7 ms·

Rent control fundamentally cannot work, which is why it never works. Malicious noncompliance is a red herring.

anovikov 3y ago
It can and does work in many places. Whole cities like Stockholm mostly consist of rent-controlled apartments which have same rents paid since WWII era, which now amount to almost nothing. It creates awful social distortions and indirect costs, but it certainly does work.
- Our_Benefactors 3y ago
  > It creates awful social distortions and indirect costs, but it certainly does work. I don't think this meets the criteria most would consider “working”.
  - hedora 3y ago
    Sweden is often used as a case study in how rent controls lead to housing shortages. Rent control tries to make housing more affordable by reducing the cost, which immediately reduces the supply. At that point, rent control ends up increasing housing costs. Theory and real-world case studies mean that this is so obvious, that I just assume anyone that's passed economics 101 and is advocating for rent control is either grossly incompetent, currently very drunk, or is disingenuous and actually wants to use the power of the government to make sure other people cannot obtain secure and stable housing.
    - matwood 3y ago
      > Theory and real-world case studies mean that this is so obvious, that I just assume anyone that's passed economics 101 and is advocating for rent control is either grossly incompetent, currently very drunk, or is disingenuous and actually wants to use the power of the government to make sure other people cannot obtain secure and stable housing. Or they are one of the lucky few living in a rent controlled apartment.
    - anovikov 3y ago
      Well, you can't have a working democracy, market economy, and affordable housing at same time. Something has to give.
      - BurningFrog 3y ago
        Sweden had all three before rent control was "temporarily" instituted during WW2.
      - lttlrck 3y ago
        I'm fascinated by this statement. Where does it come from?
        anovikov 3y ago
        Well, remove democracy and what people want on a local level (preserve and grow value of their owned homes by limiting development) will not matter - and developers will built out so many homes housing will become affordable. Like in Russia for example - housing is cheap there exactly because it is an industrialised nation without democracy. Remove market economy and the Party will distribute housing as it sees fit, and you have affordable housing, like in the Soviet Union. Otherwise, inevitably housing will cease to be accessible once a bit more than 50% of population is happy with their housing conditions - then they will vote for people who will help them build value of their house by locking out the underhoused minority. I can't see a fix to this that won't undermine either democracy (by somehow making people's political choices matter less or not at all, openly or covertly, aka "Putin elections"), or market economy. Both of which sounds worse than just putting up with unaffordable housing.
- IncreasePosts 3y ago
  I'm sure it works for the residents of Stockholm, but not so much for all sorts of people who would move to Stockholm but can't wait in line 10 years for an apartment.
  - anovikov 3y ago
    Yes that's right! 10 years is an understatement. It means simply that the city is "locked out" for everyone but locals who inherited rental contract from their grandfathers, or multimillionaire cash buyers.
    - htag 3y ago
      Maybe this is the hack for managing city growth
      - imtringued 3y ago
        Why do you want successful cities to stop growing? Especially ones that have zero desire to stop attracting employers. Offices take up very little space so if you let developers build commercial real estate you will always have a mismatch between housing and jobs if you stop building residential real estate. This will displace lower income people in the end and lead to gentrification rather than a stop to growth.
        toast0 3y ago
        Having a mechanism to reduce growth is actually great. It's hard to increase transportation infrastructure in a built-up area. And when you do, everybody says it didn't work because traffic is still bad or trains are still overfull. But they never notice that population increased during construction. If you could stop growth, then your transportation needs stabilize. Doesn't really feel fair to me though, because it's so hard to move into the closed city. Personally, I'm a fan of limiting rent increases to a max of something like 5-10% per year. Not so much that it's a total hardship to deal with a max increase; not so little that landlords have to do max increases every year or get way off market; also not so little that a landlord can't catch up later if they purposefully lag on increases to keep a preferred tenant.
- FredPret 3y ago
  Supply and demand determines rent; if you have enough supply and also rent control, then you'll have have rent control that magically "works". But it's always supply and demand that gets the upper hand in the end. If there's a shortage of supply, and you put in more market rules & regulations, costs will shift elsewhere (like the broker in the article) or the black market will simply grow to clear the market.
  - samstave 3y ago
    [flagged]
    - matwood 3y ago
      No they don't. The market determines rent. Lower demand or raise supply and watch prices drop, regardless of what the landlords want.
      - polygamous_bat 3y ago
        Market determines rent the same way market determines the cost of health insurance: people need a place to live the same way they need a doctor when they’re sick. If all the landlords are using collusion software to raise rent in tandem [0] what is your alternative, live in the streets until they give in? [0] https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r...
