Both issues are embodied in the takings clause of Fifth Amendment to The Constitution: “nor shall private property be taken for public use, without just compensation.” The US Supreme Court should recognize rent control for what it is, a government mandate that violates both essential elements of the takings clause: It is an uncompensated taking and it is not for public use. These fundamental constitutional issues have been overwhelmed by bad precedent. The Court could resuscitate the takings clause if it is willing to correct its past errors.

What Public Use Used to Be

The takings clause of the Fifth Amendment encompasses the concept known as “eminent domain,” the power of the government to forcibly acquire private property. It is an ancient concept based on the understanding that government could not perform some of its basic and legitimate functions—building a road, for example—without taking possession of some private property even when the owner does not want to sell. In an early case, Boom Company v. Patterson (1878), the Supreme Court declared:

The right of eminent domain, that is, the right to take private property for public uses, appertains to every independent government. It requires no constitutional recognition; it is an attribute of sovereignty.

Public use has traditionally meant transportation infrastructure and military installations: roads, bridges, canals, harbors, forts. Modern technology has increased that list. The efficient construction of pipelines, electrical and communication grids, and water and sewer systems will often require government usurpation of property rights to some extent. Finally, it seems eminently reasonable for the government to acquire some property (how much is another matter) for parks and other public recreational facilities. The government is allowed to forcibly acquire property for such public uses, but the action requires that just compensation be paid.

None of this is to suggest that the government will use its eminent-domain power wisely and efficiently, even when constrained by the public-use and just-compensation requirements. And, in any specific case, the “just-ness” of the compensation can be subject to acrimonious dispute.

But the first issue addressed herein is the requirement underlying the condition “for public use.” The government is allowed to take private property only for a legitimate public use, such as for those listed above: projects that will be publicly owned—or at least publicly managed—and at the service of the general public. The public-use requirement correlates well with the economic concepts of “public goods,” such as canals and roads, and “natural monopolies,” such as the water company and the electric company. Without getting into the details, these are goods and services that would be substantially undersupplied without some government intervention, though the less government intervention the better.

The distinction between public use and private use imposes a crucial constraint on the power of eminent domain; it prevents the government from forcibly transferring property from one private party to another, determined only by the parties’ relative abilities to influence the governmental process. At least that is how it was supposed to be. Governments have in fact been taking private property and transferring it to another private party for some time now, and with the approval of the courts. Contrary to the specific language of the takings clause, the Supreme Court has erased the public-use requirement. Let’s briefly review how this happened.

Public Use Undone: First Blight, Then Anything

In addition to traditional public uses, it has long been accepted that eminent domain extends to the confiscation of abandoned or “blighted” property. In economic terms, the public use derives from the “externality” generated by the neglected property. A rat infestation at an abandoned house imposes real costs on adjacent property owners; those costs are “external” to the property at which the problem arises. Such externalities are sometimes given the friendlier label “neighborhood effects.”

If you live next to an abandoned property that is dilapidated and overrun by vermin, you are likely to approve of the government condemning and confiscating the property and reselling it to a new and hopefully more responsible owner. (The original owner of the property would still be due compensation, per the Fifth Amendment, for any residual value of the property. But most such properties are abandoned because their value, net of taxes owed, is negative.) Even though the property condemned by the government would eventually be sold to a private buyer, the purpose is fairly characterized as public use because it results in the elimination of a public nuisance. The “blight exception” allowing the condemnation of abandoned property has a long tradition.

Unfortunately, the Supreme Court dramatically expanded this exception in Berman v. Parker (1954), saying an unblighted property can be taken if it is within an area that the legislature has declared blighted. That shift effectively transformed the blight exception into a broad license for area-wide redevelopment takings. From there, it still required a staggering display of linguistic legerdemain to terminate completely the public-use limitation, which would happen through a series of cases, most notably Poletown Neighborhood Council v. City of Detroit (1981, by the Supreme Court of Michigan), Hawaii Housing Authority v. Midkiff (1984), and Kelo v. New London (2005). What all these cases have in common is that private property that was neither abandoned nor even dilapidated was nonetheless confiscated by the government in order to transfer it to other private parties for private use. (See Fischel 2005.)

Let’s briefly review the core issues in those cases.

Berman v. Parker / Berman v. Parker allowed a Washington, DC, department store to be condemned in the interest of “urban renewal.” The condemned building was not dilapidated, blighted, or abandoned; indeed, it was open for business. But the store was swept up in a larger development plan that did include some abandoned properties. Close enough for government work.

Regarding property condemnation, the majority opinion in Berman v. Parker gave the local authorities a blank check:

Subject to specific constitutional limitations, when the legislature has spoken, the public interest has been declared in terms well-nigh conclusive. In such cases, the legislature, not the judiciary, is the main guardian of the public needs to be served by social legislation.

