Supreme Court to Review Rent Control Laws

MrSuttonPlace -- By this point, the vast majority of landlords will have acquired their properties knowing full well about the rent controls on the apartments when they did so. Are we supposed to fell sorry for them, and not for people who have other easements or restrictions on the use of their property that they knew about when they acquired them?

To view the situation in another light.
Why should any property holder (LL) be dictated below market rents for their property because of social ideals that the state mandates. If the state believes that low income persons have the right to housing they should be granted a rent voucher to use towards their rent. It's desicion we make collectivly based on a social contract that we agree to. Would an end to RS/RC produce massive homelessness?
Recently I was in Rockland Co. visiting a contractor friend that had to drop of one of his 'paperless workers' of central american dissent. I witnessed the living conditions of this undocumented worker & family and was somewhat....freaked out. My friend tells me that the worker was his best and actually was making a handsome wage. The worker was supporting his family plus supporting an extended family back in his home country.
Who exactly diserves this fabulous RC/RS deal?
Clever children of the elderly?
Those incapable of providing for themselves?
Anyone clever enough to work a deal or buy a RS lease?
If the state believes that a certain portion of the population 'deserves' housing, let the state build and maintain that housing. (yeah yeah, I know about public housing)
We do private land holders need to be held in this social situation.
You could pass a law that EVERY new multi family dewelling with more than, say 8 units, must include 20% of the units as low income housing. HA HA! when pigs fly.
The problem is one of fairness....
It's like adult children who are supported by their parents.
They are condemed to a life time of 'BAKSHEESH'.
Do you think it's different when it's the state acting as a parent?

I was aware that you can pass on Rent Control, but it escaped my mind in all of my discussion above.

It's outrageous.

think of this as a remnant of a very different time. which it is. you raise fascinating, valid points that of course extend way, way beyond rent control/stabilization. i still stand by my earlier statement. rent control/ rent stabilization was a giant contributor to the city. when i grew up here, which contrary to the endless rants of one poster was not that long ago, there was a real middle class.

things were not perfect and in no way am i advocating a return to the past. i am merely commenting on what was.

what will be? we don't know yet.

>rent control/ rent stabilization was a giant contributor to the city.

That's nice. And the contribution is noted.

What has it done for us lately?

>when i grew up here, which contrary to the endless rants of one poster was not that long ago, there was a real middle class.

Oh that penthouselady, she never stops ranting, does she?

" By this point, the vast majority of landlords will have acquired their properties knowing full well about the rent controls on the apartments when they did so. Are we supposed to fell sorry for them, and not for people who have other easements or restrictions on the use of their property that they knew about when they aquired them"

Jordyn, the new land lords made their decision based on their belief rent regulation laws would one day favor them. Renters in regulated apartments made theirs based on the belief rent reg laws would ALWAYS favor them. But they both gambled on rent regulation laws working in their favor. Neither position was more inherently constant than the other.

>Jordyn, the new land lords made their decision based on their belief rent regulation laws would one day favor them.

Tishman made this gamble and overleveraged, and look how they did.
I don't believe that the majority of new owners/landlords bought with the assumption that "one day" would be any day soon. Rather, they bought based on current purchase metrics, and ascribed little to the option value.

" It's like adult children who are supported by their parents. They are condemed to a life time of 'BAKSHEESH'. Do you think it's different when it's the state acting as a parent?"

As an underacheiving adult being supported by my parents i have to affirm that it is indeed different. My parents made a choice, the state has not made that choice for them. Furthermore, i am not some loser they don't know who relies on them, i am a loser they birthed and raised, i am their child. I dont come to your house saying falco i need some money, can i have some. But a ward of the state does essentially just that.

Wow

Ok so after googling purchase metric and option value it sounds you're calling more recently minted landlords stupid. Ok.

What

Wow you understood both in 8 minutes.

Huh?

Are you calling me stupid now?

Is that how you interpret my postings?

Depends which ones

Alright, so at least one of my postings.

"Jordyn, the new land lords made their decision based on their belief rent regulation laws would one day favor them."

That was probably pretty dumb, but I guess no more so than people who bought more house they could afford on the assumption housing prices would always go up and they would just refinance their way out of trouble.

My point wasn't whether or not it was reasonable for landlords to take this gamble, it was that they have no basis to complain about the value of their property being diminished because they knew about the restriction when they bought the property and paid a price that they were comfortable with based on that restriction. Their complaint is roughly synonymous to someone who buys an apartment with lot line windows and then complains when someone walls them up, or really like buying such an apartment when the windows were already walled up, getting a good price as a result, and then demanding that the building next door gets torn down so they can have a view.

I'm not saying that rent stabilization is great. It's not. But I feel basically no sympathy whatsoever for landlords who bought units that were stabilized and then complain about it after the fact.

whats the next step for this case ?

