RENT COMMISSION IN THE DISTRICT OF COLUMBIA MONDAY, JANUARY 19, 1925 CONGRESS OF THE UNITED STATES, DISTRICT OF COLUMBIA, Washington, D. C. The joint committee met, pursuant to call, at 10 o'clock a. m., in the room of the Committee on the District of Columbia, Capitol, Senator L. Leisler Ball (presiding). Present: Senators Ball (chairman), Jones of Washington, and Copeland. Present also: Representatives Lampert, Hammer, Stalker, and Blanton. Present also: John A. Petty, executive secretary, and Rodger J. Whiteford, counsel for the Washington Real Estate Board; Thomas P. Gore, counsel for the Washington Association of Building Owners and Managers; Gen. Nathan W. Mac Chesney, general counsel of the National Association of Real Estate Boards, of Chicago. The CHAIRMAN. Gentlemen, the committee will come to order. Whom shall we hear first this morning? Mr. WHITEFORD. Mr. Chairman and gentlemen of the committee, I am here as counsel for the Washington Real Estate Board. Mr. Brandenburg, due to my inabulity to be here last Wednesday, was good enough to appear in behalf of the board. I am here this morning representing the board, which is one of the opponents of the legislation and I have some witnesses here. First I wish to have you hear from Mr. John A. Petty, executive secretary of the board, who will give the committee the benefit of the survey that has been made by the board with reference to housing conditions and will state to the committee the attitude of the Washington Real Estate Board toward the pending legislation. He was on the stand on last Wednesday but due to the number of questions that arose he did not get that part of his testimony in the record. He is prepared this morning to present a concise statement to the committee and I have no doubt will be glad to answer any questions the committee may desire to ask. The CHAIRMAN. Very well; we will hear from Mr. Petty. TESTIMONY OF JOHN A. PETTY, EXECUTIVE SECRETARY WASHINGTON REAL ESTATE BOARD-Resumed Mr. PETTY. Mr. Chairman, I would appreciate it if possible that members of the committee permit me to complete my statement without interruption. I think it will save time and I shall then be glad to answer any questions the committee may desire to put to me. The CHAIRMAN. Very well; we will ask no questions until you shall have completed your statement. Mr. PETTY. I am authorized by the executive committee of the Washington Real Estate Board to make the following statement to the joint congressional committee now considering the proposed permanent rent control legislation for the District of Columbia. This organization represents 119 real estate offices in the city of Washington and has a vital interest in all legislation affecting real estate in the District of Columbia. We therefore desire to fully and frankly discuss this subject with the twofold purpose of presenting to this committee our views on the proposed legislation backed by our practical experience and knowledge of the situation, and to express our desire to cooperate in the solution of such problems in respect to real estate practices as may seem to Congress to be present in Washington. Heretofore we, as an organization, have not actively opposed rental legislation for the District. However, we now feel that there is no necessity for its continuance and that a continuance of this form of artificial control is detrimental to the interests of both landlords and tenants, creates through its interference with property rights and private contracts a dangerous precedent in legislation nationally, prevents the normal function of economic laws, and seriously interferes with the continued growth and development of the city. We do not stand alone in our opposition to this legislation, as is evidenced by the action of various trade and business organizations in the District of Columbia, which have formally noted their opposition. I refer particularly to the board of trade, District Bankers Association, Merchants and Manufacturers Association, and the Bar Association. The national aspect of the pending bill proposed for the Capital City has resulted in formal protest being noted by real estate organizations in all parts of the country, including national as well as local and State groups, trade and other associations, financial institutions, investors, property owners, and business men. From the facts to be presented we expect not only to justify our statement that there is no necessity for this legislation, but also to show that the proposed bill will actually prevent the accomplishment of the very purposes which it was designed to accomplish. One of the primary phases of the subject of housing is the number of housing units available for occupancy. A survey which has just been completed by the Washington Real Estate Board covers residential properties, vacant and available for rental purposes through the rental offices of the 85 members reporting. Every member was advised to list no property in the survey which might reasonably be considered uninhabitable. Reports furnished are all in good form, the tabulations were made with utmost care, and duplications were eliminated. A complete statement showing the location, size, and rental of each property, as well as the name of the agent, is herewith furnished the committee as evidence of the existence of a plentiful supply