The phrase “subject to specific constitutional limitations” is vacuous; no such limitations were considered. The blighted-property exception to the public use requirement had been extended to not-blighted property. The effects of this case were far reaching. Berman v. Parker paved the way, pun acknowledged, for the massive urban “renewal” movement of the 1960s and 1970s. Poor but viable and thriving neighborhoods would be destroyed in the name of “redevelopment.” (See Jacobs 1961, Anderson 1967, Bovard 1995, Benedict 2009, Shlaes 2019, and Husock 2025.)

Poletown v. Detroit / The Michigan State Constitution has the same public-use requirement as the US Constitution. Nonetheless, in Poletown v. Detroit (1981) the Michigan Supreme Court allowed an entire neighborhood—more than 200 homes—to be condemned so the land could be sold to General Motors as the site for a new factory. (Because of irreversible actions and time constraints, the Poletown decision was not appealed to the US Supreme Court. The case is relevant here because it is referred to in subsequent US Supreme Court decisions.)

To its credit, the Michigan Supreme Court reversed its Poletown precedent some two decades later in County of Wayne v. Edward Hathcock (2004). In that case, the Court declared that its Poletown decision was

inconsistent with our eminent domain jurisprudence and advances an invalid reading of our Constitution. Because that decision was in error and effectively rendered nugatory the constitutional public use requirement, it must be overruled. It is true, of course, that this Court must not “lightly overrule precedent.” But because Poletown itself was such a radical departure from fundamental constitutional principles and over a century of this Court’s eminent domain jurisprudence…, we must overrule Poletown in order to vindicate our Constitution, protect the people’s property rights, and preserve the legitimacy of the judicial branch as the expositor—not creator—of fundamental law.

Perhaps the US Supreme Court will also admit error on this issue.

Hawaii v. Midkiff / Hawaii v. Midkiff held that landowners could have their property confiscated for resale to private buyers because the Hawaii legislature had determined that land ownership in Hawaii was concentrated in the hands of too few people. The Supreme Court found that the legislature should be allowed to “attack certain perceived evils of concentrated property ownership in Hawaii.” To be constitutionally acceptable, the decision stated, the taking need only “be rationally related to a conceivable public purpose.” “Conceivable public purpose” is Orwellian; it means no public purpose. Justice Sandra Day O’Connor wrote the opinion, which she attempted to reconcile some 20-plus years later with her dissent in the next case considered.

Kelo v. New London / Kelo v. New London was the final Supreme Court nail in the public-use coffin. Another entire neighborhood—dozens of homes located on 90 acres of land—was condemned so the land could be sold to a private developer. Justice O’Connor wrote a dissent in Kelo that deserves review. She wrote in part:

Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded—i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public—in the process. To reason, as the Court does, that the incidental public benefits resulting from the subsequent ordinary use of private property render economic development takings “for public use” is to wash out any distinction between private and public use of property—and thereby effectively to delete the words “for public use” from the Takings Clause of the Fifth Amendment.… In the prescient words of a dissenter from the infamous decision in Poletown, “[n]ow that we have authorized local legislative bodies to decide that a different commercial or industrial use of property will produce greater public benefits than its present use, no homeowner’s, merchant’s or manufacturer’s property, however productive or valuable to its owner, is immune from condemnation for the benefit of other private interests that will put it to a ‘higher’ use.”… Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more. The Founders cannot have intended this perverse result. “[T]hat alone is a just government,” wrote James Madison, “which impartially secures to every man, whatever is his own.”

So it was in Berman, Midkiff, and Kelo that the Supreme Court incrementally deleted the public-use constraint on the government’s power of eminent domain.

As a final note, recall that Justice O’Connor wrote the majority opinion in Hawaii v. Midkiff. To reconcile her dissent in Kelo from the Berman and Midkiff decisions, she offered the following argument:

There is a sense in which this troubling result [the Kelo decision] follows from errant language in Berman and Midkiff.… [W]e said in Midkiff that “[t]he ‘public use’ requirement is coterminous with the scope of a sovereign’s police powers.”… The case before us now demonstrates why, when deciding if a taking’s purpose is constitutional, the police power and “public use” cannot always be equated.

In this context, the term “police power” means just about anything the state wants to do. Indeed, Gifis’s Law Dictionary defines police power as “the inherent power of state governments … to impose upon private rights those restrictions that are reasonably related to promotion and maintenance of the health, safety, morals, and general welfare of the public.” Not much is left out of bounds and there is no connection to public use.

To equate police power and public use is to render the latter term meaningless as a constraint. Concerning the relationship between police power and public use in the above statement from Justice O’Connor, “cannot always be equated” should have been “can never be equated.” The problem with Berman and Midkiff is not the “errant language” but the decisions themselves.

