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If they drop rent, couldn't they get stuck there because of rent control laws? I'm not sure exactly how the law works, but I know that landlords don't have a lo

If they drop rent, couldn't they get stuck there because of rent control laws? I'm not sure exactly how the law works, but I know that landlords don't have a lot of flexibility in NYC.

time_management 18y ago
Rent-stabilized buildings would be affected. Rent-control is a different beast altogether. Rent-stabilized means that an apartment's rent can't increase faster than the rate of inflation, plus a certain margin (1-2% per year, I believe). The purpose of this is to remove the volatility in rents that causes urban centers to rot. When rents are volatile, it's bad for residential infrastructure on both the up and down swings. When rents are high, as in 2007 New York, landlords don't need to do shit to move properties, so they let them decline. When rents are low, there's no point in improving the housing. This is why a lot of urban centers crumbled in the 1950s. Rent control was instituted in the 1940s to prevent GIs from coming back to unaffordable rents. For rent-controlled (unlike rent-stabilized) apartments, the landlord cannot raise the rent at all (meaning he takes a loss equal to the rate of inflation). Rent stabilization is a good thing and should be extended. Rent control was a huge mistake and should probably be abolished. One thing that happens in non-RS buildings in New York (the new-construction "luxury" buildings) is that landlords routinely hit tenants with 10-20% rent increases, regardless of the direction of the market. The reason for this is that they know people hate moving, especially in New York where most people don't have cars, and Wall Streeters are (were) getting 25-50% raises each year, so they would take the pain. If rents are decreased on a rent-stabilized building, I don't think it's easy to bring them back up, but this is probably better than carrying a vacancy. I've heard that RC goes out the window if there's a 5% vacancy rate, but that could be an urban myth. It's getting close to that point right now.

If they drop rent, couldn't they get stuck there because of rent control laws? I'm not sure exactly how the law works, but I know that landlords don't have a lot of flexibility in NYC.

time_management 18y ago

Rent-stabilized buildings would be affected. Rent-control is a different beast altogether. Rent-stabilized means that an apartment's rent can't increase faster than the rate of inflation, plus a certain margin (1-2% per year, I believe). The purpose of this is to remove the volatility in rents that causes urban centers to rot. When rents are volatile, it's bad for residential infrastructure on both the up and down swings. When rents are high, as in 2007 New York, landlords don't need to do shit to move properties, so they let them decline. When rents are low, there's no point in improving the housing. This is why a lot of urban centers crumbled in the 1950s. Rent control was instituted in the 1940s to prevent GIs from coming back to unaffordable rents. For rent-controlled (unlike rent-stabilized) apartments, the landlord cannot raise the rent at all (meaning he takes a loss equal to the rate of inflation). Rent stabilization is a good thing and should be extended. Rent control was a huge mistake and should probably be abolished. One thing that happens in non-RS buildings in New York (the new-construction "luxury" buildings) is that landlords routinely hit tenants with 10-20% rent increases, regardless of the direction of the market. The reason for this is that they know people hate moving, especially in New York where most people don't have cars, and Wall Streeters are (were) getting 25-50% raises each year, so they would take the pain. If rents are decreased on a rent-stabilized building, I don't think it's easy to bring them back up, but this is probably better than carrying a vacancy. I've heard that RC goes out the window if there's a 5% vacancy rate, but that could be an urban myth. It's getting close to that point right now.