7 ms·

This is reminiscent of New York's abominably badly-structured rent control system, which costs the vast majority of New Yorkers an immense amount in increased r

This is reminiscent of New York's abominably badly-structured rent control system, which costs the vast majority of New Yorkers an immense amount in increased rent, and will probably never go away because there's a powerful asshole lobby that works overtime to keep it in place. The idea of rent control isn't so bad. If done properly and fairly, it could make New York a lot better, but the insane legacy system is an unmitigated disaster. Since RC rents aren't even allowed to go up with inflation, there are a lot of people paying ~$200 for apartments that would rent for 10-15 times that. Technically, RC can only be passed within families, but the rules are broken all the time, and there's a common (if morbid) practice whereby people seeking rent control stalk obituaries and try to get themselves named as relatives of the deceased, usually in an arrangement involving paying "key money" to non-NYC resident legitimate relatives of this person. It has created a class of parasitic, law-breaking New Yorkers who will never leave, because they're locked in to an arrangement strictly better than ownership (landlord pays maintenance costs and taxes, which are higher than RC rent) and even if they only visit the city for 4 weeks out of the year, holding on to their RC apartment is cheaper than a hotel-- especially because they can sublet their RC apartments at market rent, which is also illegal but happens all the time. Now, here's the kicker. The system was developed in 1947 to benefit working-class people. In 2012, almost all of the rent-control holders are upper-middle to upper-class people who have no legitimate claim to needing it. Unfortunately, they're well-connected to the city council and therefore, like cockroaches, will never leave. Disgusting.

stfp 14y ago
Hate to be that guy but citation needed?
- stephengillie 14y ago
  Can I cite an economics professor whose name I've forgotten? He discussed how rent controls prevent both raising prices and selling the controlled property, so the owners can't make money from the property in any way. Thus, many of these buildings stand abandoned and unsafe for decades.
  - ghshephard 14y ago
    "He discussed how rent controls prevent both raising prices and selling the controlled property, so the owners can't make money from the property in any way." That's basically the position of every economics instructor I've ever had - at least in 1xx and 2xx economics. I didn't go any further in economics, but I have been told that the basic jist of 3xx and 4xx economics is to demonstrate how everything we learned in 1xx and 2xx models is pretty much demonstrably incorrect in the real world, and why.
    - ericd 14y ago
      I have a relative who owns a townhouse in Brooklyn. When they bought their place, they got a substantial discount because it came with a couple of un-evictable tenants who were paying under $100/mo in an area that would have bore $1500/mo otherwise for those apartments. They literally spent more on utilities for that apartment than they received in rent. In looking for apartments in NYC, I ran across at least one other that was rent controlled and was absurdly cheap, and the person living there was subletting from the person to whom the rent controlled place was passed down to for more than he was paying, but still less than market rent. I don't think it's a defensible system, at all, and I'm normally relatively in favor of welfare programs. This one is just completely broken.
  - smsm42 14y ago
    Here's one quote: http://gregmankiw.blogspot.com/2009/02/news-flash-economists-agree.html http://gregmankiw.blogspot.com/2009/02/news-flash-economists... 93% of economists agree that: "A ceiling on rents reduces the quantity and quality of housing available."
- michaelbuckbee 14y ago
  It's a legitimate request, but quoting stats for something that is illegal and widely occurring yet rarely enforced would seem to be difficult. From personal interactions with NYC residents, I feel pretty confident that asking any of them about rent controlled apartments would elicit rants against the system for the reasons specified.
gms 14y ago
Why do you think rent control is a good idea? How could it possibly be done fairly?
- fennecfoxen 14y ago
  Welllllll... I am NOT pro-rent-control/stabilization/etc, but I will point out that an existing landlord has some monopoly power over his tenant because the cost of a new apartment search and move is high (in terms of finances, effort, time, emotions, new neighborhoods, lost stability, etc). The free market is only efficient if transaction costs are low, among other things. But then, on the other side of the equation, every place that has rent control also has the risk of foregone future rent increases baked into the price. They'll also have insane leases meant to minimize that risk. If there is an imbalance of power between the tenant and the landlord because of their relative conditions, the government really has very limited power to change that.
  - wisty 14y ago
    Landlords and tenants have a contract. That contract can specify a long term lease, with inflation-linked rent rises. Most places have rules for what can go into a rental contract. As you say, it should strike a balance, otherwise no-one will offer cheap rentals.
epc 14y ago
You’re conflating “Rent Control” and “Rent Stabilization”. Rent Control applies to apartments built prior to 1947 and only to tenants and their descendants who have lived in the apartment continuously. There are no new rent controlled apartments in NYC. When you hear of $200 three bedroom apartments in Manhattan, it they exist at all they're likely Rent Controlled vs. Stabilized. Rent stabilization applies to apartments built roughly between 1947 and the mid-1970s. Rents can only be increased by a percentage determined each year by the NYC Rent Guidelines Board (http://www.housingnyc.com/html/resources/dhcr/dhcr1.html http://www.housingnyc.com/html/resources/dhcr/dhcr1.html). Tenants can be evicted from either style of apartment if the landlord can demonstrate that the unit is not the tenant's primary residence, amongst other reasons. While it is almost unheard of for a rent controlled tenant to be evicted, stabilized tenants get evicted all of the time. It is by no means easy. Stabilized apartments can be removed from the rent stabilization program if the rent exceeds a certain amount, or if the tenant's household income exceeds a certain amount. Typically landlords would love to eliminate RC/RS entirely, while tenant groups would like to see Rent Stabilization expand. The current vacancy rate in NYC is less than 3.something percent (http://cityroom.blogs.nytimes.com/2012/03/26/decades-old-housing-emergency-continues-and-so-does-rent-regulation/ http://cityroom.blogs.nytimes.com/2012/03/26/decades-old-hou...) so stabilization is unlikely to end any time soon. [I own in NYC, I don't rent. Calling the million plus people who live in rent stabilized apartments "cockroaches" is itself pretty disgusting.]
- dandelany 14y ago
  This. I agree that the original rent control program was badly structured, but today, true rent-controlled apartments only account for 1.8% of all rental units in NYC (http://furmancenter.org/files/publications/HVS_Rent_Stabilization_fact_sheet_FINAL.pdf http://furmancenter.org/files/publications/HVS_Rent_Stabiliz...). And as the parent says, this number can only fall. Rent-stabilization, on the other hand, is being expanded (the 2011 Rent Act increased the minimum rent for deregulation to $2500/month). It's less drastic than rent control and seems to at least have some effect on keeping rents low(er, this is NYC) without being open to such gaming effects as rent control. However, there are always loopholes. When I moved into my Manhattan apartment, I was told before lease-signing that the rent would be less than the $2000/month ceiling (at the time) for rent control. However, upon lease signing, the rent on the lease was $2050 and there was an attached rider saying I would be paying a lower, "preferential" rent - the originally agreed upon amount - presumably to avoid rent-stabilization. Who knows if that would stand up in court, but as long as management companies can make the tenants believe it's not rent-stabilized, it doesn't really matter...
smsm42 14y ago
Just as an example, one of the rent controlled apartments was occupied by one Kofi Annan. Yes, that Kofi Annan. Some working class guy, right? http://www.nysun.com/national/mystery-surfaces-over-apartment-of-kofi-annan/45403/ http://www.nysun.com/national/mystery-surfaces-over-apartmen... Once Kofi Annan became "the Kofi Annan", he passed the apartment to his brother, Kobina Annan, a working-class ambassador of Ghana to Morocco. Another example is Charles Rangel, a working-class congressman that had not one but four rent-stabilized apartments: http://www.nytimes.com/2008/07/11/nyregion/11rangel.html http://www.nytimes.com/2008/07/11/nyregion/11rangel.html If that doesn't convince you of the wisdom of the New York regulations, check out this one: http://www.nytimes.com/2011/02/06/realestate/06cov.html?pagewanted=1&_r=3 http://www.nytimes.com/2011/02/06/realestate/06cov.html?page...