Regulatory Takings

Now we turn to another eminent-domain issue, pertinent to rent control, that the Supreme Court has wrestled with: regulatory taking. Say that you buy a nice parcel of lakefront property, looking to build your dream house on it. After you buy the land, a local planning board or the National Park Service decides that your property ought to be part of a new lakefront wilderness area and requires that 80 percent of the property remain undeveloped. Even though the land has been left in your possession in a legal sense, its value has been reduced by something like 80 percent. You might reasonably consider that the government has effectively taken a substantial portion of your property and that you ought to be justly compensated for that taking. Guess again.

The first in a series of relevant Supreme Court cases is Penn Central v. New York (1978). In 1965, New York City adopted a Landmarks Preservation Law, which created a Landmarks Preservation Commission, which in turn denied the railroad company Penn Central permission to erect an office building atop its Grand Central Terminal. The commission’s decision substantially reduced the value of Penn Central’s property, but the Supreme Court decided that no compensation was owed to Penn Central because—well, just because it seemed like a reasonable thing for the Landmarks Preservation Commission to do. After all, New York City did not engage in a “physical invasion” of the property: Grand Central Terminal was not literally taken; the property was not forcibly acquired. The Penn Central case set the stage for regulatory takings.

Two subsequent cases, however, gave some hope to property owners. In First English Evangelical Lutheran Church of Glendale v. Los Angeles (1987), the County of Los Angeles would not allow the church to build a facility on property it owned, but the County later rescinded that order. The church nonetheless sued, arguing the delay amounted to a taking. The Supreme Court agreed, finding that a “temporary” taking was still a taking and, thus, required compensation.

Then, in Lucas v. South Carolina Coastal Council (1992), a landowner sued the State of South Carolina over a law preventing the landowner from building any habitable structure on the property at issue. The Supreme Court found that compensation was due to a landowner “where regulation denies all economically beneficial or productive use of the land.” Such regulation is equivalent to an actual “taking” of the property. The decision, however, sidestepped the issue of what to do when a regulation denies something less than all the economically beneficial or productive use of the property. The decision seemed to acknowledge that less-than-complete denial of economically beneficial or productive use might also require compensation, but it did not directly address the issue.

The Court then took a step backward. In Tahoe Sierra Preservation Council v. Tahoe Regional Planning Agency (2002), it held that even a denial of all useful value to a property owner may be acceptable if it is only temporary—that is, not a permanent denial. This decision seemed to reverse the position established in First English Evangelical. But the Court then took another step forward. In Knick v. Township of Scott (2019), it reversed an earlier precedent and held that federal rights are at issue in regulatory takings and, therefore, remedy can be sought in federal court.

Considerations on regulatory takings / In effect, all the Supreme Court has declared on this issue is that if the taking by regulation eliminates all beneficial value of the property and the regulation is likely permanent, then compensation is due. The problem with that standard is not just that it ignores the issue of partial takings, but also that it provides a guide to authorities on how to avoid ever paying compensation. The authorities can leave some value to the owner or declare that the relevant regulations are “temporary.” With such low barriers, compensable regulatory takings are easily avoided, even in cases involving a substantial loss of the property’s value.

But let’s look on the bright side. It was straightforward to determine, as the Supreme Court did in Lucas v. South Carolina Coastal Council, that compensation was due to a landowner “where regulation denies all economically beneficial or productive use of the land.” That finding also indicates a straightforward solution—in theory at least—to partial regulatory takings. If compensation is due when regulation denies all the economically beneficial or productive use of the land, presumably the compensation due would be the without-regulation value of the property minus the with-regulation value of the property—the with-regulation value in this case being zero.

Do the math in the same way for a partial regulatory taking. A partial regulatory taking would require compensation of the difference between the without-regulation and with-regulation values of the property. Although the Supreme Court has not endorsed that approach, it would appear to be a straightforward implication of its finding in Lucas v. South Carolina Coastal Council.

Another consideration / We need to be careful about applying the concept of regulatory takings too broadly. Consider commonplace, common-sense “zoning” regulations. Such regulations, which generally impose land-use and density restrictions, might appear to be a partial regulatory taking (and in extreme cases they may be), but most such regulations are for the purpose of maintaining property values by disallowing externalities. Your suburban neighbor might claim that his property would be worth more as a pig farm, but no one would suggest that he is due compensation for a zoning restriction barring that use. As F.A. Hayek observed about zoning (which he referred to as “town planning”):

What economists call the “neighborhood effects,” i.e., the effects of what one does to one’s property on that of others, assume major importance. The usefulness of almost any piece of property in a city will in fact depend in part on what one’s immediate neighbors do and in part on the communal services without which effective use of the land by separate owners would be nearly impossible.… The issue is therefore not whether one ought or ought not to be for town planning but whether the measures to be used are to supplement and assist the market or to suspend it and put central direction in its place. The practical problems which policy raises here are of great complexity, and no perfect solution is to be expected. (Hayek 1960, p. 467)

No perfect solution indeed. And nothing new here either. Public nuisances and housing density have been regulated since antiquity. To its credit, the Supreme Court long ago decided that federal courts should take a hands-off approach to local zoning restrictions in the case Village of Euclid v. Ambler Realty Company (1926).

