Why rent control laws need to change

https://www.nytimes.com/2024/09/09/realestate/renters-manhattan-morningside-heights.html?unlocked_article_code=1.JU4.teud.fRYlipi4hCYR&smid=url-share

Rent control laws are screwed up no matter what city, not just NYC. There are plenty of real world examples in other cities and countries that clearly show rent control does not work. Of course people who live in rent controlled units will never, ever leave, and will scheme at any cost to get their friends and family in if they have to leave. This is basic human nature, you don’t need a PhD in economics to understand this, and it’s sad that our “leaders” push rent control as an obvious attempt to buy votes

https://www.wsj.com/opinion/rent-control-is-a-great-destroyer-79336c82?st=tvwmm3flh5a04vg&reflink=article_copyURL_share

I think that we can differentiate between rent control, and rent stabilized. Unfortunately, like most things administered by the government, they're done poorly and inefficiently. Rent stabilization provides long-term stability for people, especially important to families with children that have made friends, school etc In a particular neighborhood. However, let's tie it to income, and provide reasonable increases for owners. Perhaps every 2 years, a renter needs to re-qualify for the program by submitting proof of income etc. If they don't comply, the apartment goes to market rent.

I’m kinda impressed that no one in the family decided to renovate in all those years. At this point, though, it seems like tradition.

While I am not in favor of price regulations, rent control would make more sense if it worked something more like California's property tax system, such that all rents for all residential housing have capped annual increases tied to some meaningful, objective economic metric, not some waste of money board of political hacks, and the base rent resets when the property turns over. The "family stability" argument is not a economic class argument applicable to lower income housing. The vast majority of stabilized apartments in NYC outside Manhattan and certain parts of Brooklyn and Queens do not trade at rents below market rates. The current law just creates a corrupt system for a small part of NYC.

When families/ individuals are living in a neighborhood that suddenly becomes gentrified or trendy, they can quickly find themselves without an apartment. Without some sort of rent stabilization, they would be out of luck. And this has been the case with many neighborhoods throughout New York over the last 25 years. Also, an important component to the rent stabilization law is the right to 2-year leases and renewals.

Maybe I'm just getting old, and I remember Manhattan when it was filled with plenty of working class renters. Many of them were my friends and my children's classmates who lived in various downtown neighborhoods and rent, stabilized tenements. They weren't gaming the system, just wanted to be able to stay in a home that their kids were born into and a neighborhood where they had tangible connections.

Keith, Renters don't make a choice to stay put. They have to buy for that and to keep the neigborhood connections.

Stability and perceived freedom is the whole reason for buying.

If you want to stay somewhere, buy it. But there is a huge political constituency for renters who demand excessive stabilization laws.

There's also a huge political constituency for homeowners who demand their mortgage payments be subsidized by a tax deduction and that no other property be built near them. (See for example the idiots in Windsor Terrace bellyaching about a 19 story apartment building.)

And landlords have their perks too - like the ability to depreciate an asset and pass it to heirs with a free step up in basis.

So everyone gets their little bit. Everyone except market rate tenants that is.

PS, I love the tax perks of being a landlord. I can take a bunch of cash out of my rental property tax free thanks to depreciation. I can use it up to 10% of the time that it's rented without losing any tax benefits. I can buy stuff for the property and write it off, usually in the first year. And if I never sell, the gain will never be taxed.

@300 why do only buyers get the opportunity for continuity of a living space? Sometimes I really think this group is living in a very small fishbowl. It doesn't make you a socialist to want to support working class people, who under many circumstances are probably working harder than you are, for 1/4 of the pay.

It's really quite a simple idea, if you rent an apartment, you can have an expectation of renewals along with a reasonable expectation of increases that can also be tied into your income. But I'll let the rest of you continue this argument. Perhaps we just agree to disagree as they say..

Keith,

Buyers are not guaranteed a stay in their place either for fixed cost. They may have to pay higher mortgage paymenrs such 5/1 going from 3% to 7%, higher taxes which can go up 30% in 5years in NYC multi-family and maintenance. Many can't afford that either and they move. There are plenty of small apartment buyers at the low end making $100k or less in NYC. You are thinking of buyers as rich. So why special treatment for renters. I realize you are in favor or reasonable increae in rent. If that increase is inflation + 3% (with prefential rents allowed), there wouldn't be that many complaints and not much will be rent-stabilized.

The govt has Section 8 and other subsidies for people at lower income but they do not include a right to stay at place.

-----------------------
@300 why do only buyers get the opportunity for continuity of a living space?

“if you rent an apartment, you can have an expectation of renewals along with a reasonable expectation of increases that can also be tied into your income”

Why??

