7 ms·

‘It’s legal, there’s just no precedent’: first US town to demand a rent decrease

24 points by arprocter 4y ago

PaulHoule 4y ago
They should order a property tax reduction. It’s getting clear in cities like Ithaca that landlords pass high property taxes onto tenants quite directly. For that matter, make it easier to evict people. I just started to the process to get a tenant out (who lives in the other house on our farm) who has not paid the rent and attempted to extort us. It could be six whole months before he’s gone. The tenant in the other unit has to live with him next door and between ourselves, that tenant and the next tenant we have to make up for what the deadbeat didn’t pay. Lower this expense and landlords can afford to lower the rent. In our area we also have an irresponsible tenant’s rights group that supported a group of people who insisted that they could live for free no matter what and acted as if Habitat for Humanity (their landlord) was an evil NGO. They don’t get that with our high property taxes we are paying for the health care of the indigent in NY and they oughta just give us a break. Unfortunately a lot of tenants mistook the eviction moratorium that we had for COVID-19 for a rent moratorium and it is coming due for those people, but landlords didn’t get any property tax moratorium.
- pwg 4y ago
  > It’s getting clear in cities like Ithaca that landlords pass high property taxes onto tenants quite directly. Most landlords are interested in making a profit from renting. Therefore the rent the landlord demands will be set to a monthly amount such that they can pay the costs of maintaining the property, which includes paying real-estate taxes to the local government, and still make some profit. So yes, renters are "paying the property tax", and always have been, they just do not see "property tax" as an itemized line item in their monthly rent amount.
  - PaulHoule 4y ago
    To be specific in NY, local governments whether they are run by Democrats and Republicans are all concerned that much of their budget is mandated by Albany, particularly there was the decision to pay for Medicaid (health care for the poor) through local property taxes which are frequently inequitable as opposed to income taxes which are targeted at people who have large amounts of income. Thus if you rent, the cost of health insurance for the poor is baked into your rent.
    - notjulianjaynes 4y ago
      > Thus if you rent, the cost of health insurance for the poor is baked into your rent. Isn't it then also baked into the cost of owning your own home?
      - PaulHoule 4y ago
        Sure is. And it causes the same problems for homeowners. One difference in NY is that homeowners get a significant STAR exemption. I get that despite the unusual situation of having one property the house I live in, two rental units, plus a riding academy (which isn't legally treated as agriculture unless I get in some silly boondoggle such as raising foals.) In the city of Ithaca there are rather large tax bills for the City of Ithaca, plus the County of Tompkins, plus the City of Ithaca school district. It adds up to a few hundred a month on the rent for the typical rental unit. Insofar as the local government thinks that "the rent is too damn high" there is a definite chunk of it they are responsible for.
        notjulianjaynes 4y ago
        I'm finding info that the maximum STAR exemption is good for $650 annually. A.) That sounds like a very reasonable price for health insurance. B.) How does this increase rent on residential units by hundreds of dollars a month? Are you saying that if rental properties in Ithaca were instead primary residences, the city and county would collect what equals several hundred dollars per month lesss (let's call it $1200/yr) in taxes than they do for rental properties? Is this unique to Ithaca, which is a college town?
        PaulHoule 4y ago
        It's an issue being talked out a lot in Ithaca, which is about a 20 minute drive from my farm https://www.ithaca.com/news/ithaca/cornell-s-tax-exempt-status-ithaca-s-bottom-line/article_18e74300-ad52-11ed-8550-17ee6a5bc2dc.html https://www.ithaca.com/news/ithaca/cornell-s-tax-exempt-stat... In particular that article asserts “according to the rental real estate listing service Dwellsy, Ithaca has the highest rent of any small city in the U.S. The study shows the average price for a one-bedroom was $1908 per month in 2022, up 4.5% over 2021. Only eight cities had higher average rents…New York, Boston, San Francisco, San Jose, Washington DC, Santa Barbara, Los Angeles, and San Diego.” and that article claims the tax burden in Ithaca is particularly pernicious because so much land is owned by not-for-profit organizations such as Cornell.
- Beaver117 4y ago
  Investments have risks. I don't see why we should make landlords' lives any easier.
  - toomuchtodo 4y ago
    Landlord incentives should be aligned with local and renter incentives. You want landlords who aren’t slumlords, but who also aren’t going to extract as much as possible from tenants. End state desired is clean, safe, affordable housing for people who can’t or don’t want to buy and a reasonable return for the asset owner for providing housing. Everything to arrive at that is essentially tweaking an Excel formula of public policy. (I’d also put forth community land trusts that enable non market housing solutions, keeping housing out of the market and at the whims of investors, but that’s a larger conversation)
  - PaulHoule 4y ago
    In the end the landlord passes expenses on to the other tenants so if one tenant screws up the other tenants pay more. For that matter I just paid a big insurance bill that my deadbeat tenant was supposed to help pay for, but at least if he trashes the place on the way out I will get paid to fix it and the insurance will sic lawyers on his ass instead of me. I worked at a mediation center and learned that it’s wrong to view a dispute through “social justice” or “conservative” viewpoints, race, gender, class and other things have nothing to do with who is right or wrong in a dispute. That said I think there are a lot of people in NY who wrongly think about landlords the way Mao Zhedong thought about them.
    - notjulianjaynes 4y ago
      Why was your "deadbeat" tenant supposed to pay your insurance bill?
      - prepend 4y ago
        It’s very common to have leases where the tenant pays taxes and insurance. I think much of commercial leases are “triple net” [0]. It all ends up being a wash in that not triple net leases just have higher payments. It’s a way to reduce management expenses. [0] https://www.investopedia.com/terms/t/triple-net-lease-nnn.asp https://www.investopedia.com/terms/t/triple-net-lease-nnn.as...
- advisedwang 4y ago
