Colorado Members Oppose HB1140 (Imposed Rent Control)
January 22, 2008 – 7:06 pmColorado NARPM members oppose bill HB1140 that is scheduled to go before the committee on Thursday Jan 24th.
Bill HB1140 would give counties and municipalities the ability to impose rent control on private residential property. I happen to agree with the Colorado Members of NARPM that if this bill passes, local government could wrongly use rent control as a solution for the affordable housing shortage in the state of Colorado.
Similar to how increasing the minimum wage will negatively affect the unemployment rate of minimum wage workers, rent control inevitably decreases the supply of affordable housing and lowers the quality of rent controlled housing.
The great economist Henry Hazlitt, explains rent control in his book “Economics in One Lesson.”
Rent control, however, encourages wasteful use of space. It discriminates in favor of those who already occupy houses or apartments in a particular city or region at the expense of those who find themselves on the outside.
The housing situation will deteriorate in other ways. Most important, unless the appropriate rent increases are allowed, landlords will not trouble to remodel apartments or make other improvements in them. In fact, where rent control is particularly unrealistic or oppressive, landlords will not even keep rented houses or apartments in tolerable repair. Not only will they have no economic incentive to do so; they may not even have the funds.
The effects of rent control become worse the longer the rent control continues. New housing is not built because there is no incentive to build it. With the increase in building costs (commonly as a result of inflation), the old level of rents will not yield a profit.
A further effect is the erosion of city revenues, as the property-value base for such taxes continues to shrink. Cities go bankrupt, or cannot continue to supply basic services.
The very fact that the legal rents are held so far below market rents artificially increases the demand for rental space at the same time as it discourages any increase in supply. So the more unreasonably low the rent ceilings are held, the more certain it is that the ‘‘scarcity” of rental houses or apartments will continue.
The injustice imposed on landlords is flagrant. They are, to repeat, forced to subsidize the rents paid by their tenants, often at the cost of great net losses to themselves. Men in other businesses, who support the imposition or retention of rent control because their hearts bleed for the tenants, do not go so far as to suggest that they themselves be asked to assume part of the tenant subsidy through taxation. The whole burden falls on the single small class of people wicked enough to have built or to own rental housing.
So we come back to our basic lesson. The pressure for rent control comes from those who consider only its imagined short-run benefits to one group in the population. But when we consider its long-ran effects on everybody, including the tenants themselves, we recognize that rent control is not only increasingly futile, but increasingly destructive the more severe it is, and the longer it remains in effect.
4 Responses to “Colorado Members Oppose HB1140 (Imposed Rent Control)”
Dan, great post. I agree on your stance to oppose rent control. San Francisco is one of the worst cities in the nation concerning rent control, so I know full well the creek you are paddling in.
To add full perspective to the argument, the problem with citing economic theory is that it is generally from the minority perspective. The highly educated, logical, professional people are far out numbered by lesser informed and/or alternately motivated people. In major metropolitian cities like SF, renters far out number property owners. What makes sense on a macro level for city/state, doesn’t make the same sense on a micro, short-term level for renters. Renters just want to pay as little rent as possible, period. And they vote accordingly, without conscience for future ramifications on buying a house or three someday.
The Constitution originally said “…the pursuit of property” but was then changed to “…the pursuit of happiness”. If the American Dream is still to own property, then vote No on rent control.
By Matt on Jan 23, 2008
Matt. Well said.
By Dan on Jan 23, 2008
Hello to all! I am not sure if this situation is the same as to what I just read. Will someone help me out to figure out what to do. We are looking to rent in Rifle Colorado, where there is alot of work going on and the pay is rather well. However, the rent prices are extremely high. For a decent house, it is no less than $1,700 a month pluse your utilities. There has to be some kind of law that will protect the renters. I am in no way for a set rent amount, but what about the average person that only makes minimun wage or just a little above it. Even with a couple working in the home, this amount is unaffordable. Please, someone give me some number to contact about the situation. I called a realtor the other day about buying a house. He simple told me that the market went up because the work was up, come on, that is not an excuse to make the average person live more so in porverty. I think more about the average person that I do myself. Please help!! Send me in the right direction to make the rent market fair!!
By Betty on Feb 21, 2008