You don’t OWN the home! The landlord does. Do they not have the right to refuse renewal if they want to move in, or move in a family member or even a friend? What about if they want to sell and get out of the landlord business? Selling a tenant occupied property is difficult and usually results in lower sales price. As far as rent increases tied to a tenant’s income, what if the tenant didn’t get a raise or increase in income but property taxes, maintenance, insurance, utilities, etc, etc, all go up as they do every year? If in some cities a lease automatically goes month to month and just cause is needed to terminate a lease then it is incumbent on a landlord to know that and decide if they want to be a landlord under those conditions. But absence of eviction control, I don’t see why a tenant should expect their lease to get renewed in perpetuity. As others have said, if you want stability, BUY

Keith,

Here are a couple of examples. $2k or less montly total with current lower mortgage rate (I went to Bensonhurst yesterday before someone asks whether I will ever set foot there; mix of orthodox jews, Asians and Italians).

Is the buyer for these any richer than some one paying $2k rent in rent-stabilized 1 bed room in Manhattan?

Again your suggestions are sensible that there should be some type of mean-testing and that rent increases should be fixed to something reasonable but defining what is "reasonable" is the elephant in the room.

Oh, I would like my Obamacare payments not to go up 6-10% every year. $30k+ for a family of 3. The point is there are so many variable costs in our economy, it is not practical to fix a particular cost.

https://streeteasy.com/building/1171-ocean-parkway-brooklyn/4c
https://streeteasy.com/building/303-avenue-p-brooklyn/d4

$1300 monthly.
https://streeteasy.com/building/2807-kings-highway-brooklyn/1n

Sport,

Thanks for pointing out California law. I don't think most people would have a problem with that.
---------------------------------------------
Limits on Rent Increases
The Tenant Protection Act caps rent increases for most residential tenants in California. Landlords cannot raise rent more than 10% total or 5% plus the percentage change in the cost of living – whichever is lower – over a 12-month period. If the tenants of a unit move out and new tenants move in, the landlord may establish the initial rent to charge. (Civ. Code § 1947.12.) The percentage change in the cost of living for most areas can be found through the national consumer price index by the Bureau of Labor Statistics or California consumer price index by the California Department of Industrial Relations.

In addition to the statewide limit, local rent control laws may further restrict how much a landlord can increase rent annually. Tenants and landlords should consult local resources to see whether their city or county has rules that may offer additional protection to tenants.
https://oag.ca.gov/consumers/general/landlord-tenant-issues#:~:text=Limits%20on%20Rent%20Increases,-The%20Tenant%20Protection&text=Landlords%20cannot%20raise%20rent%20more,Code%20%C2%A7%201947.12.)

The view that a landlord can boot a tenant just to get a bit more rent is a very American one. In Europe it's common for renting to look like owning. Owning isn't subsidized by the tax code for one thing. But in some places, leases are long-term (3+ years) and tenants might pay common charges and property taxes, which are lower bc nobody has a doorman and income taxes are higher. Limits on rent increases are common. This is why they have stable housing situations despite much lower homeownership rates than the US.

So there are other systems and they can be effective. Here we subsidize homeownership but that's a choice we've made.

George, What are rent caps in France and Germany?

George, BTW, a lot of people like American income and growth but European system which has very little growth and wealth accumulation opportunity. I do have a couple of friends with European roots who made their money here and then moved to Paris to semi-retire. There is even $10k international private school under French curriculum vs $65k here.

I am going to preface this with the observation that I cannot believe how far I have strayed from the Libertarian I was when I graduated university. So, with that preface, I always love the slice of "what really rich people with too much time on their hands talk about" I get when I visit this forum. I am going to put the entire topic of "complaining about housing subsidies for anyone in NYC, whether they be renters or owners" in the "least of my concerns" given the broader world in which I live. Anyone watching the debate tonight? . . . I didn't think so.

Remember tenants never have to pay if something breaks. Or any maintenance whatsoever. As far as booting out a tenant to try to get a higher rent, that can be pretty risky. You don’t know how long it will take to get a new tenant. A long vacancy can eat up any rent increase. With your current tenant, you know what you have. New tenant? Despite all your due diligence, background checks, etc, etc, you don’t know what you are getting. You may find someone who is willing to pay more but they maybe a serial complainer and a pain in the ass or worse. In my 20 plus years of being a landlord, I never raised any rent more than 6%, and in many cases, I didn’t increase the rent at all. I was fortunate to have mostly great tenants and it’s just smart to not push them out if they take care of your property to try to chase a couple hundred dollars more rent per month. And most Mom and Pop landlords I’ve talked to agree with the general idea that if you have a good tenant, you hold on to them and are are reasonable with rent increases. My bigger issue is if you want to move in a family member or yourself, and the tenant puts up a fight and makes you go to court to evict them. Or if you want to sell the property. In many cities and states, a reason of wanting to sell a property is not “good cause” to refuse to renew a lease. It is the landlords property right? They may want to sell not out of pure greed but because they need the cash for an emergency or a life changing event. Unfortunately many tenants and politicians forgot that despite the landlord actually OWNING the property, the tenant should have at least the same, if not more rights to the property, which is just crazy

why does any NYer care about this landlord? Why is someone else's business my concern?