  > They should order a property tax reduction. It’s getting clear in cities like Ithaca that landlords pass high property taxes onto tenants quite directly. I don't believe a property tax reduction gets passed on to tenants. The goal of landlords is to make money, so the incentive is to keep rents as high as possible without having long vacancies; the only reason to reduce rents is if your property is empty. The hope of a market system is that with lowered expenses, some landlords would reduce their rent, which then allows renters to potentially move to those properties forcing other landlords to reduce rents in turn. This could theoretically happen in a cycle to a new equilibrium where rents have gone down by ~ the reduction in expenses. But there's a lot of forces in play that interrupt this and allow high rents to continue even with a drop in expenses: * The vacancy rate is very low, so there are very few landlords that would take advantage of the opportunity to lower their rent to get tenant. * Landlords know renters can be long term, so often prefer a longer period of vacancy over reducing rent. * Current renters are captive as moving costs are high, so their landlords are insulated from market pressure. * The rental market is very coordinated by a) companies that own many properties, b) property management agents that manage many properties and c) rent information companies like RealPage. The result is similar to a cartel, where property owners will allow vacancies directly in order to keep the market rate from falling. * Many current owners see the property value as a source of growth, and so care less about actual rental income. All of these mean that a property tax reduction is more of a windfall to landlords than a way to bring down rents.
credit_guy 4y ago
I'm hurting too, and I'd like my rent to come down. But this just does not feel right. It feels like tyranny of the majority. Who cares about the landlords? They are just bad people by definition, right? I, for one, think they are people just like you and me. Inflation exists for them too, not just for me and my family. Ordering them to decrease the rents is not that different from confiscating part of their property. And by the way, if you want to confiscate private property, there's a perfectly acceptable way to do that: taxes. Just reassess property values, or increase real estate tax rates, or both.
- boredpeter 4y ago
  Or ban rental properties and force them to sell. Landlords add nothing of value to society. I don’t care if they’re corporate or “mom and pop”. They rob people of generational wealth and monopolize housing. Very little need for them. Exceptions can be made for vacation destinations, hell just build hotels if you’re so desperate to be a landlord.
  - prepend 4y ago
    > Landlords add nothing of value to society. Who would buy and develop rental units if landlords didn’t exist? Landlords seem to fulfill a very valuable part of the supply and demand driven marketplace. Are you suggesting we eliminate renting altogether and force people to buy?
    - kevviiinn 4y ago
      Property developers? Are you genuinely insisting that landlords are the only people who build?
      - prepend 4y ago
        Property developers don’t rent homes. They build and sell. Also, if they did rent the homes then they would become landlords.
jokethrowaway 4y ago
inflation IS an increase in taxation. The same is happening where I live. Rents doubled and cost of living is catching up. Who would have thought printing trillions would do this!
kqr2 4y ago
They could also assess a land value tax and return that to the renters as a dividend.
prepend 4y ago
> She can’t stop thinking about how most of what she brings home from her full-time job as a caretaker – two $900 checks a month – goes to rent for the two-bedroom apartment with a mold problem she shares with her disabled husband, teenage son and five pets. Not the point of the article, but someone with her low income and only a two bedroom apartment should not have five pets. Rent is expensive, but this subject is a bad example for “needing” a rent decrease. Her issue isn’t rent so much as it’s income and expense based. Disabled husband should have SSI income of $1k/month.
- notjulianjaynes 4y ago
  The article doesn't say exactly what her rent is, but if you're pointing at this woman's pets and going "See! Ha!" instead of wondering why she is only paid $21k a year for full time work, please tell me how much you make.
  - Pigalowda 4y ago
    If her husband is disabled medicare may be paying her to be a “care taker”. I think it’s like $12/hr. A good scammy home health company can usually find disabled people, get them registered, hire one of their household as a “care taker”. I didn’t read the article. But she shouldn’t have 5 pets. Maybe a turtle.
    - notjulianjaynes 4y ago
      Am I understanding correctly that you are now both dictating how many and what kind of pets this person should own AND accusing them of medicare fraud, while continuing to ignore the fact that $21,600 is not fair annual compensation for 1/3 of one's life?
      - Pigalowda 4y ago
        It’s not Medicare fraud. You just don’t know how it works. If you would like to give people money, i encourage you to donate to charitable organizations. And yea, 5 pets for an impoverished person is too much.
prepend 4y ago
I imagine this will result in a long, expensive lawsuit that the city ultimately loses. In the meantime, there will be fewer landlords willing to rent at all.
- kevviiinn 4y ago
  Good, less leeches buying up property
  - deleted 4y ago
    [deleted]
  - yucky 4y ago
    If there are no landlords to finance the purchase and maintenance of homes for the rental market, how would people who only want to rent a home do so?
    - kevviiinn 4y ago
      The social housing of Vienna seems like a good model https://www.huduser.gov/portal/pdredge/pdr_edge_featd_article_011314.html https://www.huduser.gov/portal/pdredge/pdr_edge_featd_articl... https://www.visitingvienna.com/culture/social-housing/ https://www.visitingvienna.com/culture/social-housing/
      - yucky 4y ago
        Can you explain why? These blog posts don't make a compelling case, so maybe there is something missing?
        kevviiinn 4y ago
        Austria has a robust system of government owned housing for people to rent and they include numerous amenities. Their system has been stable for a long time and is loved by the populace because they're such great places to live. As opposed to peivate landlords owning rental property where their goal is to simply profit as much as possible and raise rents while doing bare minimum repairs.
TechBro8615 4y ago
Seems like it would be much easier to implement Basic Income, or just send stimulus checks to renters. You can even increase the property taxes to pay for it, which would have the same effect as lowering rent, if you coupled it with a law limiting rent increase per year.

