7 ms·

How Much Should a Landlord Pay a Tenant to Move Out of an Apartment?

33 points by DanBlake 12y ago

afafsd 12y ago
As a landlord (in a different city where things are sensible and I can raise my rent or evict my tenant any time I darn well like because it's my fricking property) this kind of thing makes me really angry.
- jcrites 12y ago
  I'm not happy with the concept as a tenant either. It distorts the economy and artificially reduces the supply of properties that are available to rent.
- k-mcgrady 12y ago
  >> "I can raise my rent or evict my tenant any time I darn well like because it's my fricking property" Of course you're going to think that - it's in your best interest. But it's not fair to a tenant. Without regulations on evicting people asshole landlords could make families homeless for no reason. I don't think you should have to pay to evict someone but if you rent your property out there should be regulations in place to protect the tenant. If there weren't I think you find the market for rental properties start to diminish. People who could afford to buy (and that's true of a lot of renters) would to avoid the risk of their lives being turned upside down overnight.
  - harryh 12y ago
    Your hypothesis about rental markets diminishing in areas without rent control isn't supported by empirical evidence. Quite the opposite in fact. Essentially all studies have found that markets without rent control have much more robust and stable housing stocks.
    - bronbron 12y ago
      > Your hypothesis about rental markets diminishing in areas without rent control You should re-read what he wrote. That's not his hypothesis.
  - jcrites 12y ago
    How is it unfair to tenants? Tenants sign a lease for a period of time with a fixed price. The lease's fixed price protects both parties. When that lease is up, the landlord and tenant should be free to negotiate a new price. If tenants want stable prices over a longer period of time, then they should negotiate a multi-year contract with the landlord. All of the protections you're discussing are already built into the concept of a lease. If either the tenant or landlord is not willing to agree to a longer contract, then that should be their right. (Why should anyone be forced to lock in the rental price of their property for years, even while the circumstances of the city are changing -- e.g., receiving investment or decaying; people moving into the area or out of it.) If one party wants a longer contract and the other does not, then the party who desires the longer contract should offer something in exchange for lowering the other party's flexibility. It all plays into the price of the contract. I personally prefer to rent month-to-month because I value my ability to pick up and leave any time more than I worry about the uncertainty of being randomly evicted. Someone who wants a five year lease should negotiate differently and get a different price than I do (whether higher or lower depends on the circumstances).
    - bitJericho 12y ago
      Every lease I've ever seen is on a take it or leave it basis.
      - jcrites 12y ago
        Plenty of properties will advertise "no pets", but you can negotiate with the landlord about that. For example, you might offer an additional deposit against pet damage, or offer to pay a cleaning fee when you leave. I have pets and I have always been able to talk landlords out of their "no pets" policy. If you offered the landlord double the lease price in exchange for a 2 year contract, will they take it? Almost certainly. Few contracts of that type are truly take it or leave it. My point is not that 2x would be fair, just that you have the ability to negotiate, which means the question of whether you can get a contract with the terms you want depends on your ability to negotiate a price for those terms. Many landlords value stability and will be happy with a longer term lease at the same price, or even a lower price. And that's where the negotiation comes in. If the landlord believes prices in the area will rise steadily, then he may or may not want to offer a fixed price over a 3 year lease. Perhaps he will offer a longer lease, but with a stipulation of 3% price increase per year. You don't believe prices will rise that much, so you counter with 1% YoY. It's like buying a housing future. You're locking in the price of housing now as insurance against it changing in the future. That should properly have a different price than a lease with no such provision. If a person believed in rent control, why not go further? Fix the price of property itself so that it may not rise more than 1% per year. If you buy a house from someone, the sale price may not be greater than the last sale price increased by 1% YoY. Would this be desirable? A law like this will have all sorts of negative consequences on the economy. For example, imagine a house owner who no longer wishes to live in the city. If prices were allowed to rise, then he's incentivized to sell his house, cash out on the increased price, and move somewhere else, enabling a person who wants to live in the city can do so. But if prices are not allowed