>when I graduated university.

Americans graduate college

I'm in favor of elimination of RS/RC as long as there is an immediate 100% windfall profits tax on the increase in value of the properties. These $ can be used to produce affordable housing for the displaced tenants, and the landlords will be free to charge whatever they want moving forward. If you are against this, it belies your true agenda, which isn't "fairness" but in fact giving landlords profits which they were never promised nor entitled to under the terms and conditions under which they purchased the properties.

nyc_sport,
I'm not sure what you base this statement on:
"The vast majority of stabilized apartments in NYC outside Manhattan and certain parts of Brooklyn and Queens do not trade at rents below market rates. "
I have either bought on my own account or brokered a transaction on dozens of buildings in Brooklyn and Queens and the vast majority has below market RS units. Also, I'm not familiar with a single Coop conversion in those boroughs which didn't have them.

"Americans graduate college". Depends. Some graduate from colleges, some graduate from universities. Many attend a particular college within a university. My brother and sisters are graduates of different US colleges. I'm a graduate of a US university.

Nobody graduates college. College graduates you. Anyone who says "graduate college" needs to hand back their degree

@30yrs - A windfall tax is an excellent idea. Creating new housing is expensive. It would have to be a pretty steep tax, I imagine.

Don't we say graduate from college? I think George is right: colleges and universities graduate their students. But hey it's an online forum about RE so I for one am not keeping score

Americans graduate from college not university. People are also not thermometers, they are not graduated. They move on, they graduate on to the next thing, which is not college, which is real life. In real life America, we all have an interest in citizens having stability in their lives, including citizens who don't own property ... do we really need to go over that lesson again or should we debate slavery and women voting?
Turning rental housing into a stock market is a horrible idea. Can you even imagine?

I believe I already noted above the slice of "what really rich people with too much time on their hands talk about" I get when I visit this forum.

I thought you were a lawyer?

Relevance?

Btw - to be clear, I have many slices of "what really rich people with too much time on their hands talk about" in my life because, depending on who is doing the viewing, I could be viewed as such a person myself. Each slice has its own flavor - this NY real estate edition is quite different from those anchored in the other cities I call "home" from time-to-time.

To the question asked earlier, here's a summary of rent restrictions in major western European democracies. Here in the US we seem to be both more landlord friendly and less affordable than European cities. Worst of all worlds!

***

In Western European cities, rent control and good cause eviction laws are widely implemented but vary significantly by country.

Rent control laws aim to regulate the maximum amount landlords can charge tenants, preventing sharp increases and making housing more affordable.

These laws typically cap rent increases either at a fixed rate (e.g., tied to inflation or wage growth) or based on government-set guidelines.

Germany: One of the strictest systems, where rents in certain cities like Berlin are capped, and increases are limited to a percentage within a timeframe (e.g., 10% over three years).

France: Major cities like Paris have rent caps tied to a reference index. Rent increases are limited to the rate of inflation.

Netherlands: The government regulates rents for social housing, and there’s a point-based system to determine maximum rent for private rentals.

Spain: Some cities, like Barcelona, have introduced rent control zones where limits are placed on rent hikes.

Good Cause Eviction laws protect tenants by restricting the reasons landlords can evict them, requiring “good cause” such as non-payment, damage, or the landlord's own need for the property.

Good cause eviction laws often accompany rent control, ensuring landlords can’t arbitrarily remove tenants to raise rents.

Germany: Evictions are only allowed under specific circumstances, and landlords must often offer alternative accommodations or justify the necessity of eviction.

France: Evictions can only occur for non-payment, the landlord moving into the property, or if the property is being sold.

Spain: Tenants can only be evicted for non-payment or breach of contract, and some cities are tightening rules to offer more tenant protection.

In general, Western European cities prioritize tenant protection, and their rent control and good cause eviction laws reflect a desire to balance affordability and housing market stability.

**

George again: the problem with our rent control is that it protects only certain tenants. It should be either abolished or made universal.

Completely agree with this: if you want to have tenant protection, make it universal!

I guess in NYC, there will be have to be cap on real estate tax increases and employee salaries as well. Right now for multi-family real estate tax cap is 8% per year 30% in five years.

Europe doesn't has as much of this issue as real estate taxes are much smaller and govt expenses are funded more by income taxes and stamp/registration taxes. Level of interest rates is also lower in Europe.

So it all boils down to what the rent cap is, how much it exceeds inflation, and how at least real estate taxe increases, utilities, insurance rates are capped in relationship to rent cap.

