As the state Legislature and Governor Pataki prepare to extend New York’s system of rent controls, partisans of the system are still pushing the myth that these controls help keep “the middle class in the city,” as Assembly Speaker Sheldon Silver recently put it. The fact, however, is that rent control does close to nothing for either the middle class or the poor. Instead, it is essentially a subsidy for a lucky few on the upper east and upper west sides that costs about $40 million to administer — money that comes from the average taxpayer. While doing almost nothing to depress the rents of the middle class in the outer boroughs, it does plenty to depress new construction and the improvement of older buildings.

As reported in The New York Sun earlier this year, a study by a housing economist at the MIT Center for Real Estate, Henry Pollakowski, found that the benefits of rent control are concentrated in Manhattan. By comparing the rents of regulated apartments to the rents of similar, but unregulated, apartments in the five boroughs, Mr. Pollakowski found that rent control’s effects in the outer boroughs were insignificant. Regulated renters in the Bronx save about $58 a month. In Brooklyn, the number is $5. Renters in Queens and Staten Island effectively see no benefit. Compare this to the Upper East Side, where the subsidy is $418, and the Upper West Side, where the subsidy is $485. In the lower Bronx and upper Manhattan, the subsidy is about $40.

Not only are the outer boroughs not being helped by rent control, however, they are also being hurt. While Manhattan has scant room to grow its housing stock, the outer boroughs are ripe for a housing boom, should the current rent regime ever fall. What is preventing such a boom in the outer boroughs is a lack of demand for new housing, a side effect of rent control. As SUNY’s provost, Peter Salins, an expert on rent control, told the Sun last month,” Almost all the new housing development is for people that trade up or trade laterally…If the majority of the market is locked in place, they won’t be in the market.” Thus has the supply of decent housing for the middle class dried up: “The minute we introduced rent stabilization in the late 1960s, the market for that housing dried up.”

Furthermore, rent regulation has discouraged investment in New York’s aging housing stock. Deregulation could lead to improvements in all five boroughs. As Mr. Pollakowski found in another study, which was issued in May and evaluated the experience of Cambridge, Mass. with deregulation of its housing market, “both affluent and modest income neighborhoods experienced an ‘investment boom'” — with investments in existing Cambridge rental buildings shooting to more than $35 million in 1997, from less than $5 million in 1994, the year before deregulation began. About 20% of this boom, at the least, was attributable to deregulation, according to Mr. Pollakowski.

That a few lucky souls in Manhattan — and a few poor souls who truly depend on rent control — should plead for the rent regulation system’s extension is understandable. That anyone else should do so, study after study proves, is folly.