Exactly!
The actions of the state set the stage for dependence as the actions of your parents did. No judgements.....
The question is, do these actions serve your long term best interests and more importantly do these actions serve the long term needs of this community.

>Their complaint is roughly synonymous to someone who buys an apartment with lot line windows and then complains when someone walls them up, or really like buying such an apartment when the windows were already walled up, getting a good price as a result, and then demanding that the building next door gets torn down so they can have a view.

http://www.youtube.com/watch?v=Pn0WdJx-Wkw

Are you suggesting that someone's dependence on financial support from their family is somehow comparable to dependence on government assistance and financial support from YOUR family in the form of taxes taken out of the money YOU earned? Or to stay on topic, you think that my parents voluntarily subsidizing my living expenses is analogous to landlords being forced to subsidize the living expenses of their tenants? I posted my last comment in response to yours because i thought it was funny that you explained the very legitimate unfairness of a system that forces people to do something by comparing it to the very common, natural and universal practice of parents financially helping their children in some capacity. And that's true, you can always count on visceral outrage and sanctimony at the mention of parental assistance and people who receive it are basically bad and lazy and need to make their own way because thats the harsh reality and thats fair. Of course the adjectives change completely when that assistance is coming out your own wallets and its just not done to examine too closely and much less criticize those recipients' work ethic and motives. Its like a mental block with some people.

"The question is, do these actions serve your long term best interests and more importantly do these actions serve the long term needs of this community."

Its just funny because i bet many people who support rent regulation and wouldnt dare challenge the sanctity of other programs that basically elevate the idea of being a burden on the state to something healthy and beneficial would probably have all kinds of opinions about what is in the best interests of someone in my position. And none of them include continued financial help from family members who choose to give it. That's never popular, its terrible for my independence and self esteem and productivity. Funny stuff.

Marco -- The next step is that the SCT will decide, probably sometime around June 2012, whether it will accept "cert" and review the court of appeals' ruling (which summarily affirmed the lower court's dismissal of the case). Cert gets granted in a very tiny percentage of cases. If the SCT denies cert, it is game over.

>Or to stay on topic, you think that my parents voluntarily subsidizing my living expenses is analogous to landlords being forced to subsidize the living expenses of their tenants?

Landlords are not subsidizing the living expenses of their tenants.

I just googled "cert" to see if MidtownerVirginEast got his information from the "net" or if he's been eavesdropping on the lawyers at his employer law firm.

I'm merly stating that if tax dollars are utilized to support a portion of the community there has to be an even playing field. Some needy members of a community receive a long term 'benny' while equally needy members receive nothing. I am also calling into question the impact that this type of assistance has on both the individual and the community. The money your folks share with you is private and discretionary. I was simply comparing the impact on the receiver and the community.
It's comparable to social conditions in Europe.
I want my tax dollars devoted to fishing school. Handing out fish is a waste of time.

Excuse me, landlords of rs.Rc units. No finance gibberish. Landlord's of Rc/rs units are subsidizing a lifestyle their tenants cannot otherwise afford.

if rent control/rent stabilization were to end, rents would skyrocket--the landlords would be foaming at the mouth to increase rents--why anyone thinks rents would go down is living in another world-- new york city is a unique situation; people want to live here (believe it or not), and the supply of housing will always be limited-

Again, you guys are arguing over the dodo here. The number of rent-controlled units has already dropped from around a million to fewer than 40,000.

As to stabilization, most of the landlords being "forced" to offer subsidy at this point actually chose to offer it, in exchange for taxing the subsidy of tax dollars (which y'all don't seem to have a problem with). This doesn't create $1,000 3-bedroom rentals that are keeping everyone else from getttung housed. It instead creates some other restrictions on new luxury buildings that aren't noticeably below market. At the Verdesian in BPC, for instance, a tenant can't pay a year's rent up front. But those riverview apartments with twice-filtered aren't market-distortingly cheap, though they're in the pool of one million "stabilized" units.

Ali r.
DG Neary Realty

>Excuse me, landlords of rs.Rc units. No finance gibberish. Landlord's of Rc/rs units are subsidizing a lifestyle their tenants cannot otherwise afford.

No they are not.

How's that for finance gibberish?

It isn't. It expresses your point clearly and without assuming everyone participating in the conversation is fluent in the trade jargon of one industry.

>fluent in the trade jargon of one industry.

?

4k americans killed in iraq, 250mm americans still alive...... Why r ppl still fking arguing over the Iraq war? = Ali Harvard logic!

When rents go down and bubble continues to deflate, Mr. Harmon should go get a job to make the extra $2k/month rent 'subsidy' that his daddy agreed to. But like a bubblers, continue to ignore the fact if mr Harmon had sold in 2007, at the height of the bubble.... His net worth would be 100% greater. As a side benefit his name would not be associated with rich lazy LL who wants more more and more. Almost like santorum with anal sex.

