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It is still rent control. The problems you see will not be fixed by the law. >I think one could sanely argue that allowing increases of up to 5% plus inflation

It is still rent control. The problems you see will not be fixed by the law. >I think one could sanely argue that allowing increases of up to 5% plus inflation is a suitable restrictio Based on what data? And no, it's not a 'sane' argument: 1) if 5% + inflation is above market rates then this rent control is either a no-op or detrimental because it may incentivize landlords to hike rent to maximum because they won't have have the flexibility to do that in the future if the market changes. 2) if it is below market rates, then it's just rent control and it comes with all the same baggage and detrimental effects we always see. Rent control does not work. I don't understand the appeal to continue experimenting.

eru 7y ago
> [...] because it may incentivize landlords to hike rent to maximum because they won't have have the flexibility to do that in the future if the market changes. Relatively unlikely to have a big impact. Even without such a law they already have an incentive to raise rents as how as possible: profit. Mostly the law should be a no-op. I'm not sure what the argument is for why freedom of contract can't provide the "increase < inflation + 5%" provision voluntarily?
- macspoofing 7y ago
  >Mostly the law should be a no-op. Mostly? Uh huh. Sorry - then why are we wasting time with this law in then? Because OP and supporters certainly don't think it's a no-op. California doesn't think it's a no-op. >Even without such a law they already have an incentive to raise rents as how as possible: profit. That is such a shallow, nonsensical argument. By your logic explain why Starbucks isn't charging $5000 for a coffee ... because after all: profit. I'm sure landlords would love to raise prices to astronomical levels. I'm sure tenants would love to live in the apartment for free. So tell me, why doesn't that happen? Why is it that prices in a market will tend to stable point? >I'm not sure what the argument is for why freedom of contract can't provide the "increase < inflation + 5%" provision voluntarily? They can. That's called a 'lease'. It's common.
  - eru 7y ago
    > I'm sure landlords would love to raise prices to astronomical levels. I'm sure tenants would love to live in the apartment for free. So tell me, why doesn't that happen? Why is it that prices in a market will tend to stable point? I'm not sure we are disagreeing? > They can. That's called a 'lease'. It's common. Indeed. And I'm saying that if people want what the law is providing, they can negotiate it voluntarily. So there's no good orthodox economic argument for the law. (Basically, no argument from market failure.) (And, if you have a sufficiently clever financial derivative structurer, you could probably get around the law as well, if you really want to. Basically, you'd construct a swap between a fixed rent and a variable rent. Similar to an interest rate swap. One big problem with such an insane scheme would of course be transaction costs---ie too much hassle to set up complicated derivatives or repo agreements etc for a private tenancy. Especially since a court might not allow a normal unsophisticated person to be bound by such a complicated contract, even if they wanted to. Tenants are treated like children.)
azernik 7y ago
> 1) if 5% + inflation is above market rates then this rent control is either a no-op or detrimental because it may incentivize landlords to hike rent to maximum because they won't have have the flexibility to do that in the future if the market changes. It incentivizes landlords to even out their rent increases over time, and to avoid sudden jumps. Especially for lower-income people, price shocks are devastating; having warning of an expected rise in prices, so that you can move or downsize with a year or two of notice, is a boon, and this kind of measure forces landlords to do that work.
- macspoofing 7y ago
  >It incentivizes landlords to even out their rent increases over time, and to avoid sudden jumps. No. It doesn't 'incentivize', it mandates. Also, I have no idea why you're arguing this point, this is rent-control. This is how rent-control works. It sets a cap on what you can charge for rent. >Especially for lower-income people, price shocks are devastating; Rent-control is devastating for lower-income people. Price shocks are a result of spirling supply in face of rising demand. THIS DOES NOT FIX THAT. Rent control does not fix this problem and you can't just wish it away. Rent control makes it worse. In a normal market, prices stabilize. Landlords don't just spike prices over a month because either a) there's a lease agreement which sets these terms out, b) they won't be able to rent the unit out at the higher prices, or c) Good tenants are hard to find and finding tenants takes time and is expensive while your apartment sits there not generating income.
  - azernik 7y ago
    Rent control that permanently keeps units below market price is devastating for lower-income people. Rent control that simply smooths out price increases, and loses landlords perhaps a year of the new price during sudden spikes, is pretty innocuous. > No. It doesn't 'incentivize', it mandates. Well, they always have the option of not keeping up with market-rate increases. Not that I think anyone will take that option. > Price shocks are a result of spirling supply in face of rising demand. THIS DOES NOT FIX THAT. The point isn't to "fix" the increase in price. It's to give renters a year or two to adapt to the change, either by moving out, finding new sources of income, or getting roommates. > Landlords don't just spike prices over a month #NotAllLandlords. But enough do to create a serious public policy problem