to rise, then he's stuck selling is house for the same price he bought it; he has no incentive to move. Someone is willing to pay him much more for that house, but they can't. This is what it means for resources to be allocated efficiently, and it depends on the ability of prices to change over time. Fixing prices also affects investment. For example, if I believed that prices were likely to rise in some area, then I'm incentivized to buy property there, build housing or fix it up, and sell or rent it to capitalize on that price increase. The rising prices bring investment: I might build an apartment building to take advantage of rising rents. By comparison, if I know that my property will be rent controlled, then that limits my financial upside from investment, and removes my incentive to invest, which is also bad for the economy if it would otherwise happen naturally.
  - baddox 12y ago
    In my opinion, the "fairness" would depend on the terms of the rental contract.
  - theatraine 12y ago
    That's why you sign a lease. You can't raise rent for the duration of the lease. Your landlord should give you notice that the rent will be going up, thus giving you ample time to find a new place. If a tenant wants more stability, then they should consider buying a place. Also, as a counterpoint, Seattle has no rent control, and the fastest growing population of any large American city yet is able to provide good housing options to people of all incomes. This of course may be due to more liberal zoning laws allowing new housing to be built.
- anigbrowl 12y ago
  I'm not really in favor of rent control, but your attitude is precisely why it exists. Who wants to enter into a contract with someone so avowedly uncooperative?
  - baddox 12y ago
    If no one wants to enter into a contract with that type of person, it sounds like the problem solves itself.
    - fnimick 12y ago
      If there were an infinite supply of housing, and tenants could choose landlords, I'd agree with you. In the city I live in, it's common practice for tenants to work entirely through agents, and a severe housing shortage means that landlords can get away with pretty much anything. We were not even told who our landlord would be prior to signing the agreement.
    - sethhochberg 12y ago
      Thats how slumlords come to exist... landlords that nobody wants to do business with, but some people (usually poorer people) are forced to by necessity. Basic housing isn't a luxury good - when you need a place to live, you need a place to live, and you're limited in your ability to wait until a unit with a better landlord comes available.
      - deleted 12y ago
        [deleted]
    - gress 12y ago
      No - it just means that the most vulnerable people end up with the most abusive landlords.
    - anigbrowl 12y ago
      People often do things they don't want to outside the confines of economic models of perfect competition. That's why contracts of adhesion are sometimes found to be unconscionable.
- Someone1234 12y ago
  > As a landlord (in a different city where things are sensible and I can raise my rent or evict my tenant any time I darn well like because it's my fricking property) this kind of thing makes me really angry. It would be interesting to see how quickly your attitude would change if you weren't wealthy and were living under a landlord such as yourself. Any day, for any reason or no reason, your entire life can be turned upside down. You can be effectively made homeless and given a very limited amount of time to find a similar alternative place to live that may or may not exist and may or may no be close to your work (which matters when you're poor and cannot afford public transport). The power imbalance in this type of situation is just horrifying. Even if the tenant pays their rent on-time the landlord could still easily utilise the eviction threat in order to control the tenant (e.g. "your apartment is untidy, clean it or I'll evict you." "You went to a protest last week that I disagree with, goodbye!" "Give me your postal vote or I'll evict you."). It might be your "property" but it is someone elses HOME. Their basic rights trump your property rights. That's why regulation has to exist to stop people like you, so people (particularly poor people with fewer choices), get basic rights and the power imbalance is corrected. I'm not referring to rent control: I am talking about privacy of the tenant (inspection notification periods, etc), notice for evictions (e.g. 30 days), written understanding of both the tenant and landlord's responsibilities (or default ones under the law if they lack), and so on. It is your property, but when you rented it to someone to be their HOME part of that transaction is taking money but in exchange knowingly enabling someone else's basic rights. Those basic rights don't start and end at a rental cheque.
  - yummyfajitas 12y ago
    You can be effectively made homeless... You seem to be postulating a landlord that owns all the property. If you don't want to rent to me I can always find someone else. Incidentally, your concern about poor people being unable to commute to work is a bit silly. Most poor people don't have a job but do have a car. http://www.bls.gov/cps/cpswp2012.pdf http://www.bls.gov/cps/cpswp2012.pdf http://www.census.gov/prod/2008pubs/h150-07.pdf http://www.census.gov/prod/2008pubs/h150-07.pdf
