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Rent control does not force landlords to keep renters ad infinitum. It protects tenants from price gouging. Landlords can impose rent increases far beyond fair

Rent control does not force landlords to keep renters ad infinitum. It protects tenants from price gouging. Landlords can impose rent increases far beyond fair market rents for new tenants because it's costly and inconvenient to move, but (in a sellers' market) cheap to replace tenants. This imbalance of negotiating power necessitates regulations. Now, you can argue that particular rent control laws are too aggressive, or that the strategy for calculating bounds on rent increases cause excessive opportunity losses. But that's a far cry from the implication of your message.

agorabinary 12y ago
Property owners took a risk by purchasing property, just as anyone does purchasing shares of a public company for instance. The value of your asset can go up and you find yourself in an advantageous position (a seller's market as you put it), or prices can fall and recurring buyers (like renters) are at the advantage. Rent control only distorts the market and is unfair to everyone.
- brandonbloom 12y ago
  1) Landlords can diversify their properties, renters only get one. Everyone needs to live somewhere, nobody needs to be a landlord. 2) You've missed my point about moving costs. Even when the market favors renters, the lease renewal negotiation favors landlords. This is because moving costs time and money payable to third parties. As a result, the landlord can charge higher rents for renewals than they can for new leases.
  - tizzdogg 12y ago
    I actually know a few homeowners in San Francisco in this situation right now. They have extra units in their building (which is also where they live), and choose to leave it vacant rather than deal with the hassle of rent control. They do not need the income and would rather not bother with possibly getting a tenant who never leaves. It's not economically rational, but people are not always rational, especially when dealing with their homes. The building I live in is also in the situation currently where a unit is being left vacant in anticipation of a condo conversion in a couple years.. San Francisco has a very complicated condo conversion law but part of it is that during conversion some existing tenants have to be offered lifetime leases which can never be increased. Leaving units vacant is a rational way of dealing with that.
    - simoncion 12y ago
      > They have extra units in their building (which is also where they live), and choose to leave it vacant rather than deal with the hassle of rent control. Good for them. Better that they do this than take the rental income, and later whine about how terribly unfair renter protection laws are. :) Based on my immensely scientific[0] survey of Internet Message Boards (and personal experience in the American Southeast), it seems that potential landlords sometimes forget that when they rent their property to others for use as the renters' home, the landlord loses almost all control over that property. This is right and just: everyone deserves a safe, secure, private place to live. > Leaving units vacant is a rational way of dealing with SF's condo conversion laws. Again, it's good for the landlords that they showed this much restraint. The condo conversion laws prevent landlords from turning their apartment stock (that pays off smaller amounts over time) into condo stock (that pays off one large lump sum). These are sane and rational laws to have in cities that (for a variety of disgusting reasons) find themselves unable to create sufficient housing to meet demand. [0] Ha!
      - tizzdogg 12y ago
        The problem with leaving units vacant though is it takes those units off the market, driving rents up for the remaining units. That is the end result of overly aggressive rent control, and one of the big problems in San francisco right now.
  - deleted 12y ago
    [deleted]
  - nsxwolf 12y ago
    I need to be a landlord because my other mortgage is so far underwater I could either foreclose and not be able to buy a suitable place for my family, or be a landlord and be able to pay both mortgages. It seems there would be people around to criticize me no matter which option I chose.
  - clarky07 12y ago
    1 - first, so what? second, nobody needs to live "there". They can move to a different rental. 2 - moving isn't "that" expensive. It's a pain in the ass, but you can do it in a weekend with a few hundred dollar moving truck. You might be able to raise rates a few percent, but you can't just move them significantly above market.
    - wpietri 12y ago