of housing units available for rental purposes. All of the reports included in this statement were received within the past 10 days and therefore the list can be considered up to date. This survey does not include properties handled direct by owners, resident managers, nor those real estate offices not affiliated with the board. However, this list is a concrete illustration of the existing vacancies throughout the city. An analysis of our survey reveals the following properties available: Unfurnished heated apartments, 969; unfurnished apartments not. heated, 69; unfurnished houses, 524; making a total of unfurnished properties of 1,562. Furnished apartments, 54; furnished houses, 108; or a total of furnished properties of 162. Rentals of the unfurnished range as follows: Up to $35 per month, 64; from $36 to $50 per month, 246; from $51 to $75 per month, 486; from $76 to $100 per month, 160; from $101 to $125 per month, 62; from $126 to $150 per month, 6; over $150 per month, 14. There were a total of 310 listed at $50 or less, and 486 listed at from $51 to $75; or a total of 796 listed for $75 or less, and 242 listed at over $75. Rentals of the above-mentioned unfurnished houses range as follows: Up to $35 per month, 38; from $36 to $50 per month, 64; from $51 to $75 per month, 145; from $76 to $100 per month, 135; from $101 to $125 per month, 56; from $126 to $150 per month, 36: over $150 per month, 66. This comprises a total of 248 houses at $75 or less, and 293 at over $75. The sizes of the unfurnished apartments listed range as follows: 1 room and bath, 30; 2 rooms and bath, 155; 3 rooms and bath, 433; 4 rooms and bath, 230; 5 rooms and bath, 131; 6 rooms and bath, 44; over 6 rooms and bath, 55. The sizes of the unfurnished houses listed range as follows: 4 rooms and bath, 19; 5 rooms and bath, 27; 6 rooms and bath, 164; 7 rooms and bath, 64; 8 rooms and bath, 71; 9 rooms and bath, 68; 10 rooms and bath, 43; over 10 rooms, 68. The apartments and houses reported are located in the four sections of the city as follows: Northwest, 1,501; northeast, 99; southwest, 35; southeast, 89. In addition to the above, the following apartments under construction were also reported: Available February 15, 115; available March 1, 384; available April 1, 134; available May 1, 119; date of completion not given, 16. This shows a total of 768 additional apartments coming on the market approximately within 90 days. About the middle of October, 1924, we made a study of rental conditions through the medium of a questionnaire sent to our membership. One of the principal purposes of that study was to determine the situation in respect to evictions and increases in rent. The reports when tabulated showed 1,154 voluntary reductions in rent, as against 347 increases. There were more than three times as many voluntary reductions reported as there were increases. None of the reductions reported were ordered by or made through the instrumentality of the Rent Commission. This condition would not exist if there was an emergency or a shortage in housing accommodations. Two hundred and ninety-three of the 347 increases noted were for amounts not in excess of 50 per cent of pre-war rentals. Out of all of the thousands of housing units represented only 78 notices to vacate were served. October 1 was the effective date on which all of this study was based, and as that date is the recognized annual lease date this makes the information gained of more than ordinary significance. Your attention is called to the fact that while the Rent Commission has been inoperative for several months, the press has prominently mentioned only two cases of evictions. One was for nonpayment of rent, and it was admitted that the tenant had collected more money from her roomers than she was charged for the entire property and had failed to pay her landlord, and the other has already been shown to this committee to have been practically a frame-up. This fact is very definite evidence that the prediction of wholesale evictions by certain leaders in the recent tenant's agitation was groundless. Likewise it should be noted that throughout the entire campaign of propaganda and publicity conducted by the tenants in the late summer and fall, only three or four owners or agents were mentioned in the press as attempting to increase rents or evict tenants. Had this practice been general or conducted on a large scale it is reasonable to assume that the newspapers, which were giving front-page publicity to the subject almost daily, would have published more than the handful of instances referred to. The statement that 2,000 evictions had been served and the subsequent appeal to use the White House grounds for the victims, which statement was entirely disproved by us at the time, is an illustration of the extent to which the alarmists have gone in their agitation for rent-control legislation. Much of the appeal and pathos that have made up the newspaper stories, and indeed some of the testimony in favor of rent legislation given before the congressional hearings, if investigated would be found exaggerated and not based on facts. Frequently this sort of propaganda is based solely on a desire to avoid paying a just compensation for rental accommodation and an unwillingness to meet present-day conditions of high costs of labor and materials, or