7 ms·

New York's Rent Regulation Fight

28 points by giles 11y ago

exelius 11y ago
This is the problem with housing subsidies: they very often go to those who don't need them. In New York, your choice of apartment is primarily based on location -- anything that's not in the >$1 million range is pretty similar. So if you're looking at two apartments near your work and the rent stabilized one is $1200/mo and the other is $3000/mo, you try to get the $1200/mo one even if you could afford the $3000/mo one. I guarantee you it's not $1800/mo nicer. You see this effect anywhere that supply of rental housing is a problem. If you implement price controls, people with high incomes will seek out lower rents. They'll still often end up driving out the lower-income folks, because if you're a landlord with two applications for a vacant apartment, you're going to favor the one with better credit. Rent controls also deter landlords from investing, both in existing properties and in new ones. IMO the right answer (and this is not a popular sentiment) is to let rents float and have certain desirable areas of certain cities end up effectively "off limits" to lower income renters. Is it fair? Not particularly, but the side effects of this situation are that the people who can afford to shoulder the costs associated with their way of life are the ones actually doing so. They are going to crowd low-income renters out of the neighborhood eventually anyway, and hopefully a housing / worker shortage would prompt the city to actually develop a low income housing solution rather than forcing landlords to just deal with rents too low for even basic maintenance.
- jellicle 11y ago
  The type of "price controls" that you are railing against do not exist in New York City and to the best of my knowledge have never existed there. Maybe during World War II.
  - dantheman 11y ago
    Here you go: http://www.nycrgb.org/html/resources/faq/rentstab.html http://www.nycrgb.org/html/resources/faq/rentstab.html
    - jellicle 11y ago
      Urgh, when I saw the downvotes I figured it would be people who knew nothing about NYC's rent laws except had heard the phrase "rent stabilized" and decided for themselves what it meant. And I was right. Every vacant apartment in the city can be rented by the landlord at market rates. The price controls complained of by the top commenter do not exist. There is no such thing as a law saying "This vacant apartment? You can only charge $1000 for it, even though it would normally rent for $3000." Is that clear? Or would you rather just downvote, despite not knowing anything about the city's rent laws?
      - evanpw 11y ago
        This seems to explain the rules determining the rent you can charge for a vacant rent-stabilized apartment: http://www.nycrgb.org/html/guidelines/vacancy.html http://www.nycrgb.org/html/guidelines/vacancy.html. Am I misunderstanding this page?
      - bradleyjg 11y ago
        That's simply not true. Vacancy decontrol for a rent stabilized apartment only kicks in if the legal rent for an apartment has reached $2500. So it is very much the case that a vacant apartment can be subject to rent stabilization and cannot be rented for whatever the market will bear. See this page for worked examples: http://www.nycrgb.org/html/guidelines/vacancy.html http://www.nycrgb.org/html/guidelines/vacancy.html
      - akgerber 11y ago
        That's completely untrue. I live in a rent-stabilized apartment I rented at (moderately) below-market rates three years ago. Had the landlord not done what they claim are $40,000 worth of renovations, they would have had to rent it to me at something like half the market rate.
      - nemo44x 11y ago
        I don't think that's entirely true. Almost every new building has to have 20% of the capacity rented to "Affordable living" standards - far below market rate.
  - URSpider94 11y ago
    I'm not sure what you are referring to, but New York definitely has two levels of rent pricing controls: rent control and rent stabilization. With rent control, the rent never increases, it is fixed for the duration of tenancy, and can even be handed down (once) to a family member. Once that tenant or their heir vacates the apartment, then the rent goes to market rate with no further regulation. With rent stabilization, the city sets an annual percentage increase for the rent, which is typically not as high as the market-rate appreciation rate. When a tenant moves out, the landlord can raise the rent by a vacancy allowance, as well as an adder of 1/40th of any improvements made to the unit. Once the annual rent exceeds $2,500 per month, the unit is considered market-rate, and becomes unregulated (however, regulation continues until the current tenant moves out). SOURCE: I was a landlord in NYC. In my building, I had one rent-controlled unit occupied by a senior citizen who never paid rent (she needed the $100/mo more than I did), and 80% of the other units were rent-stabilized.
    - tzs 11y ago
      Hmm...from that description it sounds like eventually every unit will end up unregulated. Is there any mechanism that creates new rent controlled or rent stabilized units, or converts an unregulated unit into a rent stabilized or rent controlled unit?
      - bradleyjg 11y ago
        The mechanism for new rent stabilized units are set asides in exchange for tax credits and/or zoning variances in new buildings. They end up costing the city a lot more in forgone property taxes than residents save in rent, but nonetheless seem to keep getting renewed.
- colinbartlett 11y ago
  Not necessarily disagreeing with you. But the practical meaning of that is that, in the case of New York, this means the entire island of Manhattan becomes a playground for the wealthy and the people who keep that playground humming are relegated to the outer boroughs.
  - nine_k 11y ago