24 points by arprocter 4y ago

They should order a property tax reduction. It’s getting clear in cities like Ithaca that landlords pass high property taxes onto tenants quite directly. For that matter, make it easier to evict people. I just started to the process to get a tenant out (who lives in the other house on our farm) who has not paid the rent and attempted to extort us. It could be six whole months before he’s gone. The tenant in the other unit has to live with him next door and between ourselves, that tenant and the next tenant we have to make up for what the deadbeat didn’t pay. Lower this expense and landlords can afford to lower the rent. In our area we also have an irresponsible tenant’s rights group that supported a group of people who insisted that they could live for free no matter what and acted as if Habitat for Humanity (their landlord) was an evil NGO. They don’t get that with our high property taxes we are paying for the health care of the indigent in NY and they oughta just give us a break. Unfortunately a lot of tenants mistook the eviction moratorium that we had for COVID-19 for a rent moratorium and it is coming due for those people, but landlords didn’t get any property tax moratorium.

pwg 4y ago
> It’s getting clear in cities like Ithaca that landlords pass high property taxes onto tenants quite directly. Most landlords are interested in making a profit from renting. Therefore the rent the landlord demands will be set to a monthly amount such that they can pay the costs of maintaining the property, which includes paying real-estate taxes to the local government, and still make some profit. So yes, renters are "paying the property tax", and always have been, they just do not see "property tax" as an itemized line item in their monthly rent amount.
- PaulHoule 4y ago
  To be specific in NY, local governments whether they are run by Democrats and Republicans are all concerned that much of their budget is mandated by Albany, particularly there was the decision to pay for Medicaid (health care for the poor) through local property taxes which are frequently inequitable as opposed to income taxes which are targeted at people who have large amounts of income. Thus if you rent, the cost of health insurance for the poor is baked into your rent.
  - notjulianjaynes 4y ago
    > Thus if you rent, the cost of health insurance for the poor is baked into your rent. Isn't it then also baked into the cost of owning your own home?
    - PaulHoule 4y ago
      Sure is. And it causes the same problems for homeowners. One difference in NY is that homeowners get a significant STAR exemption. I get that despite the unusual situation of having one property the house I live in, two rental units, plus a riding academy (which isn't legally treated as agriculture unless I get in some silly boondoggle such as raising foals.) In the city of Ithaca there are rather large tax bills for the City of Ithaca, plus the County of Tompkins, plus the City of Ithaca school district. It adds up to a few hundred a month on the rent for the typical rental unit. Insofar as the local government thinks that "the rent is too damn high" there is a definite chunk of it they are responsible for.
      - notjulianjaynes 4y ago
        I'm finding info that the maximum STAR exemption is good for $650 annually. A.) That sounds like a very reasonable price for health insurance. B.) How does this increase rent on residential units by hundreds of dollars a month? Are you saying that if rental properties in Ithaca were instead primary residences, the city and county would collect what equals several hundred dollars per month lesss (let's call it $1200/yr) in taxes than they do for rental properties? Is this unique to Ithaca, which is a college town?
        PaulHoule 4y ago