stfp 14y ago

Hate to be that guy but citation needed?

stephengillie 14y ago
Can I cite an economics professor whose name I've forgotten? He discussed how rent controls prevent both raising prices and selling the controlled property, so the owners can't make money from the property in any way. Thus, many of these buildings stand abandoned and unsafe for decades.
- ghshephard 14y ago
  "He discussed how rent controls prevent both raising prices and selling the controlled property, so the owners can't make money from the property in any way." That's basically the position of every economics instructor I've ever had - at least in 1xx and 2xx economics. I didn't go any further in economics, but I have been told that the basic jist of 3xx and 4xx economics is to demonstrate how everything we learned in 1xx and 2xx models is pretty much demonstrably incorrect in the real world, and why.
  - ericd 14y ago
    I have a relative who owns a townhouse in Brooklyn. When they bought their place, they got a substantial discount because it came with a couple of un-evictable tenants who were paying under $100/mo in an area that would have bore $1500/mo otherwise for those apartments. They literally spent more on utilities for that apartment than they received in rent. In looking for apartments in NYC, I ran across at least one other that was rent controlled and was absurdly cheap, and the person living there was subletting from the person to whom the rent controlled place was passed down to for more than he was paying, but still less than market rent. I don't think it's a defensible system, at all, and I'm normally relatively in favor of welfare programs. This one is just completely broken.
- smsm42 14y ago
  Here's one quote: http://gregmankiw.blogspot.com/2009/02/news-flash-economists-agree.html http://gregmankiw.blogspot.com/2009/02/news-flash-economists... 93% of economists agree that: "A ceiling on rents reduces the quantity and quality of housing available."
michaelbuckbee 14y ago
It's a legitimate request, but quoting stats for something that is illegal and widely occurring yet rarely enforced would seem to be difficult. From personal interactions with NYC residents, I feel pretty confident that asking any of them about rent controlled apartments would elicit rants against the system for the reasons specified.

