Ari Armstrong, Business/Economy, Exclusives, Featured, Housing, Legal, Uncategorized

Armstrong: Sympathy for the property owner

Imagine if someone had proposed, during the present pandemic emergency, that, because food is so important, people should just be able to walk into grocery stores and walk out with their groceries, all without paying. We all know how that would play out. People would stop trying to fit their shopping within their budgets, and stores quickly would go bankrupt.

Substitute housing for groceries and property owners for grocers, and this is similar to what some people advocated in Colorado. Joining other activists, Denver councilor Candi CdeBaca—who once called for “community ownership of land, labor, resources, and distribution of those resources”—called for an outright rent freeze.

Governor Jared Polis, by contrast, only delayed evictions and forbade late fees on rent payments. His most recent such order, of June 13, delayed evictions by 30 additional days and declared “tenants shall have the opportunity to cure any default for nonpayment” within this period. Unfortunately, some people may wait out that period and then leave without paying in the hopes the property owner will give up trying to collect.

Insofar as Polis’s order was motivated by a desire to keep eviction cases temporarily out of the courts, which have been severely stressed by the pandemic, the move was reasonable. But, if that was the only motive, Polis could have simply called for a temporary halt in enforcing evictions rather than outlawing them outright.

“You bastard,” I can already hear some critics sputtering: “You want people to be homeless in the middle of a pandemic!” No, I don’t. Nor do I want people to go hungry.

I just don’t think government should screw over grocers or property owners, or any other sort of producers, to address the problem. Giving some individuals legal license to take things from other individuals, without paying for them, is not the answer. Imposing such harms on certain people violates the principle of equality under the law.

If we want to talk about expanded welfare programs or charity efforts to help people economically distressed by the pandemic, let’s talk about that—as many people have. If we want to look at how the government’s building restrictions and zoning codes keep housing costs artificially high, great. I was pleased to see some left-leaning people in Denver start to seriously take up some of the problems with zoning. If we were in places like California or New York, we could talk about how price controls on rent damage the supply and quality of housing long-term.

What we should not do is indulge the widespread bias against property owners. The very term “landlord,” which we should stop using, harkens to Medieval times, when “lords” who controlled lands fought violently over them and wielded their power over serfs. The modern relationship between property owners and renters is based instead on investments and voluntary contract.

As anyone who has ever completed or organized a big home improvement project knows, constructing and maintaining a housing structure is extraordinarily expensive and time-consuming. In many respects being a property owner sucks. But for the tax incentives to acquire a mortgage, many more people would seek to rent their living space to escape the continual burdens of ownership.

True enough, the value of the plot of land on which a house or apartment sits increases in high-demand areas. So some people, by foresight or by luck, end up with a windfall from a property sale, if they choose to take the proceeds and move somewhere with lower property values. It is also true that some people buy property that loses value.

But, as a place to live, the land itself is nearly worthless until someone goes to the expense of pouring the foundation, erecting the frame, putting in the electric lines and plumbing pipes, installing the siding and insulation and drywall and roofing, and so on. We do not summon housing from the belly of the Earth by casting magical spells, burning incense, smoking ganja, debating the finer points of whether Lenin or Mao or Castro or Che Guevara is the more-inspiring mass-murderer, or singing Kumbaya. Someone builds it, and someone pays for it.

Someone who invests money in a property to rent to others absorbs the costs of building and maintaining the property. The purchaser weighs such things as anticipated changes in property values, expected repair expenses, expected rent, and potential alternate uses of the funds. Providing rental units is an expensive, challenging, and honorable task, and government should not punish people for it.

Ultimately renters drive the rental market. Property owners can charge rents only that renters agree to pay. Higher rents indicate higher demand for rentals in a given area. In our current difficult times, property owners often have every incentive to work with people behind on rent, as sitting on an empty unit can be financially devastating.

A property owner evicts someone, properly subject to a voluntary rental contract, expecting to attract a paying renter (or, in some cases, a less-destructive renter), or perhaps to sell or renovate the property. As Bastiat warns, we need to look to the unseen as well as the seen, the property owner and prospective renter, not to mention the long-term health of the rental market, not just the person asked to leave for failure to pay rent.

Property owners who rent out housing have rights, and they provide an enormously important service. They deserve better than to be tormented, scapegoated, bankrupted, or demonized by politicians.

Ari Armstrong writes regularly for Complete Colorado and is the author of books about Ayn Rand, Harry Potter, and classical liberalism.  He can be reached at ari at ariarmstrong dot com.


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