There's an 18-inch stack of D.C. laws on my desk, all about rental housing. Not, mind you, anything about codes, evictions or the traditional stuff of landlord-tenant law. Only laws about rent control and sales and conversion of rental housing, passed and amended (repeatedly) since 1975, are included. But scope, not bulk, is the real problem.
These laws go far beyond regulation. Taken together, they have transformed the local rental housing industry into a public utility.
Consider the following. A landlord who wants to improve or rehabiltate his property must first get the rent administrator's okay. If he does, resulting rent increases are limited a percentage of the previous rents, even if he can't recoup the amount of money spent or realize the value added. Rents generally can increase each year to reflect increases in the local CPI -- but only up to 10 percent. Hardship petitions from landlords will be entertained, but not to allow more than a 10 percent return. And in computing that return, certain operating expenses must be excluded.
If the beleaguered landlord decides to quit the rental housing business, he must let his building sit empty for a year before he can rehabilitate it or lease it for any other purpose. Under no circumstances can he convert it to a hotel or demolish it to construct a commercial building. He can convert it to condominiums only if half of his non-elderly tenants approve. And even if they do, elderly tenants with incomes under $30,000 can stay on permanently, under rent-controlled leases.
These laws are inspired in part by compassion, but what they really reflect is an uncaring society. Through them, this city and others have foisted on individual landlords the job no one else wants: housing our low- and moderate-income families and the elderly. In the short run, it's cheaper to deal with a housing shortgage and high operating costs than to increase housing subsidies. It's easier, too, than thinking of alternative to preserve the housing stock, and it's politically expedient, since no one but the landlord's complains. In fact, it's a big crowd-pleaser, so people think we must be doing something right.
But that's not so. These laws are no solution at all, but a distraction from the real problem of an inadequate supply of affordable housing. They provide no encouragement to prolong the life of existing housing units. Worse, they discourage production of any new units. With multi-family starts down 75 percent in the 1970s from the prior decade, it's not too hard to see where all this is leading.
True, some landlords had it coming; rent gouging and abrupt evictions are not unheard of, and tenants across the country have made it clear they won't take such conduct lying down. Housing is a basic human necessity, and the providers cannot ignore the significance of their trade. Leasing home is not, after all, like selling Cuisinarts. But this doesn't make all these laws either sensible or fair.
It's clear by now that this country is not yet prepared to deliver on the 32-year-old congressional promise to ensure a decent home for every American family. Unwilling as a society to meet this commitment, we sit back and watch as housing subsidies are cut drastically and tax-exempt financing of housing for low- and moderate-income families is threatened by growing hostility. At the same time, we cringe even at the thought of capping the homeowner's interest deductions -- a tax expenditure that could go instead to develop affordable housing. Investors will shift their money to commercial development to get favored tax treatment with nary a thought about the impact on housing. Uppeer-income tenants who could support new rental housing hunt for condos and townhouses to benefit from tax deductions and hedge against inflation.
In short, the rental housing shortgage is no accident. It's our own doing, but the landlords have been tagged to hold the bag. Fair?
All indications are that the federal tax and housing policies will consciously turn more and more against rental housing. If the local response is simply to pinion the owners, the rental housing stock will shrivel and the remaining units will deteriorate. The District government should not be a bystander to this process. It can promote rental housing development by using federal block-grant money to write down costs, enticing local pension funds to get into the business, encouraging the use of new forms of mortgages, reconsidering its own tax credits and allowance and leveraging the limited available federal housing subsidies. It must seek out other, better ideas from people who know development, and retire the laws that are part of the problem.
Rental housing cannot be preserved here -- or anywhere -- if we first kill at the landlords.