9 ms·
So many people here do not know the details of NYC rent regulation, and are posting generalizations and falsehoods. Basically, you cannot raise rents aside fro
by CraigRo 4y ago
So many people here do not know the details of NYC rent regulation, and are posting generalizations and falsehoods.
Basically, you cannot raise rents aside from annual increases that are below inflation, and you are limited to a relatively small amount of renovations, and cannot increase the rents much if you do.
So you either commit to a potentially multi lifetime below market tenancy that will bankrupt you eventually, or you keep it vacant and hope to demolish it or combine units or pray that the law will change.
Or sell it to a guy who will run air bnbs until the city puts him out of business at which point it will go in the tax lien sale. In any event, nobody is investing in bringing these units back online in this legislative environment.
- bamboozled 4y agoSo it’s the governments fault for protecting people from predatory rent hikes?
- Eisenstein 4y agoThe current implementation seems to be causing an issue where it is not in the landlord's interest to offer the units to the market. It is the regulation's fault for creating disincentives for the landlord, so it depends on how you allocate blame for making a judgement based on that. That doesn't mean we shouldn't try, or that we need to stick to a counterproductive plan because some people think arguing about regulations on free markets is more important than fixing a pressing problem.
- bamboozled 4y agoNo you just made it sound like it was kind of stupid to even attempt such a law. Similar laws exists in Tokyo and it seems like a non-issue. Find me an empty apartment in Tokyo and I’ll be surprised. Maybe the problem exists elsewhere in society, for example: maybe the cost of living and property in NYC is just too expensive no matter what regulations exist? I’m saying this because I’d imagine if people don’t think it’s worth renting the apartments, why not sell to citizens so they can buy in them and live there? I feel like the world is starting to wake up to the fact that while it’s not easy to outlaw properly speculation, it’s going to be one if the major problems that define our time.
- Eisenstein 4y agoHow it sounded to you was not my intended tone. If you read what I wrote again you may take away from my response that knee-jerking an argument about regulations in general is not something I find productive, but rather discussion of specific policies. It appears this one is not effective at its goal.
- Dwolb 4y agoYour original comment laid out the logic very well. I’m not sure why the response took an emotional turn, but it wasn’t warranted. I wish there were sites where more people people could wage discussions in your manner.
- MichaelZuo 4y agoThe larger the community the more it will trend towards the population average. That's why exclusive clubs began in the first place.
- deleted 4y ago[deleted]
- bamboozled 4y agoI find your comment shockingly cynical and sad. I’m sorry you live with such a negative view of others.
- MichaelZuo 4y agoYou find probability theory and statistics to be cynical and sad? If so, I'm sorry you live with such a negative view of education.
- tomcam 4y agoAsking questions on HN can be… tiring
- 4y ago
- pjscott 4y agoUnintended consequences may not be obvious when you first hear what a law is meant to do, but sometimes they really, really matter.
- throwawaysleep 4y agoYes. As the rent hikes are so low that it is better not to rent at all.
- bamboozled 4y agoWhy do people own the apartments at all if they can't rent them and don't live in them ?
- Gigachad 4y agoThe laws haven’t always existed and you could reasonably bet they will revert them if they aren’t working.
- chrischen 4y agoRent controlled buildings are priced in during the sale so they go for lower values. As for why the very original people even bothered to invest in the building in the first place, then the answer is that the regulatory environment was one that allowed of incentivized it back then.
- hackerlight 4y agoThree reasons. It's a store of value asset, a speculative asset, and a real option that the law will get changed. Also, these kind of things get priced in, leading to lower property values. There will always be a willing buyer as long as the market price is above $0, implying that the benefits exceed the costs of ownership.
- cuteboy19 4y agoIs it the government's fault that people raised their own cobras to claim the cobra-killing bounty?
- djbebs 4y agoYes.
- Gigachad 4y agoRent control is about as useful as solving climate change by drawing a lower number on the screen of the thermometer. Rents are a product of market conditions. You have to solve those conditions rather than try to stop the output from changing. Fixing the rent results in supply dropping off so the supply/demand equation is still met.
- oezi 4y agoIn inelastic markets such as housing some form of government control can prevent excessive market distortions.
- parineum 4y agoIf the market is inelastic, why does construction ebb and flow?
- oezi 4y agoInelastic just means that it takes more time for supply to match demand or demand to match supply than in a more elastic market. Ebbing and flowing is a typical effect of inelastic markets.
- parineum 4y agoInelastic means consumers buy the same amount of some good regardless of the market. That means there's a constant demand. This is not the case with housing, at least in a local area. Prices go up, people move away and demand goes down. That's elastic. If housing suddenly cost 10 billion dollars a day in Manhattan, the city would be a ghost town tomorrow. Elastic.