And to think mr Harmon could've been a porn star if he didn't put much energy into an extra $1k/month.

Before you start running to the hills in search of new digs, just remember that anyone can take a case to the Supreme Court if they want to and have the money to. Two other courts ruled against the landlord's suit.

An article in Reason from December concludes that he faces an uphill battle. The SC doesn't usually side with property owners in cases dealing with the "Takings Clause" of the constitution. However, that the SC asked the two lower courts to respond sounds like they're at least going to hear the landlord's case. Should be interesting.

http://reason.com/blog/2011/12/20/will-the-supreme-court-consider-the-cons

Does anyone know when will there be a result?

My guess is that they'll make a decision on whether to accept the case by June 2012 (see post above), but I'll see if there is any further intelligence out there. Seems like they'll deny cert and will end it.

Why so long for a decision until June?

Hey midtownervirgineast, who is your favorite Associate Justice? Sotomayor? Kagan?

Frank --

They get about 8,000 to 9,000 cert petitions a year and, even though the SCT has tried to streamline the process through use of a "cert pool," it still takes several months from time the petitions are fully briefed until they are rejected (called "cert denied") or accepted. June 2012 is just a guess, but probably not far off.

Instead of another comment about MVE, I want to address NYRentalBible who thinks that the Supreme Court hears cases just because someone pays enough or pays enough lawyers do get there. Idiot.

"See the problems deregulation causes."

Yes, lower rents for everyone else (including the housekeeps you are worried about). SUCH a problem.

From today';s WSJ:

At the center of a property dispute that could upend New York City's rent regulations is an apartment dweller from one of America's oldest families that has a nearly four-century history of hanging on to valuable homes.

The couple's suit has lost in U.S. District Court and the Second U.S. Circuit Court of Appeals, but now the U.S. Supreme Court is taking a harder look at their appeal than anyone expected. The justices asked the city and state to respond to the Harmon suit by Monday.

Ms. Lombardi declined to comment Sunday. Though it will have no bearing on the lawsuit, Ms. Lombardi traces her American roots directly to the Wing family arriving in the New World in 1632, according to her writings on a family website. The Puritan clan fled religious prosecution in England and has since shown a knack for staying put in homes that matter to them.

There was Daniel Wing, the pilgrim patriarch who nearly lost his Cape Cod home after he was fined three cows and 20 shillings for entertaining Quakers, then a crime. Through a bit of legerdemain—he declared himself dead and probated his estate to his children—Wing was able to live out his long life under the same roof.

And there is the pride of the Wings, the Old Fort House in East Sandwich, Mass., the home of Daniel's brother Stephen. For three centuries, generations of Wings slept in that sturdy wood-frame house before the family eventually turned it into a museum. It is one of the longest streaks of occupancy for any American family.

"There are noble families of Europe that haven't been able to hold on to their estates, let alone their heads, for as many years," said Nicholas Wing, the family's official historian. "It's a rare accomplishment."

More germane to the challenges the Harmons raise in their lawsuit are Ms. Lombardi's present circumstances. She is a vice president at Manhattan-based WTW Associates, a boutique executive search firm, and owns a second home near the shore in Southampton, where she spends weekends gardening and playing tennis.

The apartment next-door to Ms. Lombardi's isn't rent-regulated and goes for $2,650 a month.

"Contrary to popular myth, the rent stabilization law is not targeted to help the needy," the Harmons said in their Supreme Court petition. "The Harmons effectively have been financing the approximately $1,500 monthly mortgage payments on the Long Island home of one of their rent stabilized tenants."

Such a burden, they say, smacks into the Fifth Amendment's safeguards against government seizure of private property without just compensation.

The city's rent regulations date back to the post-World War I era, when a severe housing shortage caused by an influx of returning troops and a dearth of new construction prompted Albany to adopt an emergency rent law. The statute is still technically temporary. Last year, state lawmakers re-declared a public emergency, citing the city's persistently low vacancy rates, and extended and expanded the regulations until 2015.

Ms. Lombardi's rent is regulated under the city's rent stabilization system, which mostly covers buildings of six or more units built before February 1947.

Rents are adjusted each year by the city's Rent Guidelines Board, which last year authorized a 3.75% increase for one-year lease renewals. Landlords can deregulate a vacant apartment when the legal rent reaches $2,500 a month. If the unit is occupied, landlords can charge market rents after hitting the $2,500 threshold if the tenant's household income exceeds $200,000 for two consecutive years.