        It's an issue being talked out a lot in Ithaca, which is about a 20 minute drive from my farm https://www.ithaca.com/news/ithaca/cornell-s-tax-exempt-status-ithaca-s-bottom-line/article_18e74300-ad52-11ed-8550-17ee6a5bc2dc.html https://www.ithaca.com/news/ithaca/cornell-s-tax-exempt-stat... In particular that article asserts “according to the rental real estate listing service Dwellsy, Ithaca has the highest rent of any small city in the U.S. The study shows the average price for a one-bedroom was $1908 per month in 2022, up 4.5% over 2021. Only eight cities had higher average rents…New York, Boston, San Francisco, San Jose, Washington DC, Santa Barbara, Los Angeles, and San Diego.” and that article claims the tax burden in Ithaca is particularly pernicious because so much land is owned by not-for-profit organizations such as Cornell.
Beaver117 4y ago
Investments have risks. I don't see why we should make landlords' lives any easier.
- toomuchtodo 4y ago
  Landlord incentives should be aligned with local and renter incentives. You want landlords who aren’t slumlords, but who also aren’t going to extract as much as possible from tenants. End state desired is clean, safe, affordable housing for people who can’t or don’t want to buy and a reasonable return for the asset owner for providing housing. Everything to arrive at that is essentially tweaking an Excel formula of public policy. (I’d also put forth community land trusts that enable non market housing solutions, keeping housing out of the market and at the whims of investors, but that’s a larger conversation)
- PaulHoule 4y ago
  In the end the landlord passes expenses on to the other tenants so if one tenant screws up the other tenants pay more. For that matter I just paid a big insurance bill that my deadbeat tenant was supposed to help pay for, but at least if he trashes the place on the way out I will get paid to fix it and the insurance will sic lawyers on his ass instead of me. I worked at a mediation center and learned that it’s wrong to view a dispute through “social justice” or “conservative” viewpoints, race, gender, class and other things have nothing to do with who is right or wrong in a dispute. That said I think there are a lot of people in NY who wrongly think about landlords the way Mao Zhedong thought about them.
  - notjulianjaynes 4y ago
    Why was your "deadbeat" tenant supposed to pay your insurance bill?
    - prepend 4y ago
      It’s very common to have leases where the tenant pays taxes and insurance. I think much of commercial leases are “triple net” [0]. It all ends up being a wash in that not triple net leases just have higher payments. It’s a way to reduce management expenses. [0] https://www.investopedia.com/terms/t/triple-net-lease-nnn.asp https://www.investopedia.com/terms/t/triple-net-lease-nnn.as...
advisedwang 4y ago
> They should order a property tax reduction. It’s getting clear in cities like Ithaca that landlords pass high property taxes onto tenants quite directly. I don't believe a property tax reduction gets passed on to tenants. The goal of landlords is to make money, so the incentive is to keep rents as high as possible without having long vacancies; the only reason to reduce rents is if your property is empty. The hope of a market system is that with lowered expenses, some landlords would reduce their rent, which then allows renters to potentially move to those properties forcing other landlords to reduce rents in turn. This could theoretically happen in a cycle to a new equilibrium where rents have gone down by ~ the reduction in expenses. But there's a lot of forces in play that interrupt this and allow high rents to continue even with a drop in expenses: * The vacancy rate is very low, so there are very few landlords that would take advantage of the opportunity to lower their rent to get tenant. * Landlords know renters can be long term, so often prefer a longer period of vacancy over reducing rent. * Current renters are captive as moving costs are high, so their landlords are insulated from market pressure. * The rental market is very coordinated by a) companies that own many properties, b) property management agents that manage many properties and c) rent information companies like RealPage. The result is similar to a cartel, where property owners will allow vacancies directly in order to keep the market rate from falling. * Many current owners see the property value as a source of growth, and so care less about actual rental income. All of these mean that a property tax reduction is more of a windfall to landlords than a way to bring down rents.