    - Someone1234 12y ago
- to3m 12y ago
  Sounds like you're forgetting who's paying who, and for what service ;)
- curun1r 12y ago
  Rent control was an attempt to correct for an even worse government policy. If we repeal both CA prop 13, which freezes property taxes at a certain value when the property is sold, we can repeal rent control as well. But both need to happen. And both are excellent examples of the "I've got mine, f#@K everyone who doesn't have theirs" thinking that's so pervasive in California. If California were serious about fixing it's housing problems, it would: 1) Repeal prop 13. Yes, some grannies would be forced to sell their homes because their property taxes would go up beyond their ability to pay from their fixed income, but the overall effect would be positive. A side benefit of this would be that we could fund our schools again. 2) Cities could repeal rent control laws. If owners are forced to pay property taxes that reflect the true value, there's less likely to be an imbalance between the value they get from renting and from selling the property. 3) Cities should allow the building of more housing regardless of complaints of existing residents. Repealing prop 13 will also help with this, since there will no longer be a direct financial benefit to existing homeowners to block new construction at all costs. But the underlying problem that's evicting poor people from ares like San Francisco is that there's a severe imbalance between housing supply and demand. No amount of government meddling will fix that problem...the only thing that will is correcting that imbalance by increasing the supply of housing.
  - afafsd 12y ago
    > If we repeal both CA prop 13, which freezes property taxes at a certain value when the property is sold, we can repeal rent control as well. As a non-American I think that property taxes are an abomination anyway. Tax people on their income if you must, but not on their wealth, especially not on non-liquid wealth. Otherwise you have retired people being forced out of homes they've owned for decades just because prices in the area have gone up.
    - vonmoltke 12y ago
      Oddly enough, I think in the US you would get more support for increasing taxes on wealth and decreasing taxes on income, at least at the lower ends of income.
- Iftheshoefits 12y ago
  My tenants benefit from a well maintained home, which I pay professional property managers to do, and I make every effort to insure their rent is near the low end of market rates. I do this because I was a renter once, a very poor/low income one, and I know what it's like to be in their shoes. Unfortunately the overwhelming majority of landlords are from privileged backgrounds and have little or no idea what it's like to live a life that isn't filled with privileged middle-class or better conditions. Regulations exist because of attitudes like yours, and frankly they ought to be stronger everywhere. Eviction ought to be difficult, and not merely based on the owners' whims.
  - DanBC 12y ago
    I would love to see decent research about the benefits to the landlord of a well maintained property. Because my landlord does (polite!) extra inspections on top of the legal minimum I feel fine telling them when water's coming in or plaster is falling off. (It's an old building. And the derelict building next door causes some problems. And the demolition of an old cinema is a bit disruptive too.)
- deleted 12y ago
  [deleted]
keltex 12y ago
I think the problem with this analysis is the assumption that rental units and owner occupied units are identical to one another. In most places, rental units have more basic fixtures an amenities and tend not to be upgraded. It can easily cost of $100K to upgrade a kitchen or bathroom with high quality cabinetry and appliances. And this happens all the time with $1M+ units. I have a house for sale in Mexico and I'm intentionally not renting it out. Why? Because renter occupied units are perceived by buyers as having more wear and tear and low-end than a place that's owner occupied.
- knieveltech 12y ago
  I am totally fascinated by the concept of a $100k kitchen renovation. What does that even look like? Where I live you can build a small house for $100k.
  - mds 12y ago
    Go to houzz.com, click "Kitchen"
  - _delirium 12y ago
    Depends heavily on materials (also on size). Granite countertops are in a totally different price range from Corian or laminate, for example (in both cost of materials & cost of installation). Tile floors are also expensive-ish compared to lineoleum, though not as expensive as stone.
  - patio11 12y ago