Landlords and business groups have complained for decades that the regulations insulate tenants from market forces while burdening landlords. Ms. Lombardi's case represents the flaws in the system, said Carol Kellermann, president of the Citizens Budget Commission, a business-backed fiscal watchdog.

"It's a poster child for what's wrong with the rent-regulation system in New York City," Ms. Kellermann said.

Andrew Scherer, a Columbia University scholar and landlord-tenant expert who supports the regulations, called it "an imperfect system." But he added: "Unless we're going to replace it with something that directly addresses the enormous need for affordable housing, we have to live with it and make the best of it." Mr. Scherer said the Supreme Court's interest in the case was "surprising." "I thought this was a well-settled question of law for the better part of the century," he said.

A spokesman for Attorney General Eric Schneiderman, who is defending the regulations in court, said: "We expect to show that New York's rent stabilization law satisfies constitutional requirements and that the case does not merit Supreme Court review."

Mr. Harmon, a decorated Vietnam War veteran and former prosecutor who now runs a corporate investigations firm, inherited the brownstone in the 1990s—along with the regulated tenants.

His grandfather, a first-generation French immigrant who worked at a cafe downtown, bought the place after World War II. Mr. Harmon's dad—who owned a machine shop—led a campaign in the 1970s to landmark their street of row houses. As for Ms. Lombardi and the fate of her apartment, Mr. Harmon said it is not personal.

"The problem here is not with the tenants; it's with New York law," he said. "It doesn't matter who you are or what your means are. You too can hit the rent-stabilization jackpot."

Rent Control isn't just a subsidy at the expense of the landlord. It inflates the price of rent for everyone else by limiting the supply of fair-market units. If all rent-control units became available to the free market, rents across the city would go DOWN not up. Rent control isn't just a tax on landlords but also on the citizenry at large.

Newyorker75 you are 100% correct.

If you released the X amount of rent control units to the market, the supply of rent-able apartments would greatly increase and prices would drop. I understand those prior rent controlled renters would need apartments, so they can rent like the rest of us or move on.

Rent control hurts many people and it doesn't make any sense anymore. Times are different and the city is different. I understand how it protects the elderly and disabled (mentally/physically) but do the elderly need to be paying $675.00 per month for a 2 BR in Chelsea. This helps no one. Give them an apartment outside of NYC.

I know people love their rent control, but how about we compromise...all rent control/stabilized apartments should become free market apartments in 5 years. That means 5 years from today, all leases expire (if not sooner) and the apartment becomes a free market apartment. If you can't find suitable housing in 5 years, I am sorry. But 5 years is a lot.

My favorite part is all the people who take these rent control/stabilized apartments and make 200K or own homes in the area. Take advantage of the system, why not? At these prices how could we not afford to.

Don't forget about how buildings are taxed at artificially low levels, corresponding to these artificially low rents. Those tax dollars have to be made up somewhere, so other taxes (income, mansion, even sales tax which then effects the economy even more) have to be higher.

The longer this goes on for, the more the gap widens and the more has to be made up...

I agree Mav. I think people think this is a liberal v. conservative debate, it really isn't. It is a fairness debate.

Is it fair to rent a beautiful 2BR or 3BR for $750.00-$1000.00 in the middle of Midtown?

My favorite are the people who move to NYC today (keep in mind most college grads are not making exorbitant salaries) are shoving 4 people in a 2BR apartment in order to keep rent around $1000.00 per person. While next door, John's family has been living in the same apartment for over 70 years and is paying $750.00 per month.

Something has got to give. NYC isn't for everyone.

I think the key question is it John's elderly parents who are paying $750 per month or some nth degree relative who got in on a good deal after they passed away. You say NYC isn't for everyone but if its for ANYONE it needs to be for the people who built it.... Having been born and raised as a rent controlled tenant, and lived for many years as a stabilized tenant prior to buying but also seeing the other side of the story I have mixed feelings about rent regulations BUT one change that can be made right away is eliminating succession rights excepting when it can proved that the successor grew up and has ALWAYS lived in the apartment apart from short breaks for college or military service.

> Rent Control isn't just a subsidy at the expense of the landlord. It inflates the price of rent for everyone else by limiting the supply of fair-market units. If all rent-control units became available to the free market, rents across the city would go DOWN not up. Rent control isn't just a tax on landlords but also on the citizenry at large.

How about the NYC Housing Authority, does that distort the market?

Does homelessness improve the market?

Nobobody cares how long you lived here or any such thing. In the US, people who move to a city yesterday and people who's families have lived here 200 years have EXACTLY the same rights under the law. Outside of discounted in-state college tuition, having been here a long time nets you nothing.

If you want to have middle class or lower income or elderly housing, then tax the wealthy and upper middle class and use that money to expand the HUD voucher system in the City. You could have a sales tax on all rents above 2X the median PSF, or raise the marginal tax rates for the top 2-3 brackets, whatever.