        scld 3y ago
        The problem is that the market determines the rent but the government determines that building houses is mostly illegal.
        polygamous_bat 3y ago
        “Government” isn’t a magical boogeyman coming out of a magical swamp to make magical laws. It’s literally NIMBYs, which are largely current property holders which are also in large part landlords. They’re playing the game to the full extent, and it’s high time they are contested in the same game.
- BurningFrog 3y ago
  It works in the sense that the system keeps existing, but it doesn't work in the sense that affordable rental housing exists for everyone. Ask anyone actually living in Stockholm, and you'll hear how the system really works. Last I heard there was a 20 year wait to get an apartment the legal way.
bradlys 3y ago
Rent control ideally wouldn’t need to exist. But since no one is fucking building anything - you need it to prevent landlords from just extracting more money from the pockets of laborers without having done any labor themselves. My landlord didn’t provide any more utility this year even though they jacked up my rent $1000/month this year. Nothing about my place got any better and I’m not getting anything out of it. They’re doing it purely to extract money from me because they know no one else is building and we just had 150k+ migrants move into the city to compete for a fixed supply. End of the day, landlords don’t deserve more money and I don’t know why anyone here argues for it. It’s like you want bezos to have even more money - it’s super weird.
- carom 3y ago
  Isn't zoning the issue in that case?
- flavius29663 3y ago
  > no one is fucking building anything Introducing rent control makes it even less likely to have new builds. Try to think like a millionaire that could potentially invest in real estate: would you buy a 2 million house not knowing that you can recoup that investment and also make a profit? Isn't it easier to just dump the money in an ETF and get 8% on the market? > you need it to prevent landlords from just extracting more money Why do you need to prevent people from making money? Would you like someone preventing bradlys from making that much money? How much is too much? If you work in tech like most people here, you're probably making more than 99% of the world. Making money is not a problem, if there is money to be made in real estate, investors would flock to it, increasing supply and therefore decreasing prices and profits over time. The problem is when the economics are not allowed to float freely: because of rent control, limitations to building (like zoning laws), insufficient infrastructure (like being stuck on an island with bad connections) etc.
  - bradlys 3y ago
    You cannot have housing be affordable and an investment. You need to decouple the two. Fundamentally these are in disagreement. If you believe that landlords should control the world then keep believing this idea that housing should also be an investment. I don’t think housing should be an investment. It is impossible for something to be a good investment and affordable. They go against one another.
jamil7 3y ago
There are way too many other variables involved to really make that generalisation. I've lived in a city with very strong rent control and one with none and essentially no tenants rights. Both cities currently have rental shortages, just the one without rental controls is about 3 times as expensive as the one with. In practise, I've yet to see anything working that doesn't make rentals either scarce or prohibitively expensive.
jrockway 3y ago
> Rent control fundamentally cannot work Rent control definitely works, because owners lock in the original price of the building with a fixed-rate mortgage. If you buy a building in 1960 to rent out, you can rent it out at 1960s prices pretty much forever, with only a tiny fraction added to cover increasing property taxes (subsidized for owners of rent-stabilized apartments) and the increasing costs of routine maintenance. If I were to become Dictator of New York City tomorrow, I think I'd freeze rents as a factor on the acquisition cost of the property + prevailing interest rates on 30 year fixed mortgages. If you want to make today's market rates on your property, you have to build a brand new building. This incentivizes the creation of new housing, and provides stability to existing tenants through rent stabilization even for newcomers to the city.
- carom 3y ago
  So you cannot sell the building? Also you have to get all the tenants out to build, do you have buyouts? This seems like no one will run apartments.
  - jrockway 3y ago
    I mean, it's the same as selling a rent-stabilized building today. No, you can't kick the tenants out when you sell. You often sell at a significant discount because of the problem to profitability that the tenants pose. This is fine. NYC is full of vacant land. You can kick cars out of a parking lot and turn it into a 50 story residential skyscraper without any problem. You can tear down nearly-abandoned office buildings and replace them with housing. Tearing down a building where people are happily living is completely unnecessary. Profitable? Sure, it can be. But the city is under no obligation to making housing profitable. Housing is infrastructure; does the city make a profit by charging tolls on roads? Nope! They don't need to; they exist for the public good, not for your 401(k) plan. Plenty of people are making TONS of money on brand-new buildings. In the 12 years I've lived here I've watched Downtown Brooklyn change from a forgotten wasteland to the home of the tallest building in Brooklyn. The neighborhood is full of $1M studio apartments (and up for more space) and they are sold before the building even breaks ground. People want new stuff and they can afford it. It doesn't have to come at the cost of existing residents.