    It's basically a $100k diamond ring, except with more granite countertops. The stock kitchen for a middle-class house in suburban USA and a kitchen with $100k of work done to it are functionally identical for 98% of people who buy them, but the one with $100k spent on it looks like $100k was spent on it (if you're in the know). Less sardonically: "professional-grade" appliances, granite countertops, redone cabinets which were custom-built by artisans out of exotic-but-sustainable wood as opposed to something which came out of a factory in China, etc, will all let you spend arbitrary amounts of money in a kitchen.
DanBlake 12y ago
Reiterating my comment on the blog here: Major issue with the article: Condos do not have rent control- They are treated as single family homes- The new owner can simply raise the rent to market pricing at the end of the lease cycle. There are some rare outliers that can bypass this (such as if a tenant was present in the apartment when it originally converted to be a condo) but you should find that the vast majority of condos do not have this situation. A much better analysis would have been on the sale of 2-4 unit buildings.
johnrob 12y ago
Oops - taxes were forgotten! They can differ wildly due to income level and legal loopholes, but it's pretty safe to assume an additional 130k in sales doesn't all go into the seller's pocket.
anigbrowl 12y ago
It would be more accurate to say 'can add over $100k to sale price.' In the case of legitimate owner move-in evictions, for example, compensation to the tenant is capped by a statutory formula. It's been a few years since I looked at it but I think it was in the region of $15k for the most complicated situation. There are additional constraints, like if a child is in elementary school you can't move in until the end of term due to the difficulty for parents of switching schools.
justincormack 12y ago
The US likes to think of itself as a deregulated, capitalist country, but still has a large amount of regulation (largely state not federal it seems). In the UK rent control was abolished by Thatcher in 1980, and while there is occasional talk of reintroducing some controls the basic premise seems unlikely to change.
- joeblau 12y ago
  Not all cities are like this and a large swath of the citizens in San Francisco seem exasperated by this issues on both sides. I had a friend who lived downtown by Union Square in a rent controlled apartment. The day he moved out (across the country) he couldn't even afford his own place to re-rent it out. It was pretty crazy.
- frandroid 12y ago
  Surely there are some cities where there is rent-control in the UK? It's only SF that has this, not "the US".
  - justincormack 12y ago
    No, it was abolished for the whole country, cities have no ability to impose it (in fact they have very little power to do stuff). (doesn't New York still have rent control?)
    - tedunangst 12y ago
      NYC has not just rent control, but rent fixed apartments. Which leads to a rentocracy where people inherit 1500/mo leases for 10000/mo apartments and all manner of tricks and lies to make it happen. And then building owners install electronic locks to record visits and prove residents are only living part time in their apartment.
  - DanBC 12y ago
    There is something called the local housing allowance rates. http://www.cheltenham.gov.uk/info/200008/benefits/565/local_housing_allowance_rates http://www.cheltenham.gov.uk/info/200008/benefits/565/local_... A landlord can charge what they like, but if they want people on benefit to be able to afford the property they should price it near the LHA rates. There are some restrictions on sudden increases once you've got a tennant, but the landlord could just evict the tennant. England has the balance mostly right (I'd prefer some slighty stronger protections for good tennants and fiercer penalties for terrible tennants).
tunesmith 12y ago
This isn't exactly my wheelhouse, but doesn't that completely gloss over stuff like time-value of money, and the fact that it's converting illiquid to liquid? Not sure why a landlord would go through the aggravation and uncertainty of buying out the tenant and then selling if it was only break-even.
- tedunangst 12y ago
  As noted, the correct methodology would be discounted cash flows. Instead they're assuming the market has already done that analysis and that they can measure the result indirectly through sale prices. If option A sells for X and option B sells for X + Y, you should be willing to pay up to Y to take option B. The market may not have done the cash flow valuation correctly, but the owner is selling in that market, not the ideal market, so it doesn't matter. The market prices also account for the "hassle factor" so it may even be more accurate than a spreadsheet calculation.
ipince 12y ago
The amount a landlord should be willing to pay will be higher than this amount if your rent is substantially below the market rate, and lower if it’s only a little below the market rate. ...Why? I don't see how that conclusion follows from the data. The data only compared occupied vs unoccupied rent-controlled home sale prices. Nothing took into account how under-market said rents were. Unless I missed something...
1945 12y ago
You own it, you can do whatever you want on the property (within reason..). If you want to evict a tenant, that's your right and the state/city/federal government should not have a place in intervening.