Germans let you do 15% in three years. NYC rent stabilized land-lord will die for 15% over 3 years. See execerpt below.
-------------------------------------------------------------
Capping limit as upper limit section 558 (3) BGB
The cap is a further limit for the rent increase demanded. If the rent is still below the local comparative rent, it may not be above the cap. According to section 558 (3) BGB, the rent may not have increased by more than 20 % within the last three years before the rent increase becomes effective. The limit is 15% if the adequate supply of rented housing for the population is at risk and a corresponding ordinance has been issued by the federal state naming the municipality of the affected flat. In Berlin, the lowered limit of 15 % will continue to apply until May 2023 due to the Capping Limits Ordinance of 2018.

The 15 or 20 % are calculated from the net cold rent paid three years before the targeted start of the new rent increase. Rent increases according to sections 559 cont. BGB due to modernisation and increases in operating costs are not taken into account.

https://www.kuhlen-berlin.de/en/glossary/rent-increase-mieterh%C3%B6hung

Compare this to NYC rent-stabilization. The German law is only protecting from rent increase higher than customary rather than forcing the rents to be below market.

"A fair balance is ensured by the connecting factor of the comparable rent customary in the locality, so that the landlord can demand the payment for comparable housing in the same municipality in the case of an existing tenancy, but not the rent which he could achieve in the case of a new tenancy."

The German system seems more rational. I think NYC law is influenced by national norms where one's wealth is held primarily in real estate. Middle class Europeans are much more likely to rent. And agree with others here that if you're going to legislate rent increases for social cohesion it should be across the board, not just a lucky few. It has to make sense for everyone, landlords and renters. If that doesn't work for political and cultural reasons then the city has to incentivize a lot more building that is truly affordable. Additive and more expensive solutions are inherently more politically doable because no one at the table comes away feeling their ox has been selected for goring.

86 years of rent control (!):

The New York Apartment That Has Sheltered One Family for 86 Years https://www.nytimes.com/2024/09/09/realestate/renters-manhattan-morningside-heights.html?unlocked_article_code=1.K04.XgLM.AdIyh14Iukpt
Love what they haven't done with the place 100% on warmth and charm

Building in NYC is expensive even if the land cost is zero. Culprits: crowded city, labor costs, long DOB approval process, building codes (there was a thread on elevator cost being 2-3 times in NYC vs Europe), ability of any one to call the DOB anonymously to report site safety issues and rather strict fines by DOB for the smallest of safety violations (such as you have a little extra garbage on site) which they will find if they come. Anonymous people may just be anti-development.

Then there is existing housing with market rents in areas where people don't want to live due to crime and poor schools.

"If that doesn't work for political and cultural reasons then the city has to incentivize a lot more building that is truly affordable."

True, schools, a huge driver of RE prices, are just holding tanks in many affordable neighborhoods. I don't know how you deal with that.

In NYC schools don't appear to be zoned to homes, the system is different. Proximity to good schools helps, but is not deterministic of RE prices like in the suburbs.

In the story in the NYT article the elderly couple has a 4 br apartment the length of a building paying less for it than what a friend if mine with a family of four pays for a one bedroom, also on UWS. Why does the elderly couple “deserve stability” and the family in a market rate rental does not?

Krolik,
K-5 is zoned and it is a major driver of kid's success academically. If the kid in a bad K-5 school, not much teachers in higher school can do to make up for it. But then the education level of parents of children in a particular school also has a huge impact on how good the school is. So a little bit of chicken and egg situation with schools.

@300 Definitely chicken and egg with schools. Majority of elementary schools i checked in any neighborhood i was comparing were quite good. I think you mentioned in another thread that middle schools were the bigger problem? And those are not zoned to an address.

>Why does the elderly couple “deserve stability” and the family in a market rate rental does not?

Krolick, are you the deservor in that elderly couple's situation?

Krolik,

You were looking in Manhattan below a certain street. Not that many bad K-5 except locations with a large percentage public housing. Now expand your search to BK and Harlem. It is a different story with pubic housing just one component.

I know several families who couldn't afford Manhattan as their family expanded or income changed (including due to retirement) and moved to burbs or left the area altogether for cheaper cost of living. People for East Coast have been moving to FL forever in their retirement with lower cost of living a big part. So stability of wanting to stay in the same place doesn't really exist in a free market economy. What we do have is govt safety net programs.

Krolik: Why does the elderly couple “deserve stability” and the family in a market rate rental does not?

Yes, K-5 is generally considered critical to later academic success. @Krolik you're right it is chicken and egg. Educated parents are going to flock. They're in a position to discern, advocate, etc. Kids end up paying for the situations they were born into...

For rent control maybe there's a way to do an occasional review - maybe every 10 years. I guess that could get expensive. But my guess is these folks are in a position to pay more than they do.

>> Krolick, are you the deservor in that elderly couple's situation?

The elderly couple is consuming more real estate than they need or than they would in a market situation. That decreases the supply for families and inflates everyone’s market rents. A couple with kids and paying more *deserves* more space than they are getting. I am not a renter right now so this does not apply to me now, but everyone knows NYC is so expensive for young people and families, it does not make sense that some are hoarding space they are not using.

