Rent Controls In The Big Apple - Essay Example

Rent Controls in the Big Apple During the time of the Second World War there were many price controls implemented due to the unpredictability of those times. There were many industries that were affected by price controls in addition to rents, such as rubber, petrol, coffee, and shoes. However, by the end of the Second World War, most of these price controls were abandoned, except for those used to control house rents. Even today, around two-thirds of New York City’s rentals still have some form of price restraint in tact.

In fact, the situation is so absurd that the same type of house rental can cost two wildly different amounts depending on where the particular house is located. There are different levels of control, however: pre-1947 buildings, rent stabilization buildings, and unregulated apartments. The one section of society that loses out in this arrangement is the poor. Sixty years after the temporary measure of rent constraints were introduced, the state government will discuss the state of this policy soon; it will likely be continued for the foreseeable future.

There was, however, an attempt to rid the market of these price restraints back in 1997. A debate ensued between the Republican-dominated Senate and the Democrat-led assembly. The result of this argument was that a compromise was reached—23,000 renters were freed of rent constraints out of a group as large as one million. The “lucky” people who qualified for this arrangement had to be extremely wealthy—household incomes of more than $175,000 per year for a period of two years, or those renting apartments that cost more than $2,000 per month.

The result of this decision was that the poor remained under strict price controls. One thing that was hidden in that agreement was that the next date to re-consider rent constraints would change to a year without elections, thus taking politics out of the decision as much as possible. Since 1997, New York’s politics and markets have changed to the extent that not too many people are likely to oppose rent constraints now. Most economic experts do not support rents constraints because it severely affects the supply and demand markets and results in unwanted side effects.

Many landlords and tenants do not have the freedom to work out their own deals; they are locked into whatever agreement is decided by the law. One consequence of the ill-nature between landlords and tenants is that the law makes it virtually impossible for a landlord to evict a criminal. Henry Pollakowski, an economist at the MIT Center for Real Estate, says that the benefits of price controls go to those residents who are wealthy. The lower class receives little or no benefit from these rent constraints.

I personally feel that price restraints should not be introduced unless there is a very strong reason for it. Times like war and famine are acceptable instances to support the implementation of price controls because stability is lacking and thus prices need to remain constant for the benefit of the average citizen. However, once these times of instability are over, any price restraints should be done away with because the market needs to function according to supply and demand.