33 points by DanBlake 12y ago

As a landlord (in a different city where things are sensible and I can raise my rent or evict my tenant any time I darn well like because it's my fricking property) this kind of thing makes me really angry.

jcrites 12y ago
I'm not happy with the concept as a tenant either. It distorts the economy and artificially reduces the supply of properties that are available to rent.
k-mcgrady 12y ago
>> "I can raise my rent or evict my tenant any time I darn well like because it's my fricking property" Of course you're going to think that - it's in your best interest. But it's not fair to a tenant. Without regulations on evicting people asshole landlords could make families homeless for no reason. I don't think you should have to pay to evict someone but if you rent your property out there should be regulations in place to protect the tenant. If there weren't I think you find the market for rental properties start to diminish. People who could afford to buy (and that's true of a lot of renters) would to avoid the risk of their lives being turned upside down overnight.
- harryh 12y ago
  Your hypothesis about rental markets diminishing in areas without rent control isn't supported by empirical evidence. Quite the opposite in fact. Essentially all studies have found that markets without rent control have much more robust and stable housing stocks.
  - bronbron 12y ago
    > Your hypothesis about rental markets diminishing in areas without rent control You should re-read what he wrote. That's not his hypothesis.
- jcrites 12y ago
  How is it unfair to tenants? Tenants sign a lease for a period of time with a fixed price. The lease's fixed price protects both parties. When that lease is up, the landlord and tenant should be free to negotiate a new price. If tenants want stable prices over a longer period of time, then they should negotiate a multi-year contract with the landlord. All of the protections you're discussing are already built into the concept of a lease. If either the tenant or landlord is not willing to agree to a longer contract, then that should be their right. (Why should anyone be forced to lock in the rental price of their property for years, even while the circumstances of the city are changing -- e.g., receiving investment or decaying; people moving into the area or out of it.) If one party wants a longer contract and the other does not, then the party who desires the longer contract should offer something in exchange for lowering the other party's flexibility. It all plays into the price of the contract. I personally prefer to rent month-to-month because I value my ability to pick up and leave any time more than I worry about the uncertainty of being randomly evicted. Someone who wants a five year lease should negotiate differently and get a different price than I do (whether higher or lower depends on the circumstances).
  - bitJericho 12y ago
    Every lease I've ever seen is on a take it or leave it basis.
    - jcrites 12y ago
      Plenty of properties will advertise "no pets", but you can negotiate with the landlord about that. For example, you might offer an additional deposit against pet damage, or offer to pay a cleaning fee when you leave. I have pets and I have always been able to talk landlords out of their "no pets" policy. If you offered the landlord double the lease price in exchange for a 2 year contract, will they take it? Almost certainly. Few contracts of that type are truly take it or leave it. My point is not that 2x would be fair, just that you have the ability to negotiate, which means the question of whether you can get a contract with the terms you want depends on your ability to negotiate a price for those terms. Many landlords value stability and will be happy with a longer term lease at the same price, or even a lower price. And that's where the negotiation comes in. If the landlord believes prices in the area will rise steadily, then he may or may not want to offer a fixed price over a 3 year lease. Perhaps he will offer a longer lease, but with a stipulation of 3% price increase per year. You don't believe prices will rise that much, so you counter with 1% YoY. It's like buying a housing future. You're locking in the price of housing now as insurance against it changing in the future. That should properly have a different price than a lease with no such provision. If a person believed in rent control, why not go further? Fix the price of property itself so that it may not rise more than 1% per year. If you buy a house from someone, the sale price may not be greater than the last sale price increased by 1% YoY. Would this be desirable? A law like this will have all sorts of negative consequences on the economy. For example, imagine a house owner who no longer wishes to live in the city. If prices were allowed to rise, then he's incentivized to sell his house, cash out on the increased price, and move somewhere else, enabling a person who wants to live in the city can do so. But if prices are not allowed to rise, then he's stuck selling is house for the same price he bought it; he has no incentive to move. Someone is willing to pay him much more for that house, but they can't. This is what it means for resources to be allocated efficiently, and it depends on the ability of prices to change over time. Fixing prices also affects investment. For example, if I believed that prices were likely to rise in some area, then I'm incentivized to buy property there, build housing or fix it up, and sell or rent it to capitalize on that price increase. The rising prices bring investment: I might build an apartment building to take advantage of rising rents. By comparison, if I know that my property will be rent controlled, then that limits my financial upside from investment, and removes my incentive to invest, which is also bad for the economy if it would otherwise happen naturally.
- baddox 12y ago
  In my opinion, the "fairness" would depend on the terms of the rental contract.
- theatraine 12y ago
  That's why you sign a lease. You can't raise rent for the duration of the lease. Your landlord should give you notice that the rent will be going up, thus giving you ample time to find a new place. If a tenant wants more stability, then they should consider buying a place. Also, as a counterpoint, Seattle has no rent control, and the fastest growing population of any large American city yet is able to provide good housing options to people of all incomes. This of course may be due to more liberal zoning laws allowing new housing to be built.
anigbrowl 12y ago
I'm not really in favor of rent control, but your attitude is precisely why it exists. Who wants to enter into a contract with someone so avowedly uncooperative?
- baddox 12y ago
  If no one wants to enter into a contract with that type of person, it sounds like the problem solves itself.
  - fnimick 12y ago
