Bring an end to rent regulations: stop subsidizing the middle class.

The City Council has passed a bill extending rent regulation. Fortunately, Albany has the final say on any such laws being extended beyond June 30th. Let the Mayor and Council pass whatever they like, but with Senator Bruno in charge of the State Senate, it is only an illusion of dreams past.

The city's political leaders being, "Champions of The Lost Cause," are trying to bring forth the mythical Brigadoon arising from the feathery mist.

Yet as we approach a semblance of a free market in housing, it is important that Joe Bruno and the Senate have a coordinated policy toward our industry. The system must be changed in such a way that any phasing-out of regulation does not impose more administrative or bureaucratic headaches upon us. In order to accomplish a move from socialized housing to a free market, a complete program must be addressed.

How in fact do we wean the public from the welfare of rent controls? For make no mistake, controls are nothing more than a confiscatory means of taking private property. The system has been designed to give the middle class an entitlement using not tax money, but the owners' money. It is the ultimate "off budget" item.

Yet the very nature of manipulating an entire industry for the purposes of votes shows just how degenerate our leaders have become. The first question society must ask itself when dealing with this issue is the morality of it. If we believe that we have a capitalistic free market economy, then how can government regulate the amount charged for a particular service? The answer, of course, is government can't.

The specious argument that the regulators put forth is that without such price regulation there would be no "affordable housing" in the area. However, that statement, like so much of political rhetoric, is babble and based on nothing. When one uses the words "affordable housing," what are we saying? Of course what it would mean to a rational, unbiased person is that in order to live in this society, I should have to pay no more than "x" amount for housing to be called affordable.

The amount that the rent would be based on is a percentage of the gross income of the tenant. For the purposes of our example we can use 30 percent. Therefore, Mr. Smith has a gross income of $2,000 per month and should be forced to pay no more than $600 for "affordable housing."

However we, need to now address what is meant by "decent housing." At present an owner doesn't only have to provide a functioning and clean apartment, but must maintain services provided as of a base date. It doesn't matter if the rent paid equals the amount needed to provide those services; the services must be maintained. Therefore, if Mr. Smith lives in an apartment that costs $800 per month, then who should pay to subsidize Smith in his "decent and affordable apartment?"

For example, let's say that in 1974 Mr. Smith, our fictional tenant, had just moved to New York after graduating college. He was hired at $18,000 per year and his rent was $400 per month. The percentage of gross earnings to rent paid was approximately 25 percent. Twenty-two years later, Smith still lives in the same apartment, but he now earns $70,000 and pays $900 per month. The percentage has now fallen to less than 15 percent of earnings to rent.

Another example I have used before is the family consisting of a mother, father and two children who in 1955 rent a three-bedroom apartment. The rent initially was $205. Over the years the children have grown and left and the father has passed away. The mother remains in the three-bedroom apartment, living alone, and the rent is now $800 per month. She stays there because for her it makes perfect economic sense.

The rest of society is subsidizing her staying in the apartment at a below market rent. It is also one less three-bedroom apartment available for a family to rent. Some people would say that the tenant is entitled to her home of over 40 years. However, unlike a house or a condo or co-op, she has only rented the apartment, not owned it. That was her decision to have someone else take the economic risk of ownership. Why is it that politicians state that she has an inherent right to this piece of property? Not only a right, but one subsidized directly by the property owner.

It is time that this is stopped. In my next column I will lay out what I believe to be a fair and equitable way of ending the rent regulation ridiculousness. A ridiculousness that we have had for the past 55 years in New York.

Thomas F. Campenni, CPM, is a real estate consultant advising owners, co-ops and condominiums. To respond, write him at 21 West 46th, Street, NY, NY 10036.