6 ms·

Rent control just creates an even less regulated, shady sub-industry of subletting, where the lucky ones who got in under rent control basically keep the apartm

Rent control just creates an even less regulated, shady sub-industry of subletting, where the lucky ones who got in under rent control basically keep the apartment for life and skim the difference between what they pay, and the real market value.

spoonie 10y ago
How do landlords/the IRS allow this? If you tenants can do it without their landlords noticing, why can't landlords do it themselves to get around rent controls?
- stvswn 10y ago
  Management companies and big developers are too visible to avoid it, but individual property owners cheat the system all the time. For example, if you have an in-law unit attached to your home in San Francisco, you'd be smart to reach a handshake deal with a nephew or friend-of-friend instead of signing a lease with a stranger.
rhizome 10y ago
In SF it's illegal to charge more than the actual rent to subletters.
- TuringNYC 10y ago
  That's never stopped people in NYC. Not sure about SF, but I imagine it is similar. The profit motive is too huge.
  - rhizome 10y ago
    In SF you essentially lose your lease instantly if caught, so the profit motive is not a sure bet. Couple that with the requirement since 1998 that subletters be informed what the actual rent is and the ability for the subletter to report the sublessor, and it's almost a sure loser.
    - TuringNYC 10y ago
      That's a good point. I have not heard about that in NYC. To note a tangential topic of dead-weight loss...I know one person in Manhattan using their studio apartment as storage. Yes, because the cost of their rent controlled apartment is less than purchasing a storage unit.
  - refurb 10y ago
    It's never stopped people in SF. I know a couple people renting extra rooms and making a profit off of it. That is, their rent is zero and they actually pocket money each month.
    - sroussey 10y ago
      So do I. Also in NYC, West Hollywood, and Santa Monica. And the subletter is also getting a deal, so they stay quiet.
      - refurb 10y ago
        Exactly, the rent control can keep rents so low, that the subletter gets a great deal even though their rent for one room pays for the whole house. Why would they bring it up with the tenant board?
- DrScump 10y ago
  It's also illegal to double-park. There, fixed that.
geebee 10y ago
Yeah, that happens. I believe the rule is that the master tenant may not charge the subtenant more than the master tenant is paying. http://sfrb.org/topic-no-154-limits-rent-charged-master-tenants http://sfrb.org/topic-no-154-limits-rent-charged-master-tena... One trick is to charge equal rent while occupying a much nicer space in the house. The link above tries to address this. For instance, a larger bedroom with attached bathroom could be considered more valuable. Most common, the master tenant lives in it but collects equal rent from the subtenant who lives in a smaller bedroom with poor light and a long walk down the hall to the bathroom - in this case, the subtenant could probably challenge this arrangement and get a reduction in rent. Another approach, I suppose, would be to "overvalue" the larger bedroom and collect an unusually large payment from the new subtenant, say an 80/20 split justified by the notion that the new tenant gets a nicer bedroom. One thing to keep in mind is that SF is a pretty pro-tenant city. A master tenant who does this can get into major trouble. Of course, if a subtenant hauls the master tenant in front of the board, it'll be war in that house. Buy hey, this is SF real estate, it's war anyway, right?

spoonie 10y ago

How do landlords/the IRS allow this? If you tenants can do it without their landlords noticing, why can't landlords do it themselves to get around rent controls?

stvswn 10y ago
Management companies and big developers are too visible to avoid it, but individual property owners cheat the system all the time. For example, if you have an in-law unit attached to your home in San Francisco, you'd be smart to reach a handshake deal with a nephew or friend-of-friend instead of signing a lease with a stranger.

rhizome 10y ago

In SF it's illegal to charge more than the actual rent to subletters.

TuringNYC 10y ago
That's never stopped people in NYC. Not sure about SF, but I imagine it is similar. The profit motive is too huge.
- rhizome 10y ago
  In SF you essentially lose your lease instantly if caught, so the profit motive is not a sure bet. Couple that with the requirement since 1998 that subletters be informed what the actual rent is and the ability for the subletter to report the sublessor, and it's almost a sure loser.
  - TuringNYC 10y ago
    That's a good point. I have not heard about that in NYC. To note a tangential topic of dead-weight loss...I know one person in Manhattan using their studio apartment as storage. Yes, because the cost of their rent controlled apartment is less than purchasing a storage unit.
- refurb 10y ago
  It's never stopped people in SF. I know a couple people renting extra rooms and making a profit off of it. That is, their rent is zero and they actually pocket money each month.
  - sroussey 10y ago
    So do I. Also in NYC, West Hollywood, and Santa Monica. And the subletter is also getting a deal, so they stay quiet.
    - refurb 10y ago
      Exactly, the rent control can keep rents so low, that the subletter gets a great deal even though their rent for one room pays for the whole house. Why would they bring it up with the tenant board?
DrScump 10y ago
It's also illegal to double-park. There, fixed that.

geebee 10y ago

Yeah, that happens. I believe the rule is that the master tenant may not charge the subtenant more than the master tenant is paying. http://sfrb.org/topic-no-154-limits-rent-charged-master-tenants http://sfrb.org/topic-no-154-limits-rent-charged-master-tena... One trick is to charge equal rent while occupying a much nicer space in the house. The link above tries to address this. For instance, a larger bedroom with attached bathroom could be considered more valuable. Most common, the master tenant lives in it but collects equal rent from the subtenant who lives in a smaller bedroom with poor light and a long walk down the hall to the bathroom - in this case, the subtenant could probably challenge this arrangement and get a reduction in rent. Another approach, I suppose, would be to "overvalue" the larger bedroom and collect an unusually large payment from the new subtenant, say an 80/20 split justified by the notion that the new tenant gets a nicer bedroom. One thing to keep in mind is that SF is a pretty pro-tenant city. A master tenant who does this can get into major trouble. Of course, if a subtenant hauls the master tenant in front of the board, it'll be war in that house. Buy hey, this is SF real estate, it's war anyway, right?