    If there were an infinite supply of housing, and tenants could choose landlords, I'd agree with you. In the city I live in, it's common practice for tenants to work entirely through agents, and a severe housing shortage means that landlords can get away with pretty much anything. We were not even told who our landlord would be prior to signing the agreement.
  - sethhochberg 12y ago
    Thats how slumlords come to exist... landlords that nobody wants to do business with, but some people (usually poorer people) are forced to by necessity. Basic housing isn't a luxury good - when you need a place to live, you need a place to live, and you're limited in your ability to wait until a unit with a better landlord comes available.
    - deleted 12y ago
      [deleted]
  - gress 12y ago
    No - it just means that the most vulnerable people end up with the most abusive landlords.
  - anigbrowl 12y ago
    People often do things they don't want to outside the confines of economic models of perfect competition. That's why contracts of adhesion are sometimes found to be unconscionable.
Someone1234 12y ago
> As a landlord (in a different city where things are sensible and I can raise my rent or evict my tenant any time I darn well like because it's my fricking property) this kind of thing makes me really angry. It would be interesting to see how quickly your attitude would change if you weren't wealthy and were living under a landlord such as yourself. Any day, for any reason or no reason, your entire life can be turned upside down. You can be effectively made homeless and given a very limited amount of time to find a similar alternative place to live that may or may not exist and may or may no be close to your work (which matters when you're poor and cannot afford public transport). The power imbalance in this type of situation is just horrifying. Even if the tenant pays their rent on-time the landlord could still easily utilise the eviction threat in order to control the tenant (e.g. "your apartment is untidy, clean it or I'll evict you." "You went to a protest last week that I disagree with, goodbye!" "Give me your postal vote or I'll evict you."). It might be your "property" but it is someone elses HOME. Their basic rights trump your property rights. That's why regulation has to exist to stop people like you, so people (particularly poor people with fewer choices), get basic rights and the power imbalance is corrected. I'm not referring to rent control: I am talking about privacy of the tenant (inspection notification periods, etc), notice for evictions (e.g. 30 days), written understanding of both the tenant and landlord's responsibilities (or default ones under the law if they lack), and so on. It is your property, but when you rented it to someone to be their HOME part of that transaction is taking money but in exchange knowingly enabling someone else's basic rights. Those basic rights don't start and end at a rental cheque.
- yummyfajitas 12y ago
  You can be effectively made homeless... You seem to be postulating a landlord that owns all the property. If you don't want to rent to me I can always find someone else. Incidentally, your concern about poor people being unable to commute to work is a bit silly. Most poor people don't have a job but do have a car. http://www.bls.gov/cps/cpswp2012.pdf http://www.bls.gov/cps/cpswp2012.pdf http://www.census.gov/prod/2008pubs/h150-07.pdf http://www.census.gov/prod/2008pubs/h150-07.pdf
  - Someone1234 12y ago
to3m 12y ago
Sounds like you're forgetting who's paying who, and for what service ;)
curun1r 12y ago
Rent control was an attempt to correct for an even worse government policy. If we repeal both CA prop 13, which freezes property taxes at a certain value when the property is sold, we can repeal rent control as well. But both need to happen. And both are excellent examples of the "I've got mine, f#@K everyone who doesn't have theirs" thinking that's so pervasive in California. If California were serious about fixing it's housing problems, it would: 1) Repeal prop 13. Yes, some grannies would be forced to sell their homes because their property taxes would go up beyond their ability to pay from their fixed income, but the overall effect would be positive. A side benefit of this would be that we could fund our schools again. 2) Cities could repeal rent control laws. If owners are forced to pay property taxes that reflect the true value, there's less likely to be an imbalance between the value they get from renting and from selling the property. 3) Cities should allow the building of more housing regardless of complaints of existing residents. Repealing prop 13 will also help with this, since there will no longer be a direct financial benefit to existing homeowners to block new construction at all costs. But the underlying problem that's evicting poor people from ares like San Francisco is that there's a severe imbalance between housing supply and demand. No amount of government meddling will fix that problem...the only thing that will is correcting that imbalance by increasing the supply of housing.
- afafsd 12y ago
  > If we repeal both CA prop 13, which freezes property taxes at a certain value when the property is sold, we can repeal rent control as well. As a non-American I think that property taxes are an abomination anyway. Tax people on their income if you must, but not on their wealth, especially not on non-liquid wealth. Otherwise you have retired people being forced out of homes they've owned for decades just because prices in the area have gone up.
  - vonmoltke 12y ago
    Oddly enough, I think in the US you would get more support for increasing taxes on wealth and decreasing taxes on income, at least at the lower ends of income.
Iftheshoefits 12y ago
My tenants benefit from a well maintained home, which I pay professional property managers to do, and I make every effort to insure their rent is near the low end of market rates. I do this because I was a renter once, a very poor/low income one, and I know what it's like to be in their shoes. Unfortunately the overwhelming majority of landlords are from privileged backgrounds and have little or no idea what it's like to live a life that isn't filled with privileged middle-class or better conditions. Regulations exist because of attitudes like yours, and frankly they ought to be stronger everywhere. Eviction ought to be difficult, and not merely based on the owners' whims.
- DanBC 12y ago
  I would love to see decent research about the benefits to the landlord of a well maintained property. Because my landlord does (polite!) extra inspections on top of the legal minimum I feel fine telling them when water's coming in or plaster is falling off. (It's an old building. And the derelict building next door causes some problems. And the demolition of an old cinema is a bit disruptive too.)
deleted 12y ago
[deleted]

