Local Limits on Rent

When Phase III began on Jan. 11, federal rent controls were not loosened, they were abolished. Worried Congressmen are already trying to get them back on the books. Last week the House Banking Committee voted to roll back rents to the levels of Jan. 10. However the debate over federal rent controls is resolved--the White House still opposes them--a good many of the nation's renters will still have some protection against gouging on new leases. For the first time since World War II, a growing number of states and cities are passing their own rent-control measures.

Much of the pressure that forced the move has come not from tenement-jammed cities but from the suburbs, where the voices of leaseholders have usually been drowned out by a chorus of homeowners and real-estate men. Last week, ruling against a vigorous challenge to rent control mounted by landlords, the New Jersey Supreme Court upheld the right of municipalities to regulate rent prices. Some 26 towns --mostly bedroom communities near New York and Philadelphia--have already passed ordinances limiting increases on new leases to the amount necessary to reflect rises in taxes and the overall cost-of-living index, and dozens of other New Jersey communities are expected to follow suit. Outside Washington, D.C., Maryland's Montgomery County has limited rent increases to 1.5% annually, and landlords in northern Virginia stemmed local rent-control fever only by promising to hold down increases to 6%.

Massachusetts has reintroduced rent control recently in Boston and four of its suburbs, amid literally explosive controversy. In Lynn, an industrial community ten miles north of The Hub, the battle over a control law has escalated into what Mayor Tony Marino calls "sort of a war." In mid-February, a grenade exploded outside a window of the city's most outspoken rent-control advocate, a Marxist-oriented community organizer; two weeks later, arsonists burned down a $60,000 home belonging to a realtor who had led the fight against controls. No one was hurt in either incident, but the war is not over. Under intense pressure from real-estate owners, the Lynn city council has voted three times to disband the pro-tenant rent board; Mayor Marino, who sides with the renters, has vetoed the action every time.

Invariably, the pressure for control has followed rent increases that reflected a shortage of local housing. Such a situation can develop for widely varying reasons. Voters in Berkeley, Calif., passed a rent-control law after builders --fearing for property values in a city where radicals had gained a third of the seats on the council--cut back on new construction. Lynn's problems were caused primarily by the loss of 1,000 low-income rental units under urban-renewal programs, making vacant apartments harder to find. The market is tight in New Jersey largely because disaffected residents of New York are moving there in droves--despite the fact that more than 1,250,000 apartments in New York are still under rent-control provisions dating from 1943.

Landlords insist that control laws only exacerbate shortages since they nearly always cut down on an owner's profits and thus reduce his incentive to build new units. "Rent control never works," says New Jersey Senate President Alfred N. Beadleston. "For the poor it results in slums, and it makes crooks out of high-income tenants because they pass money under the table for choice apartments." That certainly seems to be the case over a long period. New York City apartment dwellers have long been used to passing "key money" to vacating tenants of desirable apartments. Especially before the city made the law more flexible in 1969, some landlords were collecting such ridiculously low rents that they abandoned their buildings.

On the federal level, there is an added argument against rent control that may yet enable President Nixon to stop the congressional drive to enact it. Even some liberal economists contend that adapting federal standards to the bewildering variety of local housing conditions across the country is an administrative impossibility. But local laws are another matter, particularly in communities where a housing shortage has created an overwhelming temptation for landlords to gouge. In those areas, at least for a limited period of rapid inflation, rent controls may be an inescapable necessity.

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