Thursday, November 8, 2012

The Ethics of Rent Control: Two points of view

As part of a shiur today, I discussed whether rent control legislation (limiting eviction rights and limiting rental fees) is consistent with the Torah's business ethos.

These laws, in their modern incarnation, were first put into place in Europe in the mid-19th century, as a response to housing shortages during wartime, and after those wars they were challenged as detrimental to landlords as well as people seeking places to live. Disputes between Jews regarding these laws led to responsa in Europe as well as North America, and particularly during the World War I era.

Here are two opposite views on the subject; it's interesting to see the two sides presented so unequivocally:

Rabbi Yosef Eliyahu Henkin (20th century New York), Kitvei Rav Henkin, Teshuvot Ivra 96:9
  חוק הדירות של הממשלה הוא ישר, מתוקן ומקובל בפרט בערים הגדולות, כי הוא מכוון נגד מפקיעי שערים ופושטי עורות עניים. ואף שלפעמים נראה כעול נגד בעלי בתים שאינם עשירים, הנה כן דרך החוק שלפעמים נפגע ביושר ואזלינן בתר רובא. ומה שהחק מפלה בין דירות עניים לבתי לוקסוס אינו מגרע כח החק אלא מעדיפו ומטהו אל צד היושר...  
The government's law of tenancy is just and accepted, especially in big cities, for it is targeted against those who gouge prices and skin the hides of the indigent. Even if it appears, at times, as cheating landlords who are not wealthy, that is the way of law, at times violating justice. We follow the majority [of cases]. As far the law's differentiation between dwellings of the indigent and luxury homes, this does not diminish the law's strength; it increases it and makes it more just.

R' Dovid Menachem Munish Babad (19th-20th c. Poland/Ukraine), Chavatzelet haSharon Choshen Mishpat 8
 עכשיו השכל גוזר להיפך, שזה עוול גדול נגד בעלי הבתים, שמתקיים בהם "שורך טבוח וכו'", וזרים שולטים ברכושם ואין להם מושיע וגם להשוכרים אין זה תקנה רק להשוכרים הישנים אבל הרי בכל יום מתרבים אנשים חדשים שצריכים לשכור דירות ולהם התקנה הוא קלקלה שעי׳׳ז מתיקרים הדירות ביותר ואין מוצא דירה מה שלא היתה זאת קודם המלחמה, ובפרט שידוע לנו שעיקר החזקת החוק הזה הוא בא ע״י איזו נבחרים חפשיים שיש בהם דעות ושיטות הקאמוניסטען וסאציאליסטאן ללחוץ את העשירים ולקחת ממונם שכל אלו השיטות הם נגד דעת תורה 
Today, logic dictates the opposite, that this is a great cheating of landlords, fulfilling [a biblical curse], "Your ox will be slaughtered before your eyes, and you will not eat therefrom." Strangers control their property and they have no saviour. This doesn't even aid the renters, only the senior renters. Each day there are more new people who need to rent dwellings; for them, this repair is destructive, causing the rent to increase greatly, and one cannot find a dwelling, which was not the case before the war. This is especially true when we know that the law comes from certain elected officials who are liberal, with communist and socialist views, in order to oppress the wealthy and take their money; all of these views are against that of the Torah.


  1. It makes a large difference the date of the second teshuva. R' Babad was the Rav of Tornopol, which was under Soviet rule for 4 years, from 1917 until the Treaty of Riga in March, 1921 (when it as passed to Polish rule).

    The teshuva seems to be against communists and socialists, and the social turmoil caused by Word War I and the Russian Revolution (including the abandonment of the countryside for cities in Russia and its westerly neighbours after nationalization of the farmland).

    He is claiming that the laws enacted are NOT just, and the landlords have no recourse in case of a dispute. To me, this sounds like this was in the time of Soviet rule over his city, and he was saying that laws that are put in place to ensure that landlords will lose control of their property are completely unjust.

    This is completely different from the reality of R' Henkin, who probably wrote his teshuva after FDR's New Deal, which was a just law. In all jurisdictions that I know about in Canada and the States, if tenant protection laws are in place, there is a separate court-like system for dealing with disputes. As well, there ten of thousands, ranging in sizes from small to large, operating in these jurisdictions. If these laws were not fair and overly oppressive, I am sure they would find a more lucrative investment.