keltex 12y ago

I think the problem with this analysis is the assumption that rental units and owner occupied units are identical to one another. In most places, rental units have more basic fixtures an amenities and tend not to be upgraded. It can easily cost of $100K to upgrade a kitchen or bathroom with high quality cabinetry and appliances. And this happens all the time with $1M+ units. I have a house for sale in Mexico and I'm intentionally not renting it out. Why? Because renter occupied units are perceived by buyers as having more wear and tear and low-end than a place that's owner occupied.

knieveltech 12y ago
I am totally fascinated by the concept of a $100k kitchen renovation. What does that even look like? Where I live you can build a small house for $100k.
- mds 12y ago
  Go to houzz.com, click "Kitchen"
- _delirium 12y ago
  Depends heavily on materials (also on size). Granite countertops are in a totally different price range from Corian or laminate, for example (in both cost of materials & cost of installation). Tile floors are also expensive-ish compared to lineoleum, though not as expensive as stone.
- patio11 12y ago
  It's basically a $100k diamond ring, except with more granite countertops. The stock kitchen for a middle-class house in suburban USA and a kitchen with $100k of work done to it are functionally identical for 98% of people who buy them, but the one with $100k spent on it looks like $100k was spent on it (if you're in the know). Less sardonically: "professional-grade" appliances, granite countertops, redone cabinets which were custom-built by artisans out of exotic-but-sustainable wood as opposed to something which came out of a factory in China, etc, will all let you spend arbitrary amounts of money in a kitchen.

