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A recent study published in the Journal of Housing Research titled Rent Regulation’s Pricing Effect in the Uncontrolled Sector concludes that rent controls, designed to lower the cost of housing for renters, may have the perverse effect of increasing rents for tenants in the unregulated sector. The study concludes that unregulated rents (such as those for vacancy decontrolled units in Berkeley) are $100 greater than they should be if rent controls were not in effect. 

Cal students are becoming increasingly aware of this phenomenon without the benefit of studies. Daily Californian columnist Brook Shaaf in his May 12, 2000 feature states: “The city can do its part by getting rid of all rent control. When people pay below market they hoard apartments, which means higher costs to everyone not squatting for decades, i.e. students.” The study and Brook Shaaf merely lend credence to the often heard Berkeley landlord lament: “I’d love to rent to the class of ’04 but I’m still renting to the class of ’78.” 

The study also mentions that if new construction is allowed to compensate for the supply and demand imbalance caused by rent controls, the gap is closed in 20-30 years and eventually this $100 gap disappears. That is good news for the Cal class of ’30. For now, today’s students must resign themselves to paying at least $100 more than they should for Berkeley private rental housing. 

However, Berkeley is notorious for its obsessive contempt for apartments, apartment owners, and new construction (even if delivered by the non-profits.) According to the current General Plan project, Berkeley is the only Bay Area city to have lost housing since 1980. Furthermore, developers are loath to invest here since the City of Berkeley has a full-time paid lobbyist in Sacramento whose No. 1 goal is the repeal of Costa-Hawkins, which mandates not only vacancy decontrol, but also guarantees that new construction will not be recaptured by rent regulation. To developers Berkeley is too politically risky a city to invest in. 

Year one, of the 20-30 years of new construction necessary to compensate for rent control’s negative effects, is not yet on the horizon. 

One could actually postulate that since the beginning of vacancy decontrol (1/1/99) Berkeley tenants, including the Cal class of ’03 and other recent arrivals, who began renting after that date are paying on average more than the study’s $100, since the trickle of new construction has negligibly affected the massive loss of rentals due to owner occupancy conversion of the Eighties and Nineties. For example, according to the U.S. Census, Berkeley had 4,900 rented single family houses in 1980, compared to less than 800 today, representing an 84 percent loss in rental housing in that category. Hence, as a corollary one could project that the $100 gap will actually continue to widen as this city clings to a paradigm that refuses to allow new construction to compensate for job creation and an increased university enrollment. 

It is truly astonishing that the Progressive majority of the Berkeley City Council continues to ignore the perverse effects of rent controls which benefit an increasing number of middle- and upper-income renters –who need no subsidies – at the expense of the poor, the elderly and students for whom $100 is a significant portion of their income and makes a huge difference in their quest for housing. 

Robert Cabrera is president of the Berkeley Property Owners Association.