On this "If all rent-control units became available to the free market, rents across the city would go DOWN not up. Rent control isn't just a tax on landlords but also on the citizenry at large. "

Technically, MARKET rate rents would go down for 100% certain, and by a lot, and both vacancy and supply would go up immediately - because people like the example above would NEED roommates - but average rents might stay the same, since so many had been artificially low.

> Rent control hurts many people and it doesn't make any sense anymore. Times are different and the city is different. I understand how it protects the elderly and disabled (mentally/physically) but do the elderly need to be paying $675.00 per month for a 2 BR in Chelsea. This helps no one. Give them an apartment outside of NYC.

So the community they know and that knows them no longer matters because Chelsea got fashionable? Send them out to pasture determined by some Fairness Board ? Who is the Fairness decider?

You guys do realize that whether or not rent control is a good policy or not is distinct from the question of whether its Constitutional or not, right?

Sounds unconstituional to me
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The constitutional debate surrounding rent control revolves around the "takings clause" of the 5th amendment which reads, "No person shall be...deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation."

http://www.huffingtonpost.com/2012/03/05/us-supreme-court-looking-new-york-rent-control-uws-building-harmon-v-kimmel_n_1321851.html

In this day and age , rent control should be ended, no exceptions.
To the extent we need to help people below a certain income level, it should be done as a credit to the renter. No need to deprive a home owner of income. That they bought in this state, just means the lsat person to own it was screwed, so it's ok(ABSURD!)

"You guys do realize that whether or not rent control is a good policy or not is distinct from the question of whether its Constitutional or not, right?"

I do get it. I agree with RS that it violates the "taking" clause. Flagrantly.

Spring has sprung when jason agrees with Riversider.

How are landowners compensated when the city landmarks their district? Or when zoning regulations are applied/changed?

To dismiss the constitutional arguments, nobody knows what will happen with the Supreme Court.

Do you really want to turn this into a 5th Amendment/14th Amendmendment/Due Process or Con Law Discussion?

Read this case if you want a good start:Pennsylvania Coal Co. v. Mahon
http://en.wikipedia.org/wiki/Pennsylvania_Coal_Co._v._Mahon

@NativeRestless

No disrespect,, but I don't think it matters if your great great great great x 20 grand parents is Henry Hudson and has been here since. It matters that people are suffering and taken advantage of laws that are outdated.

That is why I am for the 5 year phase. End all rent control in 5 years, that gives people enough time to find adequate housing.

I "know" one person on rent control and they shouldn't be there based on the relationship to the original tenant. They pay under $800.00 for a 2BR and she is by herself.

@huntersburg

"So the community they know and that knows them no longer matters because Chelsea got fashionable? Send them out to pasture determined by some Fairness Board ? Who is the Fairness decider?"

It's not that it is fashionable, it is part of life. Things change and laws become outdated. There was a time slavery was allowed and women couldn't vote. It wasn't because owning a slave was not "fashionable" anymore it was because things change and everyone deserves the SAME CIVIL RIGHTS. Same thing here. They were enacted during a housing shortage and now because of the law there is a GREATER HOUSING SHORTAGE.

These rent laws prevent everyone from getting EQUITABLE and FAIR TREATMENT.

I don't really care about the landlords at all even though it is unfair to them, I care about the renters who have to deal with an inflated price on an apartment.

Bottom line: Phase out rent control, increase the supply and let the market decide the rent.

While we are evicting tenants in violation of property rights they've relied on for many years (at least 30 in the case of Rent Control), maybe we should also evict landlords who paid less than current market rents. Make them buy at current prices too!

That'd have a far more certain effect of reducing prices, making clear that Manhattan isn't for everyone, that people who got here first have no more rights than those who arrive later, and, of course, that property rights exist only so long as the legislature feels like it.

Or is the rule that property rights only count for landlords, not tenants?

@ Financeguy

What "special" property rights for landlords are you referring too?

Are you talking about negotiating and making good investment/deals? What right is that? Freedom to contract? Freedom to purchase?

Until I read this set of diatribes against tenants who had the luck or foresight or skill to negotiate and make good investments/deals, I was under the impression that property rights protected people who got in when prices were low from later price increases.

Now, I discover that some of you believe that the property rights created by our rent control regime are immoral and wrong -- that tenants should be evicted in violation of their property rights because they are paying less than current market rents for people who just arrived.

Indeed, a number of commentators seem to think that people who are exercising their legal right to pay what they agree to pay are being "subsidized" by their contracting counterparties or by the taxpayers. That logic applies equally to anyone who bought at less than current market prices.