DanBlake 12y ago

Reiterating my comment on the blog here: Major issue with the article: Condos do not have rent control- They are treated as single family homes- The new owner can simply raise the rent to market pricing at the end of the lease cycle. There are some rare outliers that can bypass this (such as if a tenant was present in the apartment when it originally converted to be a condo) but you should find that the vast majority of condos do not have this situation. A much better analysis would have been on the sale of 2-4 unit buildings.

johnrob 12y ago

Oops - taxes were forgotten! They can differ wildly due to income level and legal loopholes, but it's pretty safe to assume an additional 130k in sales doesn't all go into the seller's pocket.

anigbrowl 12y ago

It would be more accurate to say 'can add over $100k to sale price.' In the case of legitimate owner move-in evictions, for example, compensation to the tenant is capped by a statutory formula. It's been a few years since I looked at it but I think it was in the region of $15k for the most complicated situation. There are additional constraints, like if a child is in elementary school you can't move in until the end of term due to the difficulty for parents of switching schools.

justincormack 12y ago

The US likes to think of itself as a deregulated, capitalist country, but still has a large amount of regulation (largely state not federal it seems). In the UK rent control was abolished by Thatcher in 1980, and while there is occasional talk of reintroducing some controls the basic premise seems unlikely to change.

joeblau 12y ago
Not all cities are like this and a large swath of the citizens in San Francisco seem exasperated by this issues on both sides. I had a friend who lived downtown by Union Square in a rent controlled apartment. The day he moved out (across the country) he couldn't even afford his own place to re-rent it out. It was pretty crazy.
frandroid 12y ago
Surely there are some cities where there is rent-control in the UK? It's only SF that has this, not "the US".
- justincormack 12y ago
  No, it was abolished for the whole country, cities have no ability to impose it (in fact they have very little power to do stuff). (doesn't New York still have rent control?)
  - tedunangst 12y ago
    NYC has not just rent control, but rent fixed apartments. Which leads to a rentocracy where people inherit 1500/mo leases for 10000/mo apartments and all manner of tricks and lies to make it happen. And then building owners install electronic locks to record visits and prove residents are only living part time in their apartment.
- DanBC 12y ago
  There is something called the local housing allowance rates. http://www.cheltenham.gov.uk/info/200008/benefits/565/local_housing_allowance_rates http://www.cheltenham.gov.uk/info/200008/benefits/565/local_... A landlord can charge what they like, but if they want people on benefit to be able to afford the property they should price it near the LHA rates. There are some restrictions on sudden increases once you've got a tennant, but the landlord could just evict the tennant. England has the balance mostly right (I'd prefer some slighty stronger protections for good tennants and fiercer penalties for terrible tennants).

tunesmith 12y ago

This isn't exactly my wheelhouse, but doesn't that completely gloss over stuff like time-value of money, and the fact that it's converting illiquid to liquid? Not sure why a landlord would go through the aggravation and uncertainty of buying out the tenant and then selling if it was only break-even.

tedunangst 12y ago
As noted, the correct methodology would be discounted cash flows. Instead they're assuming the market has already done that analysis and that they can measure the result indirectly through sale prices. If option A sells for X and option B sells for X + Y, you should be willing to pay up to Y to take option B. The market may not have done the cash flow valuation correctly, but the owner is selling in that market, not the ideal market, so it doesn't matter. The market prices also account for the "hassle factor" so it may even be more accurate than a spreadsheet calculation.

ipince 12y ago

The amount a landlord should be willing to pay will be higher than this amount if your rent is substantially below the market rate, and lower if it’s only a little below the market rate. ...Why? I don't see how that conclusion follows from the data. The data only compared occupied vs unoccupied rent-controlled home sale prices. Nothing took into account how under-market said rents were. Unless I missed something...

1945 12y ago

You own it, you can do whatever you want on the property (within reason..). If you want to evict a tenant, that's your right and the state/city/federal government should not have a place in intervening.