credit_guy 4y ago

I'm hurting too, and I'd like my rent to come down. But this just does not feel right. It feels like tyranny of the majority. Who cares about the landlords? They are just bad people by definition, right? I, for one, think they are people just like you and me. Inflation exists for them too, not just for me and my family. Ordering them to decrease the rents is not that different from confiscating part of their property. And by the way, if you want to confiscate private property, there's a perfectly acceptable way to do that: taxes. Just reassess property values, or increase real estate tax rates, or both.

boredpeter 4y ago
Or ban rental properties and force them to sell. Landlords add nothing of value to society. I don’t care if they’re corporate or “mom and pop”. They rob people of generational wealth and monopolize housing. Very little need for them. Exceptions can be made for vacation destinations, hell just build hotels if you’re so desperate to be a landlord.
- prepend 4y ago
  > Landlords add nothing of value to society. Who would buy and develop rental units if landlords didn’t exist? Landlords seem to fulfill a very valuable part of the supply and demand driven marketplace. Are you suggesting we eliminate renting altogether and force people to buy?
  - kevviiinn 4y ago
    Property developers? Are you genuinely insisting that landlords are the only people who build?
    - prepend 4y ago
      Property developers don’t rent homes. They build and sell. Also, if they did rent the homes then they would become landlords.

jokethrowaway 4y ago

inflation IS an increase in taxation. The same is happening where I live. Rents doubled and cost of living is catching up. Who would have thought printing trillions would do this!

kqr2 4y ago

They could also assess a land value tax and return that to the renters as a dividend.

prepend 4y ago

> She can’t stop thinking about how most of what she brings home from her full-time job as a caretaker – two $900 checks a month – goes to rent for the two-bedroom apartment with a mold problem she shares with her disabled husband, teenage son and five pets. Not the point of the article, but someone with her low income and only a two bedroom apartment should not have five pets. Rent is expensive, but this subject is a bad example for “needing” a rent decrease. Her issue isn’t rent so much as it’s income and expense based. Disabled husband should have SSI income of $1k/month.

notjulianjaynes 4y ago
The article doesn't say exactly what her rent is, but if you're pointing at this woman's pets and going "See! Ha!" instead of wondering why she is only paid $21k a year for full time work, please tell me how much you make.
- Pigalowda 4y ago
  If her husband is disabled medicare may be paying her to be a “care taker”. I think it’s like $12/hr. A good scammy home health company can usually find disabled people, get them registered, hire one of their household as a “care taker”. I didn’t read the article. But she shouldn’t have 5 pets. Maybe a turtle.
  - notjulianjaynes 4y ago
    Am I understanding correctly that you are now both dictating how many and what kind of pets this person should own AND accusing them of medicare fraud, while continuing to ignore the fact that $21,600 is not fair annual compensation for 1/3 of one's life?
    - Pigalowda 4y ago
      It’s not Medicare fraud. You just don’t know how it works. If you would like to give people money, i encourage you to donate to charitable organizations. And yea, 5 pets for an impoverished person is too much.

prepend 4y ago

I imagine this will result in a long, expensive lawsuit that the city ultimately loses. In the meantime, there will be fewer landlords willing to rent at all.

kevviiinn 4y ago
Good, less leeches buying up property
- deleted 4y ago
  [deleted]
- yucky 4y ago
  If there are no landlords to finance the purchase and maintenance of homes for the rental market, how would people who only want to rent a home do so?
  - kevviiinn 4y ago
    The social housing of Vienna seems like a good model https://www.huduser.gov/portal/pdredge/pdr_edge_featd_article_011314.html https://www.huduser.gov/portal/pdredge/pdr_edge_featd_articl... https://www.visitingvienna.com/culture/social-housing/ https://www.visitingvienna.com/culture/social-housing/
    - yucky 4y ago
      Can you explain why? These blog posts don't make a compelling case, so maybe there is something missing?
      - kevviiinn 4y ago
        Austria has a robust system of government owned housing for people to rent and they include numerous amenities. Their system has been stable for a long time and is loved by the populace because they're such great places to live. As opposed to peivate landlords owning rental property where their goal is to simply profit as much as possible and raise rents while doing bare minimum repairs.

TechBro8615 4y ago

Seems like it would be much easier to implement Basic Income, or just send stimulus checks to renters. You can even increase the property taxes to pay for it, which would have the same effect as lowering rent, if you coupled it with a law limiting rent increase per year.