The tenants in this case are asserting exactly the same right as homeowners assert against someone who invades their apartment and says "I just got here and I'm willing to pay more than you can, so give me your apartment." It is the basic right of property: the right to say no, sorry, I got here first and I don't feel like giving my home to you no matter how much you think you deserve it more than me and no matter how much bigger your salary is than mine.

If you are going to take that right away from RC tenants, why not just abolish it all around and put everything up for constant auction?

"To dismiss the constitutional arguments, nobody knows what will happen with the Supreme Court.

Do you really want to turn this into a 5th Amendment/14th Amendmendment/Due Process or Con Law Discussion?"

Why not? That's what the original post was about. There's a bunch of other threads on whether rent control is a good idea for not.

I generally agree that rent control isn't very good policy, but I have a hard time seeing how it's a violation of the takings clause more than just about any other regulation imposed by the government. In fact, at this point so many of the landlords have bought their property knowing full well that the rent restrictions exist that in most cases it's pretty hard to argue that any damage at all has been done to them since the market presumably does a fair job of pricing the restriction into the cost of the unit.

There aren't enough rent-controlled apartments occupied by successor tenants in prime neighborhoods for most of the sensible reforms proposed above to have an appreciable impact on the market. What those changes would mostly achieve is a windfall for some landlords/investors who bought rent-controlled properties with full knowledge of the encumbrances. I'm not saying that's a terrible thing - just that it's not a particular triumph for justice and virtue either.

More sweeping proposals to abolish all rent regulation (including stabilization) have a better chance of moving the market... and absolutely no chance of passing the Legislature.

Rent regulation is gradually being phased out, through a highly inefficient process of apartment-by-apartment decontrol. That's the political compromise New York has settled on. The rest is theater.

@Financeguy

What foresight or skill (IT'S LUCK) was it to rent an apartment before July 1, 1971 or March 31, 1953 (depending on the building etc)? Please explain. Seems more like Laziness and Luck to me.

I am not going to argue back and forth over the arguments for and against rent control. I will say and maybe you can agree, that times are very different now. The intent of the law (control the housing shortage) is doing the opposite of what it's intent was.

"How are landowners compensated when the city landmarks their district? Or when zoning regulations are applied/changed?"

These seem like relevant questions. The court, when it was more liberal, did rule one eminent domain in a way that is relevant (and would imply sympathy for the LL.) I am sure they have been many cases on re-zoning and historic preservation over the years.

As for LLs who bought after the rent control laws were enacted - I have no isssue with a windfall tax on their rents or re-sales for a few years, along with a phasing out period for tenants.

Exactly.

Here's a handy reference, from a "what landlords should know" perspective: http://rsanyc.org/pdf/030812_PMRRP_Seminar_Materials.pdf

Of course, all the landlords whose apartments aren't regulated would be hysterical if regulation was abolished all at once. "There goes *that* projected-rents calculation...."

"Exactly" re: what west81st said.

Private property rights have two other attributes in addition to determining the use of a resource. One is the exclusive right to the services of the resource. Thus, for example, the owner of an apartment with complete property rights to the apartment has the right to determine whether to rent it out and, if so, which tenant to rent to; to live in it himself; or to use it in any other peaceful way. That is the right to determine the use.
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Renters are not owners, they are tenants.

West 81st do you have any data to backup that statement? Our of curiosity?

A lease is a property right. Or so every coop owner hopes.

Landlords own subject to the property rights of others, including tenants. There are no "complete" property rights in urban property anywhere in the world, and certainly not in buildings held for rent.

Consigliere: The starting point is the total number of rent-controlled units, between 40 and 45K IIRC. That's a tiny percentage of the total housing stock - probably no more than 2%. If those units are more-or-less evenly distributed, then it's a tiny percentage in prime neighborhoods too. Now, if you could add 2% to the vacancy rate overnight, that would move the market. But it won't happen that way. There's no political will for tossing the elderly and/or disabled out of their homes. That probably takes most RC units out of the equation right there. A lot of successor tenants will manage to hang on too. (All the successor RC tenants I know have lived in their apartments since childhood, so they aren't cheating; you may object to their life choices, but they have played by the stupid rules.) Some successor tenants who do have their rents decontrolled will fight eviction. In twenty years, you might achieve something, but not much more than you would have achieved achieve by simply waiting for elderly tenants to die.

So, do I have hard data? Not much. What I have is common sense. If you want to move the market, you have to go where the real money is: rent stabilization. Rent control is tiny, and it is dying, along with most of the tenants who benefit from it. It's easy to demonize successor tenants who game the RC system, and some of them deserve to be demonized. But from a macroeconomic standpoint, they are insignificant.

Stabilization exists and survives because it WORKS for developers, landlords and tenants.

