4 ms·

everyone except the lucky few who can get rent controlled apartments No, that's not the problem. As you say, rent control can't be both pervasive and rare

by cbr 12y ago

everyone except the lucky few who can get rent controlled apartments No, that's not the problem. As you say, rent control can't be both pervasive and rare at the same time. The real problems with rent control are: * It's hard to move. Say you change jobs and now work in a different part of the city, or your kids move out, or you'd like to move in with a partner. Normally one of the benefits of renting is that you can move, but with rent control that means switching to a place that's much more expensive. * Landlords benefit from having their long-time tenants leave. Without rent control landlords love long term tenants because they're reliable and they mean less work finding people for the apartment. Rent control reverses this, and the landlord loses the incentive to upgrade the apartment and otherwise keep the tenant happy. Yes, the landlord is being a jerk when they do it, but sometimes the best fix for widespread jerk-ness is changing the incentives. * It keeps out outsiders. People who want to live in your city enough that they're willing to give up their existing local connections and start over in your city are really valuable, and rent control means they pay a lot more than people who've lived in the city longer. * It depresses new construction. Yes, I know new buildings aren't subject to rent control, but in a place where everything is already built out you can't put up a new building without taking down an old one. Rent control means you either have legal restrictions saying you can't replace buildings, or you have protests against people doing this and displacing existing tenants. But in a growing city, without new construction housing is going to get more and more expensive. * Rent control puts off dealing with the problem of housing costs. If everyone in SF rented, and everyone had to pay market rates, then there would be the political backing for changes that would make housing more affordable. Rent control means that the long-time community members who would be best at this political change don't really feel much urgency because they have nice cheap places with rents set a decade or two ago. (But to be fair, homeownership is also a problem here, because rents and property values move together and homeowners want their property to become more valuable.) RE investors here, where a rent controlled 2br apartment will set you back at least $3k a month in the city, are doing quite alright. They don't seem too desperately in need of expanded protections under the law. Rent control hurts renters. I don't care about real estate investors. That $3k isn't why we need rent control, it's because we have rent control.

binarycrusader 12y ago
Rent control reverses this, and the landlord loses the incentive to upgrade the apartment and otherwise keep the tenant happy. I'll stop you right there; while that may be what happens in theory, it certainly hasn't seemed that way to me in practice. Perhaps in a market where there is sufficient supply for demand, but in a market where demand is sufficiently high, many property owners don't do more than what is legally required and keep raising their rents. You would not believe some of the dumps I've been shown by smiling realtors or owners that wanted thousands of dollars per month -- I'm talking about $2500+ a month for a two-bedroom apartment with boarded-over holes in Windows, holes in walls, a terrible smell and carpet that looks like it was last replaced decades ago. Time after time, the pattern I've seen from experience in the Bay Area has been that owners will do whatever the market will bear -- in a market with severely constrained supply, the market is forced to bear quite a bit.
andy_ppp 12y ago
If everyone in SF rented, and everyone had to pay market rates, then there would be the political backing for changes that would make housing more affordable. This is demonstrably not true in London where rent just keeps on going up and hardly any new housing is being built. For example, an MP has just resigned his £130k+ (total remuneration, that's $215'000) job because he can't afford to rent a 4 bedroom house anywhere near Westminster [1]. Sometimes the state just needs to step in and actually help people (by directly building high quality housing and selling it to people below market value). Currently if you buy a new build in London it is priced so high that you can expect it to be under water for a few years (the builders provide special mortgages because banks refuse to do them directly in many cases - the flats are not worth what they are being sold for). [1] http://www.theguardian.com/politics/2014/aug/11/tory-foreign-office-minister-quits-intolerable-expenses-rules http://www.theguardian.com/politics/2014/aug/11/tory-foreign...
- cbr 12y ago
  This is demonstrably not true in London where rent just keeps on going up and hardly any new housing is being built. http://www.london.gov.uk/priorities/housing-land/renting-home/rents-map http://www.london.gov.uk/priorities/housing-land/renting-hom... claims only a quarter of people in london rent? So the "if everyone rented" bit isn't being met. Because property values and rents mostly move together, as long as most people own their homes you have more people backing policies that push them higher than lower. I don't know the London political situation very well: what makes it so expensive to build new units? Are there strict historical preservation laws? Rules that let neighbors veto or slow nearby construction? Permits and taxes? He can't afford to rent a 4 bedroom house anywhere near Westminster "Anywhere near Westminster" apparently means "within walking distance". A 30min public transit commute covers areas where renting a 4br would be ~£26/year. you can expect it to be under water for a few years I'm not sure what you mean by this. You're saying if you build a flat and sell it then people are buying them at prices at which they wouldn't be able to resell them? Is this just because there's a premium for new construction? (Cars in the US, for example, lose ~20% of their value when they're bought for the first time because they stop being "new". So you could say that if you buy a new car you expect to be "under water" at first, but no one would say that.)