      > It's a pain in the ass, but you can do it in a weekend with a few hundred dollar moving truck. Let me guess: no kids, haven't lived in your place very long, don't know your neighbors, don't have family nearby, don't live in a city with substantial pressure on housing, and you make over the median income. > You might be able to raise rates a few percent, but you can't just move them significantly above market. That you can't imagine something doesn't always mean it's not possible. It can mean the world is more complex than you expect. I'm glad that you have such an easy and comfortable life that moving is no big deal, but that's just not true for everyone on the planet.
      - clarky07 12y ago
        Let's see. I moved last summer, from a place I lived in for seven years. Check. I'm married, kid on the way, I knew my neighbors, and I have family nearby. You were so close. (I do make over the median income, so you did get that one.) If your landlord raises their rates to double the market value, move. If you don't, that just means you're doing it wrong.
        wpietri 12y ago
        So you're telling me that in one weekend with one truck, you packed everything for a family, moved it, unpacked it, and had total expenses of a few hundred bucks? Congrats on being a minimalist. When I see most people do it, though, they take a couple of months of spare time to prep and months more to get everything situated and recover. Yes, sure, if the rent is doubled, one should probably move despite the hassle. But the point is that landlords can take advantage of the asymmetry in cost/difficulty of changing places to hike rents. Nobody would move because the landlord was charging them $1/yr above what they could pay elsewhere. Most would move if it were double. The landlord's advantage is somewhere in between.
orangecat 12y ago
Landlords can impose rent increases far beyond fair market rents for new tenants because it's costly and inconvenient to move, but (in a sellers' market) cheap to replace tenants. The market rent is exactly what other potential tenants are willing to pay. Now, you can argue that particular rent control laws are too aggressive, or that the strategy for calculating bounds on rent increases cause excessive opportunity losses. Or that the inability to charge market prices causes property owners to refuse to rent in the first place, thereby making housing problems even worse.
- wpietri 12y ago
  > The market rent is exactly what other potential tenants are willing to pay. You're not understanding the scam. Suppose you move in to a place and pay the then-market rent of $1000 a month. Let's further suppose that it cost you $2400 to move, plus a shitload of time and effort that you'd rather not repeat. If the next year the market price remains $1000/month, the landlord can still raise the rent on you because you'll be reluctant (and possibly unable) to pay moving costs again. The exact amount they can get away with depends on personal tolerance and your time value for money, but given how much moving sucks, in practice it's quite a bit. > Or that the inability to charge market prices causes property owners to refuse to rent in the first place, thereby making housing problems even worse. That is definitely a negative side effect, but not a huge one in practice. How many apartments can one person use? Who would really let an apartment building stand empty when you could be charging market rent? In San Francisco, pretty much nobody. A bigger problem is that it might reduce the supply of new apartments. But that's also not a problem in SF because any building built after rent control was passed is not under rent control.
  - andylei 12y ago
    > Suppose you move in to a place and pay the then-market rent of $1000 a month. Let's further suppose that it cost you $2400 to move, plus a shitload of time and effort that you'd rather not repeat. If the next year the market price remains $1000/month, the landlord can still raise the rent on you because you'll be reluctant (and possibly unable) to pay moving costs again many cities do not have rent control. the city i live in is one such city. the scenario you're describing does not happen here. if an owner decides to raise rent above market, now that owner is faced with the possibility of not being able to rent out that space, because now they are renting above market price. even just 1 month of vacancy is already lost revenue that would often dwarf the potential gain of raising the rent. owners also have costs too. when someone moves out, they have to pay to have the apartment repainted, listed, and brokered. this is not the reason rent control exists. rent control exists because SF wants to keep prices low without building more housing, making life miserable for everyone. > A bigger problem is that it might reduce the supply of new apartments. But that's also not a problem in SF because the city continually refuses to allow new housing developments to be built.

