4 ms·

Can someone explain to me, why this exists. How come, as a new resident I need to pay 3x the amount of rent compared to someone who has been there for a while.

Can someone explain to me, why this exists. How come, as a new resident I need to pay 3x the amount of rent compared to someone who has been there for a while. As a landlord wouldn't I be mad that the going rate is much higher? Can someone explain to me as I've never understood how come this happens or why it is the default. Why not just have free market? Forgive if it's obvious, I would love a lay-mans explanation

tacostakohashi 10y ago
Because politics. Yes, the landlord will be mad, but for every one of them there are dozens of happy tenants. The tenants getting a preferential rate will live there and vote/lobby to protect the system for generations. The new guy paying 3x probably came from elsewhere, and will return there shortly.
rincebrain 10y ago
Rent control, as it exists in NYC, is a damper on how fast rent can rise (both when you're in a lease, and during vacancies of a property between tenants), for people and properties whose income/rent are below certain thresholds where the government considers them to be either paying for or capable of paying for luxury apartments. Rent control lets you have some reasonable expectation that you can plan expenses for more than a single lease term, as well as attempting to limit how much damage to the economics of the surrounding area real estate prices are going to do (it's a commodity that is hard to increase the supply of in any great quantity, and demand far outstrips supply...this probably would eventually stabilize, but it'd be quite messy in between, and probably not in a net positive way for the city). Absent rent control, the lower bound of prices would go up, the ceiling would not go down.
- hueving 10y ago
  >Absent rent control, the lower bound of prices would go up, the ceiling would not go down. Pretty vapid statement. The ceiling is whatever the arbitrary asking price is for something overlooking central park on the 100th floor of some high rise. Nobody cares about the ceiling. The question is what does it do to the market price in general for a specific size apartment. It will cause a price decline because so many more apartments will actually be on the market. The current price is where supply is meeting demand so if you increase the supply the price will decline. Of course it will screw up the people on rent control since they likely won't be able to afford it.
yolesaber 10y ago
Rent controls, such as those built in to the amount which a landlord can raise the rent per annum, are often specific to the tenant and their lease. Thus when the tenants die or are able to get booted off the lease / kicked out of the apartment (NYC has very pro-tenant housing laws), the apartments go for the market rate and the cycle begins anew.
35bge57dtjku 10y ago
You can just have free market, but then you get tons of renters who complain about both the high rents and any higher capacity buildings being built nearby, as if there's some simple way to prevent new buildings and to keep rent from going up at the same time.
- hueving 10y ago
  Renters don't complain about new housing supply. That's owners who think it will impact their property value.
  - 35bge57dtjku 10y ago
    They definitely complain when the new housing supply is a new apartment building next door that ruins their view!
sodpaw 10y ago
The main reason rent controls exist is so that families are not priced out of their homes. Most low-income families are renters, so without rent control they could see their home of the past few decades become unaffordable. Especially in areas like NYC where the value of land can skyrocket, these long-term residents can easily become the “unfortunate” side effect of all this exciting economic activity. So yes, the landlord would definitely like to be able to sell their units for a higher rate if they could. Without legal protections low-income families can easily lose their homes due to market forces. Many economists (and intro econ textbooks where this is a very popular example) find that rent controls are destructive and a distortionary influence on the housing market, and you’ve already identified one of the downsides in the increased difficulty for new residents to find a dwelling where rent control exist. However, this approach ignores the human and economic impact of home instability. Joshua Mason, an econ professor at Roosevelt University who studies the effects of rent control, puts it pretty well. "Long-term tenants who contributed to this being a desirable place to live have a legitimate interest in staying in their apartments. If we think that income diverse, stable neighborhoods, where people are not forced to move every few years, [are worth preserving] then we collectively have an interest in stabilizing the neighborhood.”[0] [0]https://psmag.com/in-defense-of-rent-control-3cb453119116#.kjzqxxp42 https://psmag.com/in-defense-of-rent-control-3cb453119116#.k...

tacostakohashi 10y ago

Because politics. Yes, the landlord will be mad, but for every one of them there are dozens of happy tenants. The tenants getting a preferential rate will live there and vote/lobby to protect the system for generations. The new guy paying 3x probably came from elsewhere, and will return there shortly.

rincebrain 10y ago

Rent control, as it exists in NYC, is a damper on how fast rent can rise (both when you're in a lease, and during vacancies of a property between tenants), for people and properties whose income/rent are below certain thresholds where the government considers them to be either paying for or capable of paying for luxury apartments. Rent control lets you have some reasonable expectation that you can plan expenses for more than a single lease term, as well as attempting to limit how much damage to the economics of the surrounding area real estate prices are going to do (it's a commodity that is hard to increase the supply of in any great quantity, and demand far outstrips supply...this probably would eventually stabilize, but it'd be quite messy in between, and probably not in a net positive way for the city). Absent rent control, the lower bound of prices would go up, the ceiling would not go down.

hueving 10y ago
>Absent rent control, the lower bound of prices would go up, the ceiling would not go down. Pretty vapid statement. The ceiling is whatever the arbitrary asking price is for something overlooking central park on the 100th floor of some high rise. Nobody cares about the ceiling. The question is what does it do to the market price in general for a specific size apartment. It will cause a price decline because so many more apartments will actually be on the market. The current price is where supply is meeting demand so if you increase the supply the price will decline. Of course it will screw up the people on rent control since they likely won't be able to afford it.

yolesaber 10y ago

Rent controls, such as those built in to the amount which a landlord can raise the rent per annum, are often specific to the tenant and their lease. Thus when the tenants die or are able to get booted off the lease / kicked out of the apartment (NYC has very pro-tenant housing laws), the apartments go for the market rate and the cycle begins anew.

35bge57dtjku 10y ago

You can just have free market, but then you get tons of renters who complain about both the high rents and any higher capacity buildings being built nearby, as if there's some simple way to prevent new buildings and to keep rent from going up at the same time.

hueving 10y ago
Renters don't complain about new housing supply. That's owners who think it will impact their property value.
- 35bge57dtjku 10y ago
  They definitely complain when the new housing supply is a new apartment building next door that ruins their view!

sodpaw 10y ago

The main reason rent controls exist is so that families are not priced out of their homes. Most low-income families are renters, so without rent control they could see their home of the past few decades become unaffordable. Especially in areas like NYC where the value of land can skyrocket, these long-term residents can easily become the “unfortunate” side effect of all this exciting economic activity. So yes, the landlord would definitely like to be able to sell their units for a higher rate if they could. Without legal protections low-income families can easily lose their homes due to market forces. Many economists (and intro econ textbooks where this is a very popular example) find that rent controls are destructive and a distortionary influence on the housing market, and you’ve already identified one of the downsides in the increased difficulty for new residents to find a dwelling where rent control exist. However, this approach ignores the human and economic impact of home instability. Joshua Mason, an econ professor at Roosevelt University who studies the effects of rent control, puts it pretty well. "Long-term tenants who contributed to this being a desirable place to live have a legitimate interest in staying in their apartments. If we think that income diverse, stable neighborhoods, where people are not forced to move every few years, [are worth preserving] then we collectively have an interest in stabilizing the neighborhood.”[0] [0]https://psmag.com/in-defense-of-rent-control-3cb453119116#.kjzqxxp42 https://psmag.com/in-defense-of-rent-control-3cb453119116#.k...