by cbr 12y ago

binarycrusader 12y ago

Rent control reverses this, and the landlord loses the incentive to upgrade the apartment and otherwise keep the tenant happy. I'll stop you right there; while that may be what happens in theory, it certainly hasn't seemed that way to me in practice. Perhaps in a market where there is sufficient supply for demand, but in a market where demand is sufficiently high, many property owners don't do more than what is legally required and keep raising their rents. You would not believe some of the dumps I've been shown by smiling realtors or owners that wanted thousands of dollars per month -- I'm talking about $2500+ a month for a two-bedroom apartment with boarded-over holes in Windows, holes in walls, a terrible smell and carpet that looks like it was last replaced decades ago. Time after time, the pattern I've seen from experience in the Bay Area has been that owners will do whatever the market will bear -- in a market with severely constrained supply, the market is forced to bear quite a bit.

andy_ppp 12y ago

If everyone in SF rented, and everyone had to pay market rates, then there would be the political backing for changes that would make housing more affordable. This is demonstrably not true in London where rent just keeps on going up and hardly any new housing is being built. For example, an MP has just resigned his £130k+ (total remuneration, that's $215'000) job because he can't afford to rent a 4 bedroom house anywhere near Westminster [1]. Sometimes the state just needs to step in and actually help people (by directly building high quality housing and selling it to people below market value). Currently if you buy a new build in London it is priced so high that you can expect it to be under water for a few years (the builders provide special mortgages because banks refuse to do them directly in many cases - the flats are not worth what they are being sold for). [1] http://www.theguardian.com/politics/2014/aug/11/tory-foreign-office-minister-quits-intolerable-expenses-rules http://www.theguardian.com/politics/2014/aug/11/tory-foreign...

cbr 12y ago
This is demonstrably not true in London where rent just keeps on going up and hardly any new housing is being built. http://www.london.gov.uk/priorities/housing-land/renting-home/rents-map http://www.london.gov.uk/priorities/housing-land/renting-hom... claims only a quarter of people in london rent? So the "if everyone rented" bit isn't being met. Because property values and rents mostly move together, as long as most people own their homes you have more people backing policies that push them higher than lower. I don't know the London political situation very well: what makes it so expensive to build new units? Are there strict historical preservation laws? Rules that let neighbors veto or slow nearby construction? Permits and taxes? He can't afford to rent a 4 bedroom house anywhere near Westminster "Anywhere near Westminster" apparently means "within walking distance". A 30min public transit commute covers areas where renting a 4br would be ~£26/year. you can expect it to be under water for a few years I'm not sure what you mean by this. You're saying if you build a flat and sell it then people are buying them at prices at which they wouldn't be able to resell them? Is this just because there's a premium for new construction? (Cars in the US, for example, lose ~20% of their value when they're bought for the first time because they stop being "new". So you could say that if you buy a new car you expect to be "under water" at first, but no one would say that.)