Random and birth lottery is not the right way to distribute government subsidies, in my opinion. And in general, the way rent control is implemented is bad. The same tenant protections should be in place for everyone. Right now some people get too many protections and others get too little.

@MTH rent control in NYC is not means tested. You can be rich and pay very little. My guess is the couple from the article can live in less space, freeing up room for other folks. Also, they would prob prefer a more updated apartment. They would get what if they weren't living in a huge place continuously paying less than the cost of upkeep.

@Krolik - Yes, it was just a thought. It'll never happen but it seems to me every few years they should means test. Grandfather in the people who have their places - or not, but you'd get a lot of pushback if you tried to impose it on them now - and for new applicants offer it only to those who are struggling based on income, # of minor dependents...something. I feel esp bad for families and people trying to break into the arts. And I know means tested programs can be expensive to administer.

Not an economist but I wonder if changing the tax laws that favor private equity carry would do more to make the NYC housing market affordable than changing the rent control laws would...

Ali,
Private equity carry earners are in high-end of the housing market where there is more than enough supply. While it will certainly help plug a little bit of hole in federal deficit, there is virtually no impact on NYC real estate prices except perhaps Ultra-luxury. So tax that carry as regular income (and eliminate that step-up basis at death as well beyond certain $ amount) as it may be the right thing but no party actually does it despite talking about it.

The issue is housing supply at the lower/mid end in NYC but that issue as I mentioned above in the thread is due to high cost of building in NYC due to density, DOB regulations, high transaction taxes such as transfer and mortgage taxes, and people not wanting to live in certain areas which are still affordable.

What could help NYC would be the expiration of the Trump tax cuts in 15 months (not that I'm counting down) which ironically would lower taxes for high-earning New York homeowners. Although the standard deduction would go down and rates would rise, the restoration of SALT could be material. Figure that a family with $1m income (which isn't crazy for NYC nowadays) pays $100k of state/local income tax and maybe $50k of local property tax if they own. So the $150k of SALT deductions increases taxable income by maybe $60-70k. That would be a big positive for NYC sales especially and rentals to a degree.

BTW, private equity has a lot of well-paid vice presidents, heads of marketing, CFOs, lawyers, etc. They aren't taking home the $20m carry checks that senior partners get but are often in that $1m bracket that drives the $3-5m belly of the Manhattan market.

>Not an economist but I wonder if changing the tax laws that favor private equity carry would do more to make the NYC housing market affordable than changing the rent control laws would...

You are not an economist, and you are also not an idiot, so there must be another reason for this question

Let's face it:
The real issue is that for many of these buildings the last transaction price was well in excess of the market value. So now the owners are whining trying to get the laws changed to bail them out

That's it. Everybody bought with the expectation that they could upgrade units/lobbies etc and charge higher rents.

They also assumed they would be able to force out statutory tenants using extralegal measures.

For years, Argentina imposed one of the world’s strictest rent-control laws. Now, the new president has scrapped the rental laws and Buenos Aires is undergoing a rental-market boom. https://www.wsj.com/world/americas/argentina-milei-rent-control-free-market-5345c3d5?st=crUuJb&reflink=share_mobilewebshare

It sounds like Argentina went from one extreme to another. Politically, it's hard to imagine that in NYC.

From the same article:

'President Biden recently called for some rent increases to be capped at 5% annually. And Vice President Kamala Harris said that if elected president she “will take on corporate landlords and cap unfair rent increases.”'

If true is it something they can/would pull off via executive order? Because there's no way that is passing Congress.

I can't imagine what authority the Constitution gives the president that would permit an executive order to set rent increases, or what existing law that is going unenforced that could be used to direct the government to enforce so as to limit those increases.

The current RealPage lawsuit is a start:

https://www.justice.gov/opa/pr/justice-department-sues-realpage-algorithmic-pricing-scheme-harms-millions-american-renters

(wonder why NY isn't part of this. Does RP not operate in NY?)

The nonsense being proposed as a viable response to high cost of housing makes my head explode. $25,000 to first-time home buyers? How could anyone propose that with a straight face?

“The nonsense being proposed as a viable response to high cost of housing makes my head explode. $25,000 to first-time home buyers? How could anyone propose that with a straight face?”

This is being proposed by the same people who want to forgive student loans. They also want to tax your unrealized capital gains. And force you to buy electric cars and stoves. These are just some of their bright ideas. It’s absolutely not surprising at all, when you consider where it’s coming from. What makes my head explode is the vast majority of NYC voters will vote in November for the asinine politicians who are proposing these ideas

@MTH the subsidized rents programs in NYC are not targeted or poorly targeted. To help people in the arts/student/young families politicians should instead focus on keeping market rate rents down for everyone. The laws don't change probably because politicians and their families are often the ones in rent controlled apartments.

For example, I have a friend in a large rent regulated apartment for over a decade. She and her husband have a high income and her parents are NY State politicians.