gms 14y ago

Why do you think rent control is a good idea? How could it possibly be done fairly?

fennecfoxen 14y ago
Welllllll... I am NOT pro-rent-control/stabilization/etc, but I will point out that an existing landlord has some monopoly power over his tenant because the cost of a new apartment search and move is high (in terms of finances, effort, time, emotions, new neighborhoods, lost stability, etc). The free market is only efficient if transaction costs are low, among other things. But then, on the other side of the equation, every place that has rent control also has the risk of foregone future rent increases baked into the price. They'll also have insane leases meant to minimize that risk. If there is an imbalance of power between the tenant and the landlord because of their relative conditions, the government really has very limited power to change that.
- wisty 14y ago
  Landlords and tenants have a contract. That contract can specify a long term lease, with inflation-linked rent rises. Most places have rules for what can go into a rental contract. As you say, it should strike a balance, otherwise no-one will offer cheap rentals.

epc 14y ago

You’re conflating “Rent Control” and “Rent Stabilization”. Rent Control applies to apartments built prior to 1947 and only to tenants and their descendants who have lived in the apartment continuously. There are no new rent controlled apartments in NYC. When you hear of $200 three bedroom apartments in Manhattan, it they exist at all they're likely Rent Controlled vs. Stabilized. Rent stabilization applies to apartments built roughly between 1947 and the mid-1970s. Rents can only be increased by a percentage determined each year by the NYC Rent Guidelines Board (http://www.housingnyc.com/html/resources/dhcr/dhcr1.html http://www.housingnyc.com/html/resources/dhcr/dhcr1.html). Tenants can be evicted from either style of apartment if the landlord can demonstrate that the unit is not the tenant's primary residence, amongst other reasons. While it is almost unheard of for a rent controlled tenant to be evicted, stabilized tenants get evicted all of the time. It is by no means easy. Stabilized apartments can be removed from the rent stabilization program if the rent exceeds a certain amount, or if the tenant's household income exceeds a certain amount. Typically landlords would love to eliminate RC/RS entirely, while tenant groups would like to see Rent Stabilization expand. The current vacancy rate in NYC is less than 3.something percent (http://cityroom.blogs.nytimes.com/2012/03/26/decades-old-housing-emergency-continues-and-so-does-rent-regulation/ http://cityroom.blogs.nytimes.com/2012/03/26/decades-old-hou...) so stabilization is unlikely to end any time soon. [I own in NYC, I don't rent. Calling the million plus people who live in rent stabilized apartments "cockroaches" is itself pretty disgusting.]

dandelany 14y ago
This. I agree that the original rent control program was badly structured, but today, true rent-controlled apartments only account for 1.8% of all rental units in NYC (http://furmancenter.org/files/publications/HVS_Rent_Stabilization_fact_sheet_FINAL.pdf http://furmancenter.org/files/publications/HVS_Rent_Stabiliz...). And as the parent says, this number can only fall. Rent-stabilization, on the other hand, is being expanded (the 2011 Rent Act increased the minimum rent for deregulation to $2500/month). It's less drastic than rent control and seems to at least have some effect on keeping rents low(er, this is NYC) without being open to such gaming effects as rent control. However, there are always loopholes. When I moved into my Manhattan apartment, I was told before lease-signing that the rent would be less than the $2000/month ceiling (at the time) for rent control. However, upon lease signing, the rent on the lease was $2050 and there was an attached rider saying I would be paying a lower, "preferential" rent - the originally agreed upon amount - presumably to avoid rent-stabilization. Who knows if that would stand up in court, but as long as management companies can make the tenants believe it's not rent-stabilized, it doesn't really matter...

smsm42 14y ago

Just as an example, one of the rent controlled apartments was occupied by one Kofi Annan. Yes, that Kofi Annan. Some working class guy, right? http://www.nysun.com/national/mystery-surfaces-over-apartment-of-kofi-annan/45403/ http://www.nysun.com/national/mystery-surfaces-over-apartmen... Once Kofi Annan became "the Kofi Annan", he passed the apartment to his brother, Kobina Annan, a working-class ambassador of Ghana to Morocco. Another example is Charles Rangel, a working-class congressman that had not one but four rent-stabilized apartments: http://www.nytimes.com/2008/07/11/nyregion/11rangel.html http://www.nytimes.com/2008/07/11/nyregion/11rangel.html If that doesn't convince you of the wisdom of the New York regulations, check out this one: http://www.nytimes.com/2011/02/06/realestate/06cov.html?pagewanted=1&_r=3 http://www.nytimes.com/2011/02/06/realestate/06cov.html?page...