eru 7y ago

> [...] because it may incentivize landlords to hike rent to maximum because they won't have have the flexibility to do that in the future if the market changes. Relatively unlikely to have a big impact. Even without such a law they already have an incentive to raise rents as how as possible: profit. Mostly the law should be a no-op. I'm not sure what the argument is for why freedom of contract can't provide the "increase < inflation + 5%" provision voluntarily?

macspoofing 7y ago
>Mostly the law should be a no-op. Mostly? Uh huh. Sorry - then why are we wasting time with this law in then? Because OP and supporters certainly don't think it's a no-op. California doesn't think it's a no-op. >Even without such a law they already have an incentive to raise rents as how as possible: profit. That is such a shallow, nonsensical argument. By your logic explain why Starbucks isn't charging $5000 for a coffee ... because after all: profit. I'm sure landlords would love to raise prices to astronomical levels. I'm sure tenants would love to live in the apartment for free. So tell me, why doesn't that happen? Why is it that prices in a market will tend to stable point? >I'm not sure what the argument is for why freedom of contract can't provide the "increase < inflation + 5%" provision voluntarily? They can. That's called a 'lease'. It's common.
- eru 7y ago
  > I'm sure landlords would love to raise prices to astronomical levels. I'm sure tenants would love to live in the apartment for free. So tell me, why doesn't that happen? Why is it that prices in a market will tend to stable point? I'm not sure we are disagreeing? > They can. That's called a 'lease'. It's common. Indeed. And I'm saying that if people want what the law is providing, they can negotiate it voluntarily. So there's no good orthodox economic argument for the law. (Basically, no argument from market failure.) (And, if you have a sufficiently clever financial derivative structurer, you could probably get around the law as well, if you really want to. Basically, you'd construct a swap between a fixed rent and a variable rent. Similar to an interest rate swap. One big problem with such an insane scheme would of course be transaction costs---ie too much hassle to set up complicated derivatives or repo agreements etc for a private tenancy. Especially since a court might not allow a normal unsophisticated person to be bound by such a complicated contract, even if they wanted to. Tenants are treated like children.)

azernik 7y ago

> 1) if 5% + inflation is above market rates then this rent control is either a no-op or detrimental because it may incentivize landlords to hike rent to maximum because they won't have have the flexibility to do that in the future if the market changes. It incentivizes landlords to even out their rent increases over time, and to avoid sudden jumps. Especially for lower-income people, price shocks are devastating; having warning of an expected rise in prices, so that you can move or downsize with a year or two of notice, is a boon, and this kind of measure forces landlords to do that work.

macspoofing 7y ago
>It incentivizes landlords to even out their rent increases over time, and to avoid sudden jumps. No. It doesn't 'incentivize', it mandates. Also, I have no idea why you're arguing this point, this is rent-control. This is how rent-control works. It sets a cap on what you can charge for rent. >Especially for lower-income people, price shocks are devastating; Rent-control is devastating for lower-income people. Price shocks are a result of spirling supply in face of rising demand. THIS DOES NOT FIX THAT. Rent control does not fix this problem and you can't just wish it away. Rent control makes it worse. In a normal market, prices stabilize. Landlords don't just spike prices over a month because either a) there's a lease agreement which sets these terms out, b) they won't be able to rent the unit out at the higher prices, or c) Good tenants are hard to find and finding tenants takes time and is expensive while your apartment sits there not generating income.
- azernik 7y ago
  Rent control that permanently keeps units below market price is devastating for lower-income people. Rent control that simply smooths out price increases, and loses landlords perhaps a year of the new price during sudden spikes, is pretty innocuous. > No. It doesn't 'incentivize', it mandates. Well, they always have the option of not keeping up with market-rate increases. Not that I think anyone will take that option. > Price shocks are a result of spirling supply in face of rising demand. THIS DOES NOT FIX THAT. The point isn't to "fix" the increase in price. It's to give renters a year or two to adapt to the change, either by moving out, finding new sources of income, or getting roommates. > Landlords don't just spike prices over a month #NotAllLandlords. But enough do to create a serious public policy problem