5 ms·

To save you from reading to answer the clickbait title: insufficient supply combined with people abusing the system to sublet for profit or gift rent controlled

• ahoy 5y ago
  so the same things that cause issues in NYC
  • NovemberWhiskey 5y ago
    Right - "rent control not working because of predictable outcomes of rent control".
    • ahoy 5y ago
      alternatively, "Rent control not working because government allows it to be undermined."
      • mc32 5y ago
        How do you even monitor against fraud if even in communist countries this could happen? People will game it, if there is “profit” in it. The only way to avoid it is a very tyrannical East German system where people rat on each other to, we’ll, gain something, maybe that coveted apartment…
        • oytis 5y ago
          How do you monitor that people are not working illegally? Or are not selling drugs? It's hard to make sure either of this never ever happens, but it is definitely possible to make sure it's not happening as much as to become a social problem.
          • mc32 5y ago
            That’s my point. It’s not possible and you can only get close if you use tyrannical methods of surveillance and invasions of privacy.
            • oytis 5y ago
              Even in a democratic country if the only jobs people can find are sketchy illegal ones without social protection you can tell the government has failed at its job.
      • YPPH 5y ago
        It seems awfully hard to enforce all cases. If a subletter voluntarily enters into an agreement with a lessee to pay above the rent control amount, who is the victim? Is it not a victimless crime?
        • danuker 5y ago
          I suspect the subletter is breaking the law, due to charging more than is allowed. The victim is the person not able to rent on a first-come-first-serve basis instead of someone willing to pay more than is allowed.
          • YPPH 5y ago
            >The victim is the person not able to rent on a first-come-first-serve basis instead of someone willing to pay more than is allowed. That's indeed the only sensible thing I can think of. But it's a very odd thing to me (that a mutual, consensual agreement between two people is governed by the interests of third parties).
            • TheOtherHobbes 5y ago
              That's because there's a thing called the social contract, which makes it clear to anyone who can parse situations like a mature adult that all policy has wider social consequences, and short term gimme gimme can have disastrous long term results. And also because "consensual agreements" rarely are. Typically one party has more power than the other and can force terms. By definition, you only get truly consensual agreements when the balance of power is equal - which it very much isn't in rental markets with deliberately restricted stock.
        • exhilaration 5y ago
          Isn't the landlord the victim in this case? The extra money should be going to them, not the lessee that is likely violating their rental agreement.
          • 988747 5y ago
      • 988747 5y ago
        Rent control is not working because it cannot work - it is directly contradicting the laws of nature, such as supply and demand. Housing gets build in order to extract profit from it. If you disallow profit, you are disincentivizing new housing construction, and you create perverse incentives to work around rent control.
        • TheOtherHobbes 5y ago
          Strange how rents were manageable in the UK while there was a national not for profit council house building program. Perhaps there's a lesson to be learned from that.
          • imtringued 5y ago
            Land is expensive and nobody wants to tax it. More generally. Non reproducible assets/aka monopolies can extort more money out of people now that people have more money thanks to low interest rates. Notice how being rich doesn't make you rich because of abuse of monopoly power to do perfect price discrimination.
        • occz 5y ago
          >the laws of nature, such as supply and demand. This has got to be satire, right?
          • 988747 5y ago
            It is actually not. Basic laws of economy are much like the laws of physics: they work the same whether you believe in them or not. Trying to circumvent them with legislation such as rent control leads to various second order effects. For rent control that means limited supply and worse quality of the available apartments. Also: people unwilling to move, occupying apartments much too big for them, just because they are rent-controlled.
            • occz 5y ago
              I know that the observable properties of economic systems happen regardless of belief. It's just seriously strange to equate them with 'laws of nature'. Next thing you know someone is going to call something like the law of demeter a law of nature. Just sort of absurd, really.
      • imtringued 5y ago
        There is no such thing as non undermined rent control. There are a thousand things to do with a property and the government decides, hey guys, stop that 1 thing out of thousands. Then people will do all the thousand other things. The government then acts surprised that its incomplete policy has failed. You can also just tax the land.
  • dijit 5y ago
    Supply underpins most of the housing crisis' London is having a hard time because supply is less than demand. Stockholm, NYC, Paris for the same reason. It's really one of the largest things that seemingly every developed country is struggling with right now. I don't personally believe Stockholm is more affected than any other European capital except perhaps Berlin, which somehow seems to stay affordable (likely because of supply).
    • Nav_Panel 5y ago
      >It's really one of the largest things that seemingly every developed country is struggling with right now. Not Japan! Tokyo rents are surprisingly cheap relative to other major cities.
      • ilammy 5y ago
        The key here is considering housing a consumable with 20-year lifespan tops, as opposed to multigenerational investment vessel.
        • kalleboo 5y ago
          Yeah this is the big difference. A home in Japan is not an investment. You buy a home to live in, the mortgage is around the same or a bit cheaper than rent, but the property depreciates like a car, and while the land has value, the house you built on it has negative value (since the next tenant has to tear it down).
          • jlokier 5y ago
            > (since the next tenant has to tear it down). In Tokyo?