It can and does work in many places. Whole cities like Stockholm mostly consist of rent-controlled apartments which have same rents paid since WWII era, which now amount to almost nothing. It creates awful social distortions and indirect costs, but it certainly does work.

Our_Benefactors 3y ago
> It creates awful social distortions and indirect costs, but it certainly does work. I don't think this meets the criteria most would consider “working”.
- hedora 3y ago
  Sweden is often used as a case study in how rent controls lead to housing shortages. Rent control tries to make housing more affordable by reducing the cost, which immediately reduces the supply. At that point, rent control ends up increasing housing costs. Theory and real-world case studies mean that this is so obvious, that I just assume anyone that's passed economics 101 and is advocating for rent control is either grossly incompetent, currently very drunk, or is disingenuous and actually wants to use the power of the government to make sure other people cannot obtain secure and stable housing.
  - matwood 3y ago
    > Theory and real-world case studies mean that this is so obvious, that I just assume anyone that's passed economics 101 and is advocating for rent control is either grossly incompetent, currently very drunk, or is disingenuous and actually wants to use the power of the government to make sure other people cannot obtain secure and stable housing. Or they are one of the lucky few living in a rent controlled apartment.
  - anovikov 3y ago
    Well, you can't have a working democracy, market economy, and affordable housing at same time. Something has to give.
    - BurningFrog 3y ago
      Sweden had all three before rent control was "temporarily" instituted during WW2.
    - lttlrck 3y ago
      I'm fascinated by this statement. Where does it come from?
      - anovikov 3y ago
        Well, remove democracy and what people want on a local level (preserve and grow value of their owned homes by limiting development) will not matter - and developers will built out so many homes housing will become affordable. Like in Russia for example - housing is cheap there exactly because it is an industrialised nation without democracy. Remove market economy and the Party will distribute housing as it sees fit, and you have affordable housing, like in the Soviet Union. Otherwise, inevitably housing will cease to be accessible once a bit more than 50% of population is happy with their housing conditions - then they will vote for people who will help them build value of their house by locking out the underhoused minority. I can't see a fix to this that won't undermine either democracy (by somehow making people's political choices matter less or not at all, openly or covertly, aka "Putin elections"), or market economy. Both of which sounds worse than just putting up with unaffordable housing.
IncreasePosts 3y ago
I'm sure it works for the residents of Stockholm, but not so much for all sorts of people who would move to Stockholm but can't wait in line 10 years for an apartment.
- anovikov 3y ago
  Yes that's right! 10 years is an understatement. It means simply that the city is "locked out" for everyone but locals who inherited rental contract from their grandfathers, or multimillionaire cash buyers.
  - htag 3y ago
    Maybe this is the hack for managing city growth
    - imtringued 3y ago
      Why do you want successful cities to stop growing? Especially ones that have zero desire to stop attracting employers. Offices take up very little space so if you let developers build commercial real estate you will always have a mismatch between housing and jobs if you stop building residential real estate. This will displace lower income people in the end and lead to gentrification rather than a stop to growth.
      - toast0 3y ago
        Having a mechanism to reduce growth is actually great. It's hard to increase transportation infrastructure in a built-up area. And when you do, everybody says it didn't work because traffic is still bad or trains are still overfull. But they never notice that population increased during construction. If you could stop growth, then your transportation needs stabilize. Doesn't really feel fair to me though, because it's so hard to move into the closed city. Personally, I'm a fan of limiting rent increases to a max of something like 5-10% per year. Not so much that it's a total hardship to deal with a max increase; not so little that landlords have to do max increases every year or get way off market; also not so little that a landlord can't catch up later if they purposefully lag on increases to keep a preferred tenant.
FredPret 3y ago
Supply and demand determines rent; if you have enough supply and also rent control, then you'll have have rent control that magically "works". But it's always supply and demand that gets the upper hand in the end. If there's a shortage of supply, and you put in more market rules & regulations, costs will shift elsewhere (like the broker in the article) or the black market will simply grow to clear the market.
- samstave 3y ago
  [flagged]
  - matwood 3y ago
    No they don't. The market determines rent. Lower demand or raise supply and watch prices drop, regardless of what the landlords want.
    - polygamous_bat 3y ago
      Market determines rent the same way market determines the cost of health insurance: people need a place to live the same way they need a doctor when they’re sick. If all the landlords are using collusion software to raise rent in tandem [0] what is your alternative, live in the streets until they give in? [0] https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r...
      - scld 3y ago
        The problem is that the market determines the rent but the government determines that building houses is mostly illegal.
        polygamous_bat 3y ago
        “Government” isn’t a magical boogeyman coming out of a magical swamp to make magical laws. It’s literally NIMBYs, which are largely current property holders which are also in large part landlords. They’re playing the game to the full extent, and it’s high time they are contested in the same game.
BurningFrog 3y ago
It works in the sense that the system keeps existing, but it doesn't work in the sense that affordable rental housing exists for everyone. Ask anyone actually living in Stockholm, and you'll hear how the system really works. Last I heard there was a 20 year wait to get an apartment the legal way.