NYC's current rent stabilization regime encourages building, by subsidizing developers if they agree to stabilization, by making development more profitable because new construction comes in at higher prices than the existing stock, by giving renovators a highly predictable cash incentive, and by making rental properties more predictable for tenants and landlords. It also increases quality of life generally, by making communities more stable and creating a large pool of committed residents who are less likely than owner/flippers to move instead of working to solve issues.

Moreover, more building means more supply. Because it increases total supply, RS almost certainly makes rents and prices LOWER than they would be absent it, on average. However, it probably increases rents in the upper end of the stabilized sector, since some renters would refuse to pay current rents without the security of tenure that RS gives them.

In cities without rent stabilization, anyone with a family and a choice avoids rentals like the plague, since middle class people need to know that they can stay in their homes if they follow the rules, and badly regulated rental markets have trouble providing that security: all it takes is a couple of rapacious landlords taking advantage of tenants who are obviously immobile to spoil the game for everyone. Upper middle class rentals barely exist in cities without RS.

Overall, if RS were abolished, much of the rental stock would quickly be converted to coop/condos. But that probably wouldn't decrease the price of coop/condos, since the new stock would have to be sold to the same people who used to rent it, with a bigger take going to the finance industry. Probably, rents and prices would end up higher, since there would be less profit to building so supply would be smaller. Definitely, prices would be less stable; the owner-occupied market has more problems with booms and busts than stabilized rental markets. Buildings would probably look better, but might be built to lower quality standards in the places not obvious to a retail buyer, in the usual McMansion style.

But if the aggregate would probably reduce choice and wealth, the specifics of who would lose and win are harder to predict. Except, of course, for the expropriated tenants and the landlords who'd receive the property stolen from them.

Sorry, "macroeconomic" should just be "economic".

Any response Financeguy?

Can we agree to those items?

Financeguy wrote:
"Because it increases total supply, RS almost certainly makes rents and prices LOWER than they would be absent it, on average. However, it probably increases rents in the upper end of the stabilized sector, since some renters would refuse to pay current rents without the security of tenure that RS gives them."

That makes perfect sense, and I think it was true through the 90s. Then the bubble hit, and it was politically impossible for the RGB to approve increases that would have kept pace with market rents.

Also, the combined effects of vacancy decontrol and high-income decontrol (based on unindexed thresholds) have turned "the upper end of the stabilized sector" into something of an oxymoron. There are virtually no upper middle class people signing new leases for rent-stabilized apartments in prime Manhattan in 2012. When the apartments those people might consider living in become vacant, they get decontrolled.

financeguy, you DO realize that essentially 0.0% of economist agree with you, right? Obvioulsy not right-wing ones or middle-of-the-road ones, but emphatically not Paul Krugman, Stiglitz, or Reich etc on the left. Krugman in fact is vehemently against it. This is about the ONLY issue every freshwater, saltwater, Keynsian, monetarist, Austrian, new school, old school, whatever economist agrees upon. Rent controll drives up market rate rents and drives down supply.

Rent Control/Rent Stabilization According to the NY Times
I want to know Rent Control and Rent Stabilization...

"New York City has about one million rent-regulated apartments."
http://www.nytimes.com/2009/02/03/nyregion/03rent.html?_r=1&partner=permalink&exprod=permalink

Later NY Times in a different article says

"According to the most recent figures available, the number of rent-stabilized units fell to 848,000 in 2008 from 900,000 in 2003."
http://www.nytimes.com/2010/05/25/nyregion/25appraisal.html

If we make all those, over 5 years, free market. That is the increase we are talking about to the supply.

To the board, if you made roughly 750,000-1,000,000 available as free market apartments I would guess it would greatly decrease rents and decrease the costs of an apartments to purchase. We're talking about 750,000 apartments entering the market. Some people will rent them, some will sell buildings (which will have condo/coop conversions) but over all the market will greatly change.

Consigliere: Is the target of your wrath Rent Control or Rent Stabilization? Rent Control is tiny. Rent Stabilization is huge. You seem to have crossed over from talking about Rent Control to lumping them together.

I am lumping them together because I don't believe they are fair.

I am also not making my argument because I love Landlords and people making money.

@jordyn

"I generally agree that rent control isn't very good policy, but I have a hard time seeing how it's a violation of the takings clause more than just about any other regulation imposed by the government. In fact, at this point so many of the landlords have bought their property knowing full well that the rent restrictions exist that in most cases it's pretty hard to argue that any damage at all has been done to them since the market presumably does a fair job of pricing the restriction into the cost of the unit."

Not commenting on when Landlord's bought their properties because I have no idea. If you buy today with a rent control/stabilized tenant you know what you're getting into.

It is about inverse condemnation, it is about a regulation in place that costs someone money (meaning they lose after the rent is paid) to maintain an apartment with a rent control/stabilized tenant in there.

It is about people who violate the law and the law works in opposite of it's intent.