      • nwj 5y ago
        My understanding is that in Japan zoning restrictions are controlled at a federal rather than local level. I've read that this helps prevent local incumbents using the zoning system to exclude new construction. In other words, Japan lacks the regulatory environment (common in all these other countries) that depresses supply.
  • nivenkos 5y ago
    It's not the same as NYC though. Most renters in Stockholm are renting second-hand or commercial and are not covered by rent control at all. It's more akin to the council housing crisis in the UK.
• merpnderp 5y ago
  How is something as simple as basic supply and demand still a shocker to so many people? Rent control is just the government picking the winners and losers, with those who are corrupt, play dirty, and generally antisocial being the winners.
  • TheOtherHobbes 5y ago
    Which only happens in housing, and not in - say - defence contracting. Or banking.
  • occz 5y ago
    > How is something as simple as basic supply and demand still a shocker to so many people? Rent control is just the government picking the winners and losers, with those who are corrupt, play dirty, and generally antisocial being the winners. Because it's not just about supply and demand, and attempting to frame it as such is seriously reductionistic. Essentially you're at Why #1 here, and you have at least 4 more Why's before you even begin to scratch the surface of the root cause
    • epistasis 5y ago
      This would be a far more convincing comment if you could hint at these other directions, otherwise it's just extremely condescending. I'm a big supporter of rent control. But I also think the problem here is supply and demand. I've never met a supply-and-demand skeptic that would do anything except deny its applicability. They could ever explain why themselves or point to somebody else's explanation. And I've met a fair number of such folks. I'm left thinking that they just don't want to see new homes or new people. But if you have an explanation, I'm all ears.
      • occz 5y ago
        I was wary of trying to go down the rabbit hole of explaining more of the situation, as I don't feel that I'm enough of an expert in the subject. I was merely critical of the lack of nuance in the analysis ("it's just supply and demand"). But let's give it a shot! There's no denying that there is a lack of supply in housing in some parts of Sweden, particularly in Stockholm, where there are very long queues to get a reasonably priced apartment to rent. There's no denying that rent controls are probably one contributing factor to why the supply is too low. But it's important to note that it's just one of many variables in this equation. So what other contributing factors are there? Well, for one, acquiring permits is pretty damn hard in Sweden. It's a long process with a lot of NIMBYism, not entirely unlike what I've understood is the case in San Francisco. There's also the issue of rental units being profitable on a far longer horizon, leading investors looking to make their money back quickly to look at the buyers market instead. Which leads us down the path of the very high prices in the buyers market. What's causing that? For one, very low interest rates in the housing loan market (about 1-2%), but also tax policy, giving lenders a tax deduction relative to their interests payments. Yes, you read that correctly - buying a home, ie being richer than average, comes with tax deductions. In Sweden, paying off your home loan for a long time wasn't even required - you just continually paid the interest, and perhaps lent even more money against your home when the value increased. There's also the fact that the public housing providers have more or less been dismantled in many cases, and sold off to what essentially amounts to slumlords, attempting to game the ever-living hell out of the rent control rules. The playbook is more or less: - Buy old public housing Then - Spend as little as possible on upkeep, be actively hostile to current tenants - When anything goes wrong inside the rental unit, refuse to do anything but a full-scale renovation And - When any tenant moves out, perform a full-scale renovation And finally - Legally raise the price, as the standard of the rental unit has increased, often increasing the price as much as 50% I don't pretend to know the answer to this complex issue, nor do I pretend to entirely understanf every part of it. Nor do I claim that rent control is the right answer or the wrong. But one thing is for sure - reductive arguments claiming that rent control is the root cause is wrong on the basis that it does not begin to understand the issue even slightly. Hopefully this begins to cover some of the nuance of the issue.
• alistairSH 5y ago
  Title is also, potentially, not actually supported by data... >Only around 8% of Swedes live in households spending more than 40% of disposable income on housing, compared to 15% in the UK and almost 40% in Greece, according Eurostat data. Something is keeping rent low in Sweden (relative to a few other European counties).
  • bjourne 5y ago
    It may also be interesting to note that rent control is supported by 75 to 80% of the population. For a policy that "isn't working" it is strangely popular.
  • ransom1538 5y ago
    "Something is keeping rent low in Sweden (relative to a few other European counties)." Weather.
  • nivenkos 5y ago
    There are separate controls on being able to rent out flats for more than 2 years. So you can't really be an absentee landlord. The rent controls apply to first-hand contracts (kinda like council housing in the UK). Which is basically non-existent for working people now.
  • melolife 5y ago
    Rent control does keep rent low. What it creates is a supply problem, which could possibly explain the decades-long wait list for an apartment in Stockholm.
    • nivenkos 5y ago
      Those queues are for public first-hand contracts. You can always rent second-hand (for up to 2 years, from a private owner), private first-hand (more expensive queues from development firms), company rentals (in some cases, your company can be a guarantor, and you rent like a commercial entity with no time limit or deposit, etc. but usually higher rents), or you can buy a place. The issue is there aren't enough first-hand contracts, or enough properties in general. But the rent controls as discussed only apply to first-hand contracts, which are the minority.
• tbihl 5y ago
  Typical populace, responding to incentives and trying to find ways to thrive.