bradlys 3y ago

Rent control ideally wouldn’t need to exist. But since no one is fucking building anything - you need it to prevent landlords from just extracting more money from the pockets of laborers without having done any labor themselves. My landlord didn’t provide any more utility this year even though they jacked up my rent $1000/month this year. Nothing about my place got any better and I’m not getting anything out of it. They’re doing it purely to extract money from me because they know no one else is building and we just had 150k+ migrants move into the city to compete for a fixed supply. End of the day, landlords don’t deserve more money and I don’t know why anyone here argues for it. It’s like you want bezos to have even more money - it’s super weird.

carom 3y ago
Isn't zoning the issue in that case?
flavius29663 3y ago
> no one is fucking building anything Introducing rent control makes it even less likely to have new builds. Try to think like a millionaire that could potentially invest in real estate: would you buy a 2 million house not knowing that you can recoup that investment and also make a profit? Isn't it easier to just dump the money in an ETF and get 8% on the market? > you need it to prevent landlords from just extracting more money Why do you need to prevent people from making money? Would you like someone preventing bradlys from making that much money? How much is too much? If you work in tech like most people here, you're probably making more than 99% of the world. Making money is not a problem, if there is money to be made in real estate, investors would flock to it, increasing supply and therefore decreasing prices and profits over time. The problem is when the economics are not allowed to float freely: because of rent control, limitations to building (like zoning laws), insufficient infrastructure (like being stuck on an island with bad connections) etc.
- bradlys 3y ago
  You cannot have housing be affordable and an investment. You need to decouple the two. Fundamentally these are in disagreement. If you believe that landlords should control the world then keep believing this idea that housing should also be an investment. I don’t think housing should be an investment. It is impossible for something to be a good investment and affordable. They go against one another.

jamil7 3y ago

There are way too many other variables involved to really make that generalisation. I've lived in a city with very strong rent control and one with none and essentially no tenants rights. Both cities currently have rental shortages, just the one without rental controls is about 3 times as expensive as the one with. In practise, I've yet to see anything working that doesn't make rentals either scarce or prohibitively expensive.

jrockway 3y ago

> Rent control fundamentally cannot work Rent control definitely works, because owners lock in the original price of the building with a fixed-rate mortgage. If you buy a building in 1960 to rent out, you can rent it out at 1960s prices pretty much forever, with only a tiny fraction added to cover increasing property taxes (subsidized for owners of rent-stabilized apartments) and the increasing costs of routine maintenance. If I were to become Dictator of New York City tomorrow, I think I'd freeze rents as a factor on the acquisition cost of the property + prevailing interest rates on 30 year fixed mortgages. If you want to make today's market rates on your property, you have to build a brand new building. This incentivizes the creation of new housing, and provides stability to existing tenants through rent stabilization even for newcomers to the city.

carom 3y ago
So you cannot sell the building? Also you have to get all the tenants out to build, do you have buyouts? This seems like no one will run apartments.
- jrockway 3y ago
  I mean, it's the same as selling a rent-stabilized building today. No, you can't kick the tenants out when you sell. You often sell at a significant discount because of the problem to profitability that the tenants pose. This is fine. NYC is full of vacant land. You can kick cars out of a parking lot and turn it into a 50 story residential skyscraper without any problem. You can tear down nearly-abandoned office buildings and replace them with housing. Tearing down a building where people are happily living is completely unnecessary. Profitable? Sure, it can be. But the city is under no obligation to making housing profitable. Housing is infrastructure; does the city make a profit by charging tolls on roads? Nope! They don't need to; they exist for the public good, not for your 401(k) plan. Plenty of people are making TONS of money on brand-new buildings. In the 12 years I've lived here I've watched Downtown Brooklyn change from a forgotten wasteland to the home of the tallest building in Brooklyn. The neighborhood is full of $1M studio apartments (and up for more space) and they are sold before the building even breaks ground. People want new stuff and they can afford it. It doesn't have to come at the cost of existing residents.