>I do get it. I agree with RS that it violates the "taking" clause. Flagrantly.

What about gas price caps. Are they also taking?

Truth
>Spring has sprung when jason agrees with Riversider.

And when financeguy and huntersburg agree.:

financeguy
about 6 hours ago
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While we are evicting tenants in violation of property rights they've relied on for many years (at least 30 in the case of Rent Control), maybe we should also evict landlords who paid less than current market rents. Make them buy at current prices too!

That'd have a far more certain effect of reducing prices, making clear that Manhattan isn't for everyone, that people who got here first have no more rights than those who arrive later, and, of course, that property rights exist only so long as the legislature feels like it.

Or is the rule that property rights only count for landlords, not tenants?

financeguy
about 6 hours ago
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Until I read this set of diatribes against tenants who had the luck or foresight or skill to negotiate and make good investments/deals, I was under the impression that property rights protected people who got in when prices were low from later price increases.

Now, I discover that some of you believe that the property rights created by our rent control regime are immoral and wrong -- that tenants should be evicted in violation of their property rights because they are paying less than current market rents for people who just arrived.

Indeed, a number of commentators seem to think that people who are exercising their legal right to pay what they agree to pay are being "subsidized" by their contracting counterparties or by the taxpayers. That logic applies equally to anyone who bought at less than current market prices.

The tenants in this case are asserting exactly the same right as homeowners assert against someone who invades their apartment and says "I just got here and I'm willing to pay more than you can, so give me your apartment." It is the basic right of property: the right to say no, sorry, I got here first and I don't feel like giving my home to you no matter how much you think you deserve it more than me and no matter how much bigger your salary is than mine.

If you are going to take that right away from RC tenants, why not just abolish it all around and put everything up for constant auction?

Again, what financeguy said:

Riversider
about 5 hours ago
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Renters are not owners, they are tenants.

financeguy
about 5 hours ago
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A lease is a property right. Or so every coop owner hopes.

I didn't go to business school, but it's my understanding that in economics value can be either intrinsic or subjective, meaning reflecting current trends. of these, the theoretical value defining a rent regulated apartment is neither. furthermore, while rent regulation is essentially a philosophy, the buildings themselves are real, tangible property legally owned by a specific party. to equate the philosophical property rights tenants may have to the real, actual definition of "property", a concept older than legal tender, is absurd. and I'm not sure someone who doesn't understand this should go around calling himself financeguy.

jason10006
about 4 hours ago
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>financeguy, you DO realize that essentially 0.0% of economist agree with you, right? Obvioulsy not right-wing ones or middle-of-the-road ones, but emphatically not Paul Krugman, Stiglitz, or Reich etc on the left. Krugman in fact is vehemently against it. This is about the ONLY issue every freshwater, saltwater, Keynsian, monetarist, Austrian, new school, old school, whatever economist agrees upon. Rent controll drives up market rate rents and drives down supply.

How many of these Austrian New Schoolers are New Yorkers? And doesn't Krugman have better stuff to do?

real property vs. personal property. Jesus f. Christ, even I know this.

meaning co op

Tenants have a leasehold interest. That's their owneership.

http://en.wikipedia.org/wiki/Leasehold_estate

Termination

"The landlord may terminate the lease at any time by giving the tenant notice as required by statute. Typically, the landlord must give six months' notice to terminate a tenancy from year to year. Tenants of lesser durations must typically receive notice equal to the period of the tenancy - for example, the landlord must give a month's notice to terminate a tenancy from month to month. However, many jurisdictions have varied these required notice periods, and some have reduced them drastically."

come on. you are defining it as a relationship between 2 parties, but defending an unrelated 3rd party's fight to enforce its will. tsk tsk

MIT Study, "What Were the Effects of Ending Rent Control in Cambridge, MA"
http://seii.mit.edu/research/study/what-were-the-effects-of-ending-rent-control-in-cambridge-ma/

sorry, 3rd party's RIGHT.

You are citing Wikipedia?

but you ignored words like "as required by statute" without providing any context regarding the laws in NY, and words like "typically" which any real New Yorker knows doesn't apply here.

>MIT Study, "What Were the Effects of Ending Rent Control in Cambridge, MA"

Are you suggesting that we uproot all NYC Rent Control tenants and move them to Cambridge?

What the heck is the relevance of Cambridge, MA to NY, NY? Do they have a miniature Statue of Liberty there or something?

do you honestly believe I ignored those words or made a mistake? read them again. statute refers to the manner in which owner can terminate. it does not challenge owners RIGHT to terminate.

I do know that you went to Wikipedia and looked up a generic term and magically thought it would apply to NYC.

again, you are defending tenants rights in this case by defining this in terms of a relationship between 2 parties, and yet you don't respect the very basic principles of this relationship.