1. Is this a decision for the judiciary or the legislature?
a. must always ask why we are imposing rent control and then must ask if the same objective can be achieved in some other way?
2. Two important questions with rent control
a. Is the ordinance constitutional in general?
i. Emergency test
a) Before rent control became popular during and after WWII, the S.Ct held that rent control is justifiable only under emergency conditions. Under this test, the court is not bound by a leg declaration that an emergency exists but may review and reject the factual assertion
ii. Reasonableness Test and Fair Rate of Return
a) The requirement of an emergency has been lessened or dropped entirely and the rent control statute has been held constitutional if (A) it bears a rational relation to a legitimate public purpose (NASH) and (B) the LL is given a just and reasonable return on his investment
i) how do you determine fair rate of return?
3. Typical Rent Control Ordinance
a. tenants are entitled to renewal leases and cannot be evicted except for good cause
b. LL has a right to a fair rate of return and can pass some costs through to the tenants
i. capital investment and maintenance costs?
c. Small family dwellings are exempt from the statute
a) tenant has become attached to the property and invested some of their self into it
iii. General rule: preservation of one's home is a stronger claim than preservation of one's business -- personal use of an apt as a home is morally entitled to more weight than purely commercial landlording
a) exceptions are when the LL lives in bldg or has attachment to bldg or when tenant is transient
iv. general rule does not apply to would be tenants -- not attached to the property -- higher value placed on making someone move out of their home by raising the rent -- no reason why would be tenant has to live in this particular neighborhood?
v. fungible versus personal property
a) home is the paradigm of personal property
b) LL's interest is generally fungible
vi. but need some level of moral objectivity
a) don't want to protect the compleat capitalist b/c he loves possessions
vii. personhood argument works best it the tenants are poor and cannot afford the market rate
iv. people stay in their apts longer and one that is much too big for them b/c it is cheaper to do so
a) inefficient use of resources
v. key money / black market / illegal subletting?
vi. studies have shown that old rent controls lead to a deterioration in the quality of the housing stock -- more recent studies show that this is not necessarily the case where the costs of improvements and inflation can be passed on
8. Who is hurt by rent control?
a. the present owner -- future owners know of the regulation and will pay less for bldg
i. In nash the court argued that he was no worse off with rent control than if the govt took the property by eminent domain -- is this true
a) would get fair mkt value with eminent domain but would not get that on the free market because of the restrictions
b. Unfairness argument -- Radin's article
i. But is it morally right to burden the landlord for no better reason than the business he is in?