Failing both conditions / Concerns about neighborhood effects do not arise in the case of rent control, which is a direct transfer of value from one private party to another, no externalities or public use involved, but plenty of adverse effects. (Numerous studies discuss and demonstrate the economic harms engendered by rent control. Kholodolin [2024] provides a recent survey of the literature.)

Let’s say that an apartment would rent for $1,000 per month in an unfettered market, but rent control limits the rent to $700. The value of that property, determined by the flow of rental income that it can generate, has been reduced by 30 percent. How is that not a taking of a substantial portion of the value of the property? Not only is it a taking, the difference between the controlled and uncontrolled rent is a forced transfer from one private party—the landlord—to another private party—the tenant. In other words, it’s not for public use.

Unfortunately, the Supreme Court ruled rent control to be constitutionally acceptable starting with cases from the 1920s. (See Epstein 1985 and Higgs 1987.) While those cases allowed rent control during a time of declared “emergency” (the emergency being World War I), the Supreme Court never again intervened in a direct challenge to rent control. The Court has simply refused to take up the issue of rent control, thereby effectively granting a constitutional pass. This malignant neglect of the issue was affirmed as recently as 2024 when the Supreme Court refused to consider several rent-control cases.

A New Case

When it comes to rent control, the Supreme Court has been afraid to call a spade a spade. But Small Property Owners may give the Court a chance to rectify that. The case is narrowly focused, dealing only with New York City apartments that are currently vacant and bound to remain so because the cost of legally mandated upgrades makes them uneconomical given the rent controls that would apply. In other words, the apartments are rendered worthless—a complete denial of economic and beneficial ownership—as occurred in South Carolina Coastal and which the Supreme Court has said would require compensation.

Limiting the case to vacant apartments that are bound to remain vacant may sidestep the Supreme Court’s presumed (if misguided) constitutionality of rent controls for occupied apartments, whereby the landlord retains some benefit of the property. But that distinction, while perhaps legally relevant, is not economically meaningful; a partial taking is still a taking, and a transfer of value from one private party to another is still not for public use. If the Supreme Court finds for the apartment owners, it will at least have to admit that rent control is a taking. But attempting to reconcile such a finding with rent control per se—rent control that applies to any apartment, vacant or otherwise—would reveal the obvious inconsistencies. In other words, it would be a giant step in the right direction.

Conclusion

Many property rights issues, such as rent control, could be correctly resolved if only the courts would apply a simple principle: Your property rights are abrogated—that is, your property is taken—if the law does not respect your economic rights, in particular the right to sell, lease, or rent your property at a time and place of your choosing and at a price that is agreeable to both buyer and seller. As The Constitution is supposed to protect property rights, so should it protect these basic economic rights. They are indivisible, two sides of the same coin.

In sum, there is no coherent way to reconcile rent control with The Constitution’s provisions on takings; but there it is and there it has been for a very long time. Maybe, just maybe, the current Supreme Court, supposedly conservative and textualist, will recognize rent control for what it is: a taking not for public use. The resurrection of the takings clause is long overdue.

Readings

• Anderson, Martin, 1967, The Federal Bulldozer, McGraw-Hill.
• Benedict, Jeff, 2009, Little Pink House: A True Story of Defiance and Courage, Grand Central Publishing.
• Block, Walter, and Edgar Olson (eds.), 1981, Rent Control: Myths and Realities, Fraser Institute.
• Bovard, James, 1995, Lost Rights: The Destruction of American Liberty, St. Martin’s Griffin.
• Epstein, Richard A., 1987, Takings: Private Property and the Power of Eminent Domain, Harvard University Press.
• Fischel, William A., 2005, “Before Kelo,” Regulation 28(4): 32–35.
• Hayek, F.A., 1960, The Constitution of Liberty, University of Chicago Press.
• Higgs, Robert, 1987, Crisis and Leviathan, Oxford University Press.
• Husock, Howard A., 2025, The Projects: A New History of Public Housing, New York University Press.
• Jacobs, Jane, 1961, The Death and Life of Great American Cities, Random House.
• Kholodolin, Konstantin A., 2024, “Rent Control: Does It Work?” Institute for Economic Affairs, August.
• Shlaes, Amity, 2019, The Great Society: A New History, Harper Collins.