The Folly Of Bernie Sanders’ National Rent Control Proposal

Cato ^ | January 27, 2020 | Ryan Bourne

[karpov]

“Landlords cannot be allowed to raise rents to whatever they want, whenever they want,” Senator Bernie Sanders boomed on Twitter in November. “We need…a national rent control standard.” Now, his presidential campaign advocates one: under Sanders’ housing proposals, all landlords nationwide would only be able to increase rents annually by one and a half times the rate of inflation or 3 percent, whichever is higher. Assuming the current CPI for Urban Consumers is the inflation measure used, that would mean a rent increase cap today of just 3.4 percent.

Given the likely unconstitutionality of a truly national rent control law, one suspects Sanders should be taken seriously but not literally. What he is really doing here is endorsing a spate of new rent control laws across states, encouraging left‐​wing activists to push for more stringent restrictions elsewhere. California has already instituted a 5 percent plus inflation cap for older buildings. Oregon has passed a rent increase cap of seven percent per year above CPI. New York just expanded protections for existing rent stabilized tenants and is expected to follow the others with a proposal for a general rent cap.

But that Sanders’ national proposal probably won’t or can’t be implemented doesn’t mean his reasoning won’t damage housing policy across the country. His claim that landlords can charge “whatever they want” entrenches the idea that rents are set through greed or market power, not supply and demand. And if crude, low level rent increase caps are implemented even in individual cities, it could have disastrous consequences in “hot” markets – particularly given proposals like his are shorn of the exemptions one usually sees for small‐​time landlords, new properties or vacant units, that can provide a safety valve for the rental market.

[ClearCase_guy]

All housing is the property of the government. They will with it as they wish, comrade.

[OttawaFreeper]

Let me guess, Bernie wants to put Robert Taylor housing project like places in every town or city in the United States.

[Rashputin]

It’s dangerous to say the State should allow the market to decide such things Comrade. Perhaps you need a visit from your local Political Officer. /sarc

[Red Badger]

[I want the USA back]

Right. He’s signaling lefties throughout the country to press for rent control laws.

The government does not have the right to determine a maximum amount of increase in the price of any product, at any time, and in any way. Current rent control laws are invalid.

It’s another step on the path to communism, in which you own nothing, and the government owns everything.

This crazy old man is a communist.

[Rurudyne]

Give dat Lock Ness Monster it’s three fiddy!

[Amendment10]

"We need…a national rent control standard."

FR: Never Accept the Premise of Your Opponent’s Argument

Patriots are reminded that the states have never expressly constitutionally given the feds the specific power to establish national rent control standards.

”From the accepted doctrine that the United States is a government of delegated powers, it follows that those not expressly granted, or reasonably to be implied from such as are conferred, are reserved to the states, or to the people. To forestall any suggestion to the contrary, the Tenth Amendment was adopted. The same proposition, otherwise stated, is that powers not granted are prohibited [emphasis added].” —United States v. Butler, 1936.

So post-17th Amendment ratification, constitutionally low-information Sen. Sanders is unthinkingly trying to expand the already unconstitutionally big federal government’s powers with his constitutionally indefensible campaign proposal for national rent control.

If Sanders wants to experiment with rent controls then he needs to get himself elected to a state government in a state whose citizens are willing to let him experiment with rent controls using 10th Amendment powers.

"10th Amendment: The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

In the meanwhile, patriots need to elect a new Congress that will promise to fully support PDJT’s already excellent work for MAGA, now KAGA.

Remember in November!

MAGA! KAGA! (Keep America Great Always!)

[kingu]

Can’t wait until California voters get suckered into closing the “loophole” that permits business to not have their property grossly reassessed each year (Prop 13)

So many will be shocked that even with rent control, their rents well be going up 35% or more.

Oregon’s 7% + CPI is also short of planned taxes with a typical 3% increase in assessment value plus an 8% yearly increase in services (trash, sewer, water)

Oh, and California’s AB5’s elimination of the independent contractor (and independent journalist) will become great fun for owners who use on property management. They are on the hook for hourly minimum wage for worked or on call hours, plus benefits.

Fun fun times. Open license to issue unlimited bonds and taxes with no worry about constituents rising up over increased rents. And next to ban criminal background checks!

[RainMan]

I am a Multifamily Investor, and I am in the largest Multifamily training group in the Country. So here is the funny thing about this.

First, an apartment complex is probably going to change owners every 3-7 years. The reason is pretty simple … more CAPEX needs to be funded. So, how do you get more CAPEX for a complex, you sell it, and the next group of investors raise the purchase price and capex necessary to make the place nicer. Without having any CAPEX to invest, the property starts to lag behind its competitors in how much rent it can charge.

The CAPEX is usually spent within the first 90 days from closing, so that rents can be increased sooner. Holding onto CAPEX is actually stupid, because then it becomes committed but non performing investments. This is why it has to be sold … there is no more money for CAPEX after it is consumed. OK, so the investors upgrade the property, and subsequently increase rent to get it back to market rate. The investors expect a return on their investment, which is normally around 6-10%. If you cant offer a return like that, then the investors will not invest, because the investors are not run of the mill lets put our money in mutual funds kind of people. They are sophisticated investors that have access to a lot of investment mechanisms. So now you put in rent control. This would not have an immediate effect, but the effect would be over years. As properties start to go into disrepair, the current owners would not be able to sell them to repeat the repair, raise rent cycle. Without new money, the current owners just cashflow the property into the ground. This is why Rent Control is a recipe for creating slums. You are taking away the ability to attract new CAPEX.

[PGalt]

Bourgeois Bernie. Can we declare your homes SANCTUARY HOMES, comrade cracker?

[Flash Bazbeaux]

““Landlords cannot be allowed to raise rents to whatever they want, whenever they want,”

Bernie is 100% right. The free market denies Landlords the right to raise rents to whatever they want, whenever they want. The most they can raise them to is what the market will bear.

[Mr. Blond]

Will there be limits on their property tax increases?

[ronnie raygun]

So let me put my money in real estate make the investment and not make a profit