Or this: https://www.nytimes.com/2008/07/11/nyregion/11rangel.html

I love the irony that everyone hear is complaining that RS/RC is somehow "unfair" to landlords but meanwhile those landlords are engaging in monopolistic practices, breaking the law with illegal evictions, fraudulently increasing rents. And you're all crying about the "poor landlords."

Think about this:
Since 2019 those same landlords complaining that HSTPA of 2019 is bankrupting them have foregone something like $6 billion in lost rent keeping units vacant on purpose hoping this will force state legislators to repeal a duly enacted statute

And spouting the ridiculous mantra that they would lose money if they rented them while using stripper math accounting.

And BTW perfect is the enemy of good, and since the current system isn't perfect you all want to scrap it. You all saw what happened after the George Floyd incident where no one on NYC had an actual dog on the fight. Wtf do y'all think would happen if RS/RC wereagically

Repealed and all of a sudden there were 2 million more homeless people on the streets what kind of bedlam would ensue?

I think most people on here are most sympathetic to market rate renters, many of whom are poorer than the RS/RC renters and are unfairly paying prices several times higher. Why should I or any market rate renter or anyone else have to subsidize (via higher taxes and rents) all the rent controlled tenants that are not even means tested?

On the apartments sitting vacant, the way I understand it, most of these vacant apartments are completely unlivable (not in the Rinette's sense of the word, but quite literally) and require extensive renovations to bring to code, and an investment of 30k plus. Where the prices for these units are set, landlord would not get that money back ever, so they are not willing to spend the 30k. Like, what is the reason they would take that money and spend it? Public good + your approval? Even if they did spend the money out of the goodness of their heart, you would continue to shit on them on this forum, so they are rationally deciding not to do it.

Also, your logic on millions of homeless people does not make sense to me. If rent is raised on 2 million people, that not only means 2 million tenants potentially looking for apartments, but also lots of empty apartments looking for tenants. Likely more benefit on inventory side actually, since rent controlled tenants are very likely to be overconsuming real estate right now which costs almost nothing to them. The net result should be a strong downward pressure on market rents at the lower end of the market.

Just give vouchers to the poorest tenants (means-tested regularly) and that should address the problem. On the other hand the wealthier couple in 4br apartments like the one described in the NYT article should just get a smaller place at a market price (which they can totally afford based on what they pay today).

“Repealed and all of a sudden there were 2 million more homeless people on the streets what kind of bedlam would ensue?”

What a ridiculous statement, frequently parroted by homeless advocacy groups. Most normal, rational people, if their rent is raised, they move somewhere else where it’s less expensive. NYC is the most expensive rental market in North America. Are there absolutely no less expensive places to rent in outside of the city? Or do you feel certain people have a god given right to live in NYC regardless how much money they make and how much it costs to live here?

Turbo, Fundametal issue with NYC rent stabilization is that rent increase is decided by a political process rather than linked by law to Inflation + utility, taxes and insurance cost increases above inflation + 1% + cost to comply with new city regulations on housing. This still give stabilization. And there are plenty of cheaper areas within NYC.

Krolik,

1) they were occupied up until very recently. Yet when the tenant moves out they become completely unlivable? Not possible.
2)The apartments are collecting ZERO right now. If they rent for only $1,000 /month (significantly below average for the vacant units) that's a 40% annual return on $30k. So basically the highest return you could imagine on the investment.

911turbo,
Your concept that 2 million people would simply move out of state is juvenile.

"And there are plenty of cheaper areas within NYC."

Really? And what are the rents there? The cheapest 2 bedroom unit in the entire Bronx is $1,710 requiring an annual income of $68,400 while the AVERAGE income is $56,492 and the 25th percentile is $42,390. In Queens the cheapest studios are $1,500 requiring a $60,00

300, speaking of regulations we now know how much it costs to skip fire inspections...

"And there are plenty of cheaper areas within NYC."

Really? And what are the rents there? The cheapest 2 bedroom unit in the entire Bronx is $1,710 requiring an annual income of $68,400 while the AVERAGE income is $56,492 and the 25th percentile is $42,390. In Queens the cheapest studios are $1,500 requiring a $60,000 annual income. The 25th percentile is $27,100

Ali, Ha. Rot in Adams administration in deeper than I thought.

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300, speaking of regulations we now know how much it costs to skip fire inspections...

30,

That is correct. But there are section 8 and other housing program vouchers who make less than that income. And don't forget public housing. Any many people just need 1 bed or studio.