- oezi 4y agoElasticity of a market is a scale. Elastic markets quickly adjust demand or supply while inelastic markets require a lot of time if they change at all. Housing on the supply side is relatively inelastic when compared to other markets. Even if demand is high it might not quickly lead to new construction. On the demand side the market is also relatively inelastic as moving has a lot of friction compared for instance with not making a luxury good purchase or postponing a holiday.
- Ekaros 4y agoThey are not predatory. They are entirely market based. Why shouldn't companies be allowed to charge whatever is the market price? Or maybe in general we should start applying price controls to absolutely everything. Let's say only ever allow 5% net profit on any good or service.
- kevingadd 4y agoOr instead of market based they're set by an algorithm that pushes them as high as it possibly can: https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r... “The beauty of YieldStar is that it pushes you to go places that you wouldn’t have gone if you weren’t using it,” said Kortney Balas, director of revenue management at JVM Realty, referring to RealPage’s software in a testimonial video on the company’s website. The nation’s largest property management firm, Greystar, found that even in one downturn, its buildings using YieldStar “outperformed their markets by 4.8%,” a significant premium above competitors, RealPage said in materials on its website.
- Ekaros 4y agoSo they are fixing an inefficiency in market by actually charging what market can bear. Should be applauded for the work, as inefficient markets are bad. Now they genera more profit which they can invest in more property thus enabling possibly more units to be build.
- Arainach 4y agoMoving all the money into the hands of landlords means that the population has no money to spend on anything else. This is massively detrimental to society.
- parineum 4y agoGood thing nobody suggested that. Allowing landlords to actually build would drive prices down but overregulation and zoning laws have broken the supply end of the market.
- cm2187 4y agoAny time you apply artificial price controls you create scarcity. Ask Venezuelans. The same bad policies are applied over and over with the same effects.
- y7 4y ago> below market tenancy that will bankrupt you eventually Why would pricing the rent lower than the insane market prices cause bankruptcy for the owner?
- deleted 4y ago[deleted]
- anonymoushn 4y agoThe owner rents the property from the government at prices that are not capped below inflation. This is called property tax.
- vouwfietsman 4y agoCalling landlords owners is deceptive, they are investors taking on risk. This is the risk.
- TomVDB 4y agoBeing an owner and being an investor are orthogonal concepts.
- refurb 4y agoRight, and with the current legislative environment they lower their risk/maximize gain by keeping it empty.
- vouwfietsman 4y agoExactly, that just enforces the idea that the ownership itself is meaningless, and the investment aspect is the only thing of value. A landlord owns a house like a hedge-fund owns stocks: its not about the houses or the stocks themselves. Obvious problems arise since houses are actually rare things people want for their own sake, and stocks are not. I feel like the discussion often trends towards criticizing legislature, but we should not forget that choosing the darwinist approach is still very much a choice made by the individual in their own favor. Why is lowering risk/maximizing gain at the expense of others a defendable choice because it produces/saves money for an already wealthy individual. Why is this not viewed similarly to other things which are legal but unethical, say cheating on a spouse? Why is it that the government needs to produce ever smarter and more complicated legislature to prevent people from exploiting others for wealth? Is government really to blame for this rat race? I don't think so.
- Renaud 4y agoBut isn’t this only true if you want to profit from the property? What about you buy the property for you and your family to live in rather than as an investment that needs high return? The property value will still increase with time. That should offer some form of protection for the initial capital investment if you need to sell later in life.
- Gigachad 4y agoLikely the people renting these apartments couldn’t afford to buy at almost any price. A much more logical system would be for the government to raise minimum wage and welfare to the point that people can afford rentals at the market rate rather than rent control which is a head in sand solution.
- AmericanChopper 4y agoThat’s a guaranteed way to increase rental prices.
- Gigachad 4y agoOnce the rent increases enough, new construction becomes more and more worth while. Artificially depressed rents lead to a slowdown in construction while allowing them to rise uncontrolled keeps construction flowing at a desirable which itself controls rents because its increasing the supply.
- AmericanChopper 4y agoSure, artificially decreasing supply with pricing controls is a bad idea, but artificially increasing demand with subsidies isn’t the solution to that problem.
- vouwfietsman 4y agoIf done in the short term (years), wouldn't this just cause inflation and landlords will happily follow that inflation with higher rents... As long as a good is scarce and controlled by the market there is no reason for the situation to improve for people who want that good. Thats why housing should never be part of a market, because people don't want houses, people need houses.
- sofixa 4y agoWhy would it bankrupt you? "Rent stabilization" is in place in the big French metropolises (a landlord can only increase rents at a specific rate at specific intervals) and there's no shortage od landlords due to compensating policies encouraging building.