Turkel’s building sublet for $6,500 per month. Former mayor Edward Koch pays $441.49 a month for a large one- bedroom apartment that would probably rent for $1,200 in the absence of rent controls.
Koch kept the apartment the entire twelve years he lived in Gracie Mansion (the official mayor’s residence) because had he given up the apartment, it would have been extremely difficult to find another one.
Imposing rent control laws may sound like a simple way to deal with high housing prices. However, the secondary effects are so damaging that many cities have begun repealing them. In the words of Swedish economist Assar Lindbeck: “In many cases, rent control appears to be the most efficient technique presently known to destroy a city – except for bombing. Though this may overstate the case, Lindbeck definitely has a valid point.