    Basically, it seems to me that they agree that "Just Laws" are good, and "Unjust Laws" are bad. When you live in a communist country that wants to forcibly nationalize everything owned by the wealthy, then it makes a lot of sense that those laws are "Unjust Laws". When you live in a "Medina Shel Chesed", the situation may be different.

    1. I quite agree. I made the point re: the Russian Revolution in the shiur (although that teshuvah is actually undated). Rav Henkin wrote his teshuvah in 1951.

  2. One question is:

    If an investor parks his money in Place A (let's say rental housing) and not Place B (let's say a gumball machine factory), why should there be government limits on his return in A but not B? Going in, who would choose A knowing its profit potential was hemmed in more by government? So we might end up with more gumball machines and fewer apartments. Or the landlord might skimp on services to tenants, to make his money in a less savory way.

  3. "This doesn't even aid the renters, only the senior renters. Each day there are more new people who need to rent dwellings; for them, this repair is destructive, causing the rent to increase greatly, and one cannot find a dwelling"

    R'Babad understands the practical (as opposed to moral/property rights) argument against rent control. Rent control acts as a disincentive for the creation of new rental units and ultimately makes things worse. Also, over time rent control tends to primarily protect more affluent and well-connected renters as they have the legal and political means to prevent the landlords from redeveloping, preventing subletting and lease transfers, etc.

    The R'Henkin/R'Babad difference lines up remarkably well with current LW/RW lines -- R'Henkin is a liberal focused on the intent of the law, R'Babad a conservative focusing on the actual outcome.

    1. I don't know with what rent control laws you are familiar, Yannai, but in Canada (where this shiur was given) every province with a Tenant Protection Act (or something similar) only legislates the valid reasons for eviction and how much rent can be increased every year (based on the CPI). If a landlord wants to redevelop, there is no restriction, just permits like any other redevelopment project. As well, as soon as the unit is vacant, the landlord is permitted to set the rent to whatever they feel.

    2. I'm in Canada too, but 'Rent Control' does not usually refer to generic tenant protection laws but to specific regulations that keep rents below market rates (at the expense of the landlord). I believe that this was a major problem in NY in the 1980s and resulted in landlords walking away from buildings for which the controlled rent did not cover costs.

      Because this creates enormous incentive for landlords to get rid of grandfathered tenants, the regulations make it practically impossible for landlords to get rid of tenants (i.e. all leases give tenants infinite renewal options and eviction becomes extremely difficult because of the suspicion that the landlord simply wants to get new higher-rent tenants). These regulations often contain provisions that prevent redevelopment because otherwise landlords could use redevelopment as a pretext for eviction when capped rents got too out-of-line with property values.

      From Wikipedia:
      Economists from differing sides of the political spectrum, such as Paul Krugman[42] and Thomas Sowell,[43] have criticized rent regulation as poor economics which, despite its good intentions, leads to the creation of less housing, raises prices, and increases urban blight.

  4. "This is especially true when we know that the law comes from certain elected officials who are liberal, with communist and socialist views, in order to oppress the wealthy and take their money;"

    Socialism is not the same as Communism, and one can be liberal without being either of the former. Given the lack of care with which these three terms are being thrown around and conflated, one would be justified in suspecting that the author exhibits similar intellectual rigor in constructing the rest of his argument, and finding it difficult to take seriously as a result.

    1. bratschegirl-
      In an abstract world, I would agree with you. The author, though, lived in a world in which socialism and communism were conflated by their own proponents.

    2. He certainly did. Does that affect the weight given to his point of view in a different world?

    3. In terms of taking the comments about socialism literally, yes; he had a different socialism in mind.

    4. So I guess my overall question, then, is this: Given a teshuvah that seems so very specifically geared to the social and political circumstances of a particular time and place, how generally applicable is it in circumstances that may not be similar?

    5. I'd suggest first looking at the teshuvah as a whole; it's available at (that's the first page). The particular reference to Communism and Socialism should not be taken as the logic of the entire responsum.