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it was easier to just walk away and let the building rot than to take any action to repair it and continue to collect rent-controlled rents. My parents and I l

it was easier to just walk away and let the building rot than to take any action to repair it and continue to collect rent-controlled rents. My parents and I lived in a rent-controlled apt in Manhattan in the early 1970s. Rent was $80/month. The 1973 oil embargo happened and heating oil prices went up. Oh, did I forget to mention that the $80 rent included heat?!!!! Basically things were so bad for the landlord that it cost as much to heat the average apt in the building as that apt paid in rent. Clearly not a sustainable situation. We moved out of the city the next year. But in retrospect we should have bought our apt (for about $7,000) when the building went coop/condo. So the tenants not only enjoyed below market rents for decades, but after the landlord was bled dry they were able buy their apts for a pittance. Hmmm ... 12 apts, maybe two voters each, vs an older couple, the landlords, only two votes. I wonder why rent control existed for so long? (that was sarcasm, I know exactly why it existed!). As Maggie Thatcher said, the problem with socialism is that eventually you run out of other people's money. I'm sure the tenants saw some large cost increases once they went coop, because now they had to pay 100% of all the building costs. But that only moved them into fair value territory. All the money they "stole" from the old landlord in the previous decades would never be paid back.

chimeracoder 10y ago
Ironically, rent control may have been the single biggest factor leading to the consolidation of ownership of New York real estate by the ultra-wealthy. If you were a landlord, you couldn't afford to pay enough to buy your tenants out of their apartments. But massively wealthy investors and big banks could - and they did. They bought the rent-controlled apartments that were money pits for small landlords, and then paid large sums of cash (under the table) to the tenants to get them to leave. Once the tenants had left, the apartments could be easily converted back to unregulated, market-rate apartments. Small landlords literally couldn't afford to own the buildings, because they had to spend money to operate them and received next-to-nothing in rent. So, they had no choice but to sell them to the investors and banks who were well-capitalized enough to negotiate these buyouts, resulting in the mass consolidation of real-estate by a relatively small number of owners. And of course, the original goal of rent control (ensuring that long-time residents would continue living in the same neighborhoods) went completely out the window, because it was in their best financial interest at that point to move. And the secondary goal (providing "affordable" housing) was gone long before that > We moved out of the city the next year. But in retrospect we should have bought our apt (for about $7,000) when the building went coop/condo. In retrospect, you should probably have kept living there as tenants. If you were there in the early 1970s, you'd have been grandfathered into rent control, and rent control in New York (as opposed to rent stabilization) is insanely profitable for the tenants, even if you weren't offered the type of buyout that I described above. It'd have taken you 7 years just to break even on the savings in rent by itself, but between maintenance costs (which your landlord was required to give you for free) and property taxes (easily more than you were paying in rent), you'd probably still come out ahead today if you'd just stayed on as tenants. Of course, you'd have to live there continuously and never move, and the apartment wouldn't be yours to pass on in inheritance. But the money you'd save would be worth way more than that.
- pmoriarty 10y ago
  "Once the tenants had left, the apartments could be easily converted back to unregulated, market-rate apartments." This is why rent-controlled apartments should never be allowed to go back to "market rates". They should remain rent controlled in perpetuity. Problem solved.
  - solidsnack9000 10y ago
    Carried to its logical conclusion, this probably creates a situation where it's worth it to knock down the building and make all new apartments.

chimeracoder 10y ago

Ironically, rent control may have been the single biggest factor leading to the consolidation of ownership of New York real estate by the ultra-wealthy. If you were a landlord, you couldn't afford to pay enough to buy your tenants out of their apartments. But massively wealthy investors and big banks could - and they did. They bought the rent-controlled apartments that were money pits for small landlords, and then paid large sums of cash (under the table) to the tenants to get them to leave. Once the tenants had left, the apartments could be easily converted back to unregulated, market-rate apartments. Small landlords literally couldn't afford to own the buildings, because they had to spend money to operate them and received next-to-nothing in rent. So, they had no choice but to sell them to the investors and banks who were well-capitalized enough to negotiate these buyouts, resulting in the mass consolidation of real-estate by a relatively small number of owners. And of course, the original goal of rent control (ensuring that long-time residents would continue living in the same neighborhoods) went completely out the window, because it was in their best financial interest at that point to move. And the secondary goal (providing "affordable" housing) was gone long before that > We moved out of the city the next year. But in retrospect we should have bought our apt (for about $7,000) when the building went coop/condo. In retrospect, you should probably have kept living there as tenants. If you were there in the early 1970s, you'd have been grandfathered into rent control, and rent control in New York (as opposed to rent stabilization) is insanely profitable for the tenants, even if you weren't offered the type of buyout that I described above. It'd have taken you 7 years just to break even on the savings in rent by itself, but between maintenance costs (which your landlord was required to give you for free) and property taxes (easily more than you were paying in rent), you'd probably still come out ahead today if you'd just stayed on as tenants. Of course, you'd have to live there continuously and never move, and the apartment wouldn't be yours to pass on in inheritance. But the money you'd save would be worth way more than that.

pmoriarty 10y ago
"Once the tenants had left, the apartments could be easily converted back to unregulated, market-rate apartments." This is why rent-controlled apartments should never be allowed to go back to "market rates". They should remain rent controlled in perpetuity. Problem solved.
- solidsnack9000 10y ago
  Carried to its logical conclusion, this probably creates a situation where it's worth it to knock down the building and make all new apartments.