agorabinary 12y ago

Property owners took a risk by purchasing property, just as anyone does purchasing shares of a public company for instance. The value of your asset can go up and you find yourself in an advantageous position (a seller's market as you put it), or prices can fall and recurring buyers (like renters) are at the advantage. Rent control only distorts the market and is unfair to everyone.

brandonbloom 12y ago
1) Landlords can diversify their properties, renters only get one. Everyone needs to live somewhere, nobody needs to be a landlord. 2) You've missed my point about moving costs. Even when the market favors renters, the lease renewal negotiation favors landlords. This is because moving costs time and money payable to third parties. As a result, the landlord can charge higher rents for renewals than they can for new leases.
- tizzdogg 12y ago
  I actually know a few homeowners in San Francisco in this situation right now. They have extra units in their building (which is also where they live), and choose to leave it vacant rather than deal with the hassle of rent control. They do not need the income and would rather not bother with possibly getting a tenant who never leaves. It's not economically rational, but people are not always rational, especially when dealing with their homes. The building I live in is also in the situation currently where a unit is being left vacant in anticipation of a condo conversion in a couple years.. San Francisco has a very complicated condo conversion law but part of it is that during conversion some existing tenants have to be offered lifetime leases which can never be increased. Leaving units vacant is a rational way of dealing with that.
  - simoncion 12y ago
    > They have extra units in their building (which is also where they live), and choose to leave it vacant rather than deal with the hassle of rent control. Good for them. Better that they do this than take the rental income, and later whine about how terribly unfair renter protection laws are. :) Based on my immensely scientific[0] survey of Internet Message Boards (and personal experience in the American Southeast), it seems that potential landlords sometimes forget that when they rent their property to others for use as the renters' home, the landlord loses almost all control over that property. This is right and just: everyone deserves a safe, secure, private place to live. > Leaving units vacant is a rational way of dealing with SF's condo conversion laws. Again, it's good for the landlords that they showed this much restraint. The condo conversion laws prevent landlords from turning their apartment stock (that pays off smaller amounts over time) into condo stock (that pays off one large lump sum). These are sane and rational laws to have in cities that (for a variety of disgusting reasons) find themselves unable to create sufficient housing to meet demand. [0] Ha!
    - tizzdogg 12y ago
      The problem with leaving units vacant though is it takes those units off the market, driving rents up for the remaining units. That is the end result of overly aggressive rent control, and one of the big problems in San francisco right now.
- deleted 12y ago
  [deleted]
- nsxwolf 12y ago
  I need to be a landlord because my other mortgage is so far underwater I could either foreclose and not be able to buy a suitable place for my family, or be a landlord and be able to pay both mortgages. It seems there would be people around to criticize me no matter which option I chose.
- clarky07 12y ago
  1 - first, so what? second, nobody needs to live "there". They can move to a different rental. 2 - moving isn't "that" expensive. It's a pain in the ass, but you can do it in a weekend with a few hundred dollar moving truck. You might be able to raise rates a few percent, but you can't just move them significantly above market.
  - wpietri 12y ago
    > It's a pain in the ass, but you can do it in a weekend with a few hundred dollar moving truck. Let me guess: no kids, haven't lived in your place very long, don't know your neighbors, don't have family nearby, don't live in a city with substantial pressure on housing, and you make over the median income. > You might be able to raise rates a few percent, but you can't just move them significantly above market. That you can't imagine something doesn't always mean it's not possible. It can mean the world is more complex than you expect. I'm glad that you have such an easy and comfortable life that moving is no big deal, but that's just not true for everyone on the planet.
    - clarky07 12y ago
      Let's see. I moved last summer, from a place I lived in for seven years. Check. I'm married, kid on the way, I knew my neighbors, and I have family nearby. You were so close. (I do make over the median income, so you did get that one.) If your landlord raises their rates to double the market value, move. If you don't, that just means you're doing it wrong.
      - wpietri 12y ago
        So you're telling me that in one weekend with one truck, you packed everything for a family, moved it, unpacked it, and had total expenses of a few hundred bucks? Congrats on being a minimalist. When I see most people do it, though, they take a couple of months of spare time to prep and months more to get everything situated and recover. Yes, sure, if the rent is doubled, one should probably move despite the hassle. But the point is that landlords can take advantage of the asymmetry in cost/difficulty of changing places to hike rents. Nobody would move because the landlord was charging them $1/yr above what they could pay elsewhere. Most would move if it were double. The landlord's advantage is somewhere in between.

orangecat 12y ago

Landlords can impose rent increases far beyond fair market rents for new tenants because it's costly and inconvenient to move, but (in a sellers' market) cheap to replace tenants. The market rent is exactly what other potential tenants are willing to pay. Now, you can argue that particular rent control laws are too aggressive, or that the strategy for calculating bounds on rent increases cause excessive opportunity losses. Or that the inability to charge market prices causes property owners to refuse to rent in the first place, thereby making housing problems even worse.

wpietri 12y ago
> The market rent is exactly what other potential tenants are willing to pay. You're not understanding the scam. Suppose you move in to a place and pay the then-market rent of $1000 a month. Let's further suppose that it cost you $2400 to move, plus a shitload of time and effort that you'd rather not repeat. If the next year the market price remains $1000/month, the landlord can still raise the rent on you because you'll be reluctant (and possibly unable) to pay moving costs again. The exact amount they can get away with depends on personal tolerance and your time value for money, but given how much moving sucks, in practice it's quite a bit. > Or that the inability to charge market prices causes property owners to refuse to rent in the first place, thereby making housing problems even worse. That is definitely a negative side effect, but not a huge one in practice. How many apartments can one person use? Who would really let an apartment building stand empty when you could be charging market rent? In San Francisco, pretty much nobody. A bigger problem is that it might reduce the supply of new apartments. But that's also not a problem in SF because any building built after rent control was passed is not under rent control.
- andylei 12y ago
  > Suppose you move in to a place and pay the then-market rent of $1000 a month. Let's further suppose that it cost you $2400 to move, plus a shitload of time and effort that you'd rather not repeat. If the next year the market price remains $1000/month, the landlord can still raise the rent on you because you'll be reluctant (and possibly unable) to pay moving costs again many cities do not have rent control. the city i live in is one such city. the scenario you're describing does not happen here. if an owner decides to raise rent above market, now that owner is faced with the possibility of not being able to rent out that space, because now they are renting above market price. even just 1 month of vacancy is already lost revenue that would often dwarf the potential gain of raising the rent. owners also have costs too. when someone moves out, they have to pay to have the apartment repainted, listed, and brokered. this is not the reason rent control exists. rent control exists because SF wants to keep prices low without building more housing, making life miserable for everyone. > A bigger problem is that it might reduce the supply of new apartments. But that's also not a problem in SF because the city continually refuses to allow new housing developments to be built.