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Really? And what are the rents there? The cheapest 2 bedroom unit in the entire Bronx is $1,710 requiring an annual income of $68,400 while the AVERAGE income is $56,492 and the 25th percentile is $42,390. In Queens the cheapest studios are $1,500 requiring a $60,000 annual income. The 25th percentile is $27,100

“911turbo,
Your concept that 2 million people would simply move out of state is juvenile”

No more ridiculous than your statement that we would have 2 million more homeless. People are more resilient than you give them credit. Yes, many will move farther out. Even to parts of New Jersey, heaven forbid. One hour commutes to work are not so uncommon. People deal with it. Most people, unless their are underlying mental illness or medical issues don’t just suddenly go from living in an apartment to being homeless. You don’t make enough money to live in New York City, you need to move somewhere where it’s cheaper. I get it Newark or Paterson New Jersey are not appealing but that doesn’t mean taxpayers should subsidize then living in NYC just because it’s convenient for them

Most importantly, for every one of those 2m people moving out of an apartment there will be one or more person moving in (freeIng up space elsewhere in the city). The net number of people and apartments is the same, and in fact if the elderly couple occupying a rent controlled 4br rents a 1br instead, there would be a lot more space available for families. I would expect just an optimization of how space is used + increased investment by landlords which would improve housing stock.

In addition to the good points Krolik and Turbo are making, I think people forget that we have voucher and other govt programs to subsidize housing costs in all states. These programs are clear recognition by the voters that some people will not earn enough to afford to pay their rent even in Alabama (see below) and they need help from the Govt. Federal govt picks a part of the tab to recognize the freedom of movement in the country. Why add additional distortions in terms of rent stabilization/control programs like NYC?

Alabama 1 Bedroom rent is $945. So 40x gives you $45k.

https://www.zillow.com/rental-manager/market-trends/al/?bedrooms=1

The "let them eat cake" attitude here reminds me of what an echo chamber for the 1% this place is. And whenever faced with flat facts certain people just stick their heads in the sand and pretend the inconvenient responses don't exist.

Go out and talk to some actual homeless people. Not just one or two, but a whole bunch. Ask them "how did this happen" or how did

Go out and talk to some actual homeless people. Not just one or two, but a whole bunch. Ask them "how did this happen" or "how did you get in this situation"? The overwhelming majority will start with "I lost my apartment."

Okay, as much as the "$25K for every first time home buyer" makes my head explode as the statement of the candidate I am voting for, this statement by someone I follow on this forum hurts more: "I think most people on here are most sympathetic to market rate renters, many of whom are poorer than the RS/RC renters and are unfairly paying prices several times higher."

Um, I do not belive it to be the case that many market rate renters are "poorer than the RS/RC renters and unfairly paying prices several times higher."

Of course we have no way of actually testing whose belief is grounded in fact here, but I personally view the perspective as a litmus test. It never ceases to amaze me how highly intelligent analytical people can zero in on and criticize public policies that they perceive unfairly adversely affect them without even thinking about the myriad public policies that unfairly benefit them. It is a victim mindset that I correlate with people who will never have enough and will always find a way to blame someone else for their own failure to achieve whatever status marker someone else has set for them or whatever status marker they desire from pressing their nose against the glass of a view of what they perceive as a better life.

I keep checking back to see if @George has any additional thoughts. He speaks my language and has articulated solid points in this thread. What say he?

To elaborate: @George speaks country club/Ivy League/FedSoc language. I don't see that confluence often. He understands completely the perspectives of @krolik, @300Mercer, et al, and can translate those perspectives into elite political dialogue. And what I love most after a substantive @George post is an @Inonada inquiry.

@MCR here is a clarification: on average RC/RS tenants are poorer than market rate tenants (NYC has clear statistics on this). However, it is also true that some/many RC/RS tenants are wealthier than some/many market rate tenants. That is because RC/RS programs are not means tested and are often effectively hereditary, while some of the poorest people in New York - most typically recent immigrants - aren’t able to get those RS/RC and are instead crowded into small, expensive market rate apartments.

I am benefitting from many things in life (including from living in a country and city with extraordinary economic opportunities), but this opinion is not about me. (And I own my residence. )

It is about NYC being too expensive for so many younger people, and about lottery being a bad, insufficiently targeted way to distribute subsidies, in my opinion.
RS/RC program also contributes to suboptimal use of space and insufficient investment into real estate, both of which drive up market rents that price out of NYC artists, young families, recent immigrants, etc.

I would be down with the same amounts of taxes and subsidies out of my pocket, if the money went to those that actually needs it and not to the few selected by birth lottery.

George>> So everyone gets their little bit. Everyone except market rate tenants that is.

My bank account begs to differ. Sometimes, people trip over themselves hard in pursuit of subsidies, tax benefits, and/or past performance. Collectively, they push prices to “unreasonable” levels given sober analyses of expected earnings and risk.

>> And what I love most after a substantive @George post is an @Inonada inquiry.

I don’t feel too out of touch these days to opine about rent stabilization as a policy.

Is the favoring of locals born into RS or those lucky / skilled enough to get themselves a RS apartment fair? I dunno, is the favoring of those born into US citizenship or those lucky / skilled enough to immigrate fair? Does it make sense to dole out subsidies via lottery make sense? It seems like we’ve been doing it for green cards for decades. I guess the US could be more “fair” about it. We could dole out green cards that confer rights to anyone applying for 2 weeks per year, but that probably does not have the same effect on the composition of the nation. Similarly, I don’t think $400 rent vouchers for all do the same either.

