Berkeley’s Rent Control Ordinance Violates the U.S. Constitution By ROBERT CABRERA

Tuesday December 07, 2004

The Taking protections of our Federal (5th Amendment) Constitution is a significant protection and the envy of people throughout the world. In an era when property in parts of the world is taken by the use of force without just compensation to those displaced, this American right created in our constitution must be applied even under the most benevolent circumstances such as the good intentions of people like Chris Kavanaugh (Letters, Daily Planet, Nov. 19-22). 

However, rather than strengthening or merely preserving these protections, the trend is towards their eventual dismantling. Without property rights freedom is meaningless. 

Let me give you a real life example of the chaos that ensues without property rights. Many years ago I met a couple who had owned what they described as a very nice house somewhere in Cuba. They had worked all their lives to own it. One day during the Cuban revolution their maid and gardener refused to let them enter the house stating that since they had toiled in it for many years it rightly belonged to them more than to the holders of the title. The couple lost the house and belongings since there was no legal recourse; seeing the writing on the wall they left the island for the U.S. 

A couple of decades later they spoke with someone who told them that the maid and gardener had been soon evicted themselves and that a Cuban functionary had taken their place. The maid and gardener apparently had no legal recourse any more than the original owners. 

Rent control is merely the chipping away of the Fifth Amendment of the US Constitution—and the chips are flying and taking us ever closer to the Third World Cuban chaos described above.  

On its face rent control is a clear violation of the Fifth Amendment which states: “nor shall private property shall be taken for public use, without just compensation.” 

Without being a lawyer, it is clear to anybody that a property placed under rent control is worth less and hence the owner is deprived of part of its value, hence it is unconstitutional under the Fifth Amendment. 

Rent control also violates another section of the U.S. Constitution (Bill of Rights) that provides in Section 10: No state shall pass any law impairing the obligation of contracts. In other words if a landlord and a tenant want to agree on a rent level and enter into an agreement, the state should not interfere. 

These basic property rights are self evident: If I own something you can't take it away from me (it is called stealing). If one person wants to voluntarily purchase a legal good or service from another, the government should not get in the way. 

From an economic standpoint, rent controls do not work. Look up rent control in the index of any Econ 101 text and you will see that it is routinely used as an example of why price controls in general do not work. Some even provide graphs to illustrate the failure. Here is an excerpt from one of these college books: “Ironically, although rent controls are often legislated to lessen the effects of perceived housing shortages, in fact, controls are a primary cause of such shortages.” 

In plain English: Rent control makes housing even more scarce. 

Rent control laws are passed with good intentions such as helping low income tenants. However since rent controls create shortages, for any given vacant apartment there will be many applicants and the landlord will invariably chose the most qualified which means that the poorest will be passed over.  

Rent control also creates the incentive for prospective tenants to pay “key money” to tenants who are about to give notice. When I lived in NYC many years ago, I gladly entered into an agreement with the departing tenant (Section 10 of Bill of rights mentioned above) to whom I paid one thousand dollars to obtain the studio apartment renting for $125 per month. This thousand dollar amount was my life savings at the time. 

The sad part about rent control is that the politicians and bureaucrats who politically or financially benefit from this failed housing policy will always want the public to focus not on the failure of rent control as public policy but on the housing provider. They will always characterize the tenant as victim and landlord as target. And since rent control is the crown jewel of Berkeley politics (tenants are more numerous that landlords), we can expect this state of affairs to continue. 


Robert Cabrera is a Berkeley resident.