Chareidi Rent Control

Over the past few months, there have been a series of articles and letters in Mishpacha magazine addressing the rise and impact of a number of rent control vaads in a few Chareidi Jerusalem neighborhoods. The target of these vaads is mainly the "chutznik" kollel yungerleit from the United States who are generally supported by their parents and don't mind paying top dollar for an apartment.

The way these vaads work is that they strong-arm potential renters who are willing to pay more than the "going rate" that the vaad sets. The vaad threatens that they will be ostracized from the neighborhood. The men will not be called to the Torah, etc., and the women will be excluded from the community N'shei.

The first article extolled the virtues of these righteous, Rabbi-approved, vaads which seem to be able to keep rents in check. I found the conclusions of the first article to be very dubious. Indeed, the follow up letters were not so positive and Mishpacha ran a follow-up article that was more objective.

These are my thoughts:

From a market perspective, there are short term and long term costs to rent control whether imposed by the government or the rabbinate. In the short run, an economic benefit is artificially transferred from one set of stakeholders (landlords) to another (tenants). In the long run, when you take a way the incentive to own rental properties, the supply of rental properties will decrease and the stock that does exist will deteriorate over time.

From a moral perspective, the vaads are not doing anything righteous. They are protecting one interest group, i.e., current members of the neighborhood (meaning, themselves), to the detriment of two other groups, i.e., landlords and chutzniks. As a result, neighborhood people don't have to move to less expensive neighborhoods, chutzniks may not be able to find the apartments that they are otherwise willing to pay for, and landlords are getting less than the market value for their rental properties.

While I understand the frustration of long-term residents of these neighborhoods as the Ugly, Rich Americans invade their turf (something that is happening all over J'Lem (Baka, Nachlaot, German Colony, etc., with French and American buyers bidding up apartment prices)), what the vaads are doing is not a long term solution and will inevitably have very negative effects.