I do look at the laws a bit and wonder what the heck people are thinking.

The pre-2019 laws were pretty clearly aiming to eventually ending rent stabilization over the long term. But the implementation was asking for the abuse that unsurprisingly ensued. Big rent increase from vacancy => push tenants out. Big rent increase from improvements => make luxury-level improvements. Hard rent threshold to deregulate => do whatever it takes to go above threshold. Hard income threshold to maintain => hide / prevent income gains.

A simpler implementation would have been to close the gap between preferential and market rents more slowly an evenly. E.g., an extra 2%/yr increase would close a 2x gap after 35 years. Or 1%/yr would close it after 70 years.

The problems start when you sit there carving out exceptions. “Grandma can deal with 2%/yr but not 3%/yr. So let’s leave her at 2%/yr but squeeze out the policy gap it leaves via vacancy increases.” Oy vey…

Similarly, I look at the 2019 law and feel similarly. Pretty clearly, the policy goal is rent stabilization forever. The rent increase from improvements is structured kinda stupidly — 6%/yr rather than based on (say) rates. And the caps are ridiculously low, at $15K every 15 years IIRC. How does one use that to maintain an apartment sustainably? Why is it the same for a studio vs a 4 br?

I kinda look at that and think, OK I guess as a landlord you gotta make the whole thing work out based on rental yield. Which means maintaining the apartments at the absolute minimum of habitable conditions. So you get to a race to the bottom between landlords in trying to achieve that.

I also think WTF on the suddenness of the shift in the pre-2019 policy vs the 2019 policy. Basically, the old law supported some level of sustainable market prices for RS apartments. The new law cuts that “sustainable markrt price” significantly, perhaps in half or maybe as much as a quarter. Maybe that’s what’s desired, but is it wise to make it happen so suddenly?

Nada, Isn’t the key difference private landlords of rent stabilized apartments being on the other side?

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Is the favoring of locals born into RS or those lucky / skilled enough to get themselves a RS apartment fair? I dunno, is the favoring of those born into US citizenship or those lucky / skilled enough to immigrate fair?

The fact that NYC is governed by a machine based on political patronage (see ongoing city government investigations) means that change is unlikely.

Well alrighty then - thank you to all for the discussion. I do enjoy reading dialogue between smart and thoughtful people, even if the topic is not one I would otherwise prioritize.

Would you people stop?
Rent regulation is just fine, with a sound basis, and at a large scale, predictable. Shocks on the other hand displace and harm real people for the benefit of the speculator.
The benefit simply shouldn't be inheritable, and perhaps the cost (to the landlord) should taper but not benefit from a windfall change in the law or circumstances.

300>> Nada, Isn’t the key difference private landlords of rent stabilized apartments being on the other side?

Not really.

Private landlords are subject to all sorts of land use restrictions. Wanna build commercial on your private land in the middle of a residential area? Sorry, no can do. Wanna rent a prime piece of commercial for residential purposes, because that represents the highest and best use for rent? No can do. Wanna build a 80 story glass tower in the middle of the Village? Sorry.

The courts have been pretty clear and consistent about the legality and constitutionality of rent stabilizations. This includes the current Supreme Court, in the denial to review the appellate ruling on the 2019 law.

So if you buy a rent stabilized building, you’re signing up for rent stabilization, including changes made thereto. Just like what happens when you buy when there are use restrictions on what you may build. “You may only build residential up to 6 stories” and “You may only build residential up to 6 stories perpetually subject to rent stabilization” are not all that different. At least that’s what Supreme Courts spanning more than a century have determined.

Nada, Thank you. That is the best logical answer I have seen. I guess the landlords will have to fight in the court on the constitutionality of the rent increases allowed rather than the "taking" which hasn't worked in the courts so far.

@inonada courts may find it a certain way until they don't, as abortion and affirmative action cases have shown us recently

@rinette agreed that the benefit should not be inheritable and that sudden mass displacement of vulnerable people is not great. But there are lots of ways to undo RS/RC gradually without a sudden mass displacement.

With regards to the windfall to some landlords, I don't care too much one way or another. I think undoing rent control is likely to also reduce rents of market rate units (at the low end, not the kinds of luxury units Inonada rents), resulting in losses for landlords that own market rate units. Whatever.

What I am concerned about is market place renters (at the lower end), who are paying too much, locked in effect for some households, and NYC housing stock deteriorating without the necessary investments.

Krolik, I think the landlords many need a new argument besides "taking" (despite Nada's very convincing arguments, ideologically I still think of this as "taking" but the courts have also spoken). NAR broker commission case finally found an agreement courts agreed with after many many years.

-- courts may find it a certain way until they don't