expressed in another way, the lowered purchasing power of the dollar. Almost invariably the proponents of this legislation base their arguments on the theory of protecting the sixty-odd thousand Government employees. The impression is given that all or a large percentage of Government employees are tenants. The percentage of potential tenants-that is, individuals who are actually occupying definite housing units and assuming the responsibility of bona fide tenants under rental contracts-among Government employees is not so large as these repeated statements indicate. Deduct those Government employees residing in Maryland and Virginia, also those who own their own homes, allow for duplications occasioned by two or more members of one family being in the Government service, eliminate the young men and women who reside with their parents or who room and board in private homes or boarding houses, and the net number of Government employees actually affected by rental legislation will be found very much lower than is generally believed. Permanent rent-control legislation will result in practically a total suspension of construction of rental properties in the District of Columbia. This will be due to two reasons-the loss of control of private property and the withdrawal by the financial interests of the money necessary to finance building operations. During the past years of rental control legislation there has not been a single dwelling house or a two-family flat constructed for rental purposes, and this type of rental properties is very much needed to serve the tenant classes in any city. Building of houses "for sale only" has gone on. In addition, this legislation has also caused hundreds of properties that for many years heretofore were owned by investors as income-producing investments to be sold to home buyers and thus withdrawn from the rental market, thereby reducing the supply of available rental properties. It is true that apartment-house construction has continued through the period of rent-control legislation on an extensive scale, but it should be borne in mind that the legislation was temporary only and was expected to cease and that the type of these properties in the main were high-class, expensive buildings, with rentals from $20 to $35 per room and wholly outside of the character of building demanded by the emergency or which was designed to be or was affected by rent-control legislation. While we are opposed to rent-control legislation or any other legislation that takes from property owners the control of their property or interferes with the sanctity of private contracts, we cordially accept the suggestion made by this committee last week and are glad to cooperate in improving real estate practices in the District of Columbia. Our organization was formed primarily for the purpose of elevating the real estate business to a professional plane and our membership is governed by a code of ethics that defines the highest standards of practice. During the past four years since our organization has maintained permanent offices and a full-time secretary, we have made marked progress in eliminating many evils in sales practices and have records to show the extent to which we have been able to furnish the public a measurable service in advising and assisting both purchasers and sellers dealing in realty transactions. In this connection I might state that the Department of Justice in making its real-estate investigations in Washington last fall had one of their investigators spend the better part of two weeks in the offices of our board, examining our records, files, minutes and correspondence, and we furnished that department with every possible cooperation and assistance in securing the information and facts they desired. It might be of interest to the committee to have the Department of Justice furnish it with a report of their examination of our organization and we hope that the committee will request this of the Department of Justice. The practice of real estate is an important part of the economic life of a city and those engaged in it should not only be qualified, competent, and of good character but some measure of supervision should be provided wherein improper practices can be controlled. While our organization is exercising to a considerable extent supervision of the practices of its members, it should be borne in mind that during the fiscal year ending June 30, 1924, there were 591 licenses issued in the District of Columbia and our organization has never had more than about 130 brokers on its roster. In addition to this large number of licensed brokers there is a considerable number operating without licenses and also approximately 1,000 salesmen who are not required to be licensed. You can realize that we, as an organization, are interested in improving real estate practice and we are very willing to cooperate in accomplishing any constructive legislation that will result in overcoming evils due to improper or dishonest practices. The present system of licensing real-estate brokers in the District of Columbia is solely a revenue producing measure. There are absolutely no restrictions or safeguards in connection with the issuance of licenses and no means of revoking licenses or otherwise punishing wrongdoing in real-estate practice except through the |