    Entire Manhattan, including 200th streets? I can imagine that areas like this already exist, e.g. in most lower Manhattan and upper west side. Did it result in anything particularly bad, or at least measurably bad? (Disclaimer: I live in Brooklyn and work on Manhattan; my commute is still better than in most other places I lived.)
    - exelius 11y ago
      Eventually, yeah. There is a finite supply of land on Manhattan, and demand from foreign buyers is growing. Downtown and midtown are already saturated, so the billion dollar condo buildings of 2040 will need to be built somewhere.
      - bradleyjg 11y ago
        I don't see any particular reason that Inwood will be more desirable in 2040 than Brooklyn Heights. Being physically on the island of Manhattan just isn't that big a deal. What matters in the long run seems to be commuting time and to a lesser extent zoning and projects. Looking at this heat map: http://project.wnyc.org/transit-time/#40.75805,-73.98571,12,790 http://project.wnyc.org/transit-time/#40.75805,-73.98571,12,... I'd be bullish on Sunnyside / western Woodside.
      - runako 11y ago
        I hear this often, but it doesn't jive with my impressions of Manhattan (lived there years ago, visit periodically). In particular, significant parts of the island top out at walk-up heights (5-6 stories). The economics of rent in Manhattan would change dramatically if the island were rebuilt using modern technologies (chiefly: elevators and the taller buildings they enable). Without knowing the local politics, it seems obvious that there is some force that is preventing the low-productivity uses of land (broadly: "short buildings") from being converted into higher-productivity uses (chiefly "taller buildings"). There's only a finite supply of ground -- this does not mean there has to be a finite supply of usable indoor space. The latter is a choice that can presumably be changed when the will arises.
- nuschk 11y ago
  Well, economists often suggest a better way than just let the rich take over: directly subsidize people, not flats. So, if you want a neighborhood to not just attract bankers but also families with kids, pay the families for living there! The idea is to pay them only while they live there - independently of which accommodation they choose - and stop the payments when they move away. This way, the market isn't distorted, people don't get "sticky" in their ability to move to other apartments, and the whole setup is much more fair, as it's pretty easy to control who gets which benefits. The downside, of course, is that the cost of such payments is far more transparent to the public. Many economists would argue that it's in fact much cheaper, as you it's more efficient. Still, today's subsidies are well hidden and almost never show up in household budgets. And thus it's hard to get to a system of direct payment.
  - exelius 11y ago
    Yeah, such a solution is difficult -- and costly -- to implement. For the reasons you mentioned, government tends to choose subsidization options where money isn't explicitly exchanged: i.e. rather than paying the landlord the difference between controlled and uncontrolled, they just tell him certain units are controlled and he has to deal with it. A solution such as the one you described also makes it difficult to distinguish between who to subsidize and who not to subsidize. How do you make sure you're not giving big payments to people who don't really need the money and just want the house? What's the difference between a family making $90k/yr and wanting to live in a $5k/mo apartment and a family making $500k/yr and wanting to live in a $25k/mo apartment off central park west? Neither can afford the rent in the area, but where do you draw the line?
    - evanpw 11y ago
      The subsidy shouldn't depend on the apartment, but it should depend on the renters. So you can explicitly set an income limit to exclude the $500k/yr family, but even if you don't, they don't get a bigger subsidy just because they want a more expensive apartment.
      - mseebach 11y ago
- nuschk 11y ago
  Well, economists often suggest a better way than just let the rich take over: directly subsidize people, not flats. So, if you want a neighborhood to not just attract bankers but also families with kids, pay the families for living there! The idea is to pay them only while they live there - independently of which accommodation they choose - and stop the payments when they move away. This way, the market isn't distorted, people don't get "sticky" in their ability to move to other apartments, and the whole setup is much more fair, as it's pretty easy to control who gets which benefits. The downside, of course, is that the cost of such payments is far more transparent to the public. Many economists would argue that it's in fact much cheaper, as you it's more efficient. Still, today's subsidies are well hidden and almost never show up in household budgets. And thus it's hard to get to a system of direct payment.
- mathattack 11y ago
  There are many many problems with the current system: - It locks people into poor locations. Someone that is unemployed lives in a massively subsidized apartment in the Bronx. A job opens up in South Brooklyn. Would they move and take it? Not when their rent will go up 4X. - It helps long term residents at the expense of shorter term residents, and companies who hire them. - It only helps the small subset of the needy who can get in, and leaves the others out in the lurch. - It discourages investment in the housing infrastructure. I can keep going, but it would take me an hour to finish venting.
- kazinator 11y ago
  > Is it fair? Absolutely. You can't dictate to the owner of private property how much it should sell or rent for. (Unless maybe your surname is Lenin or Zedong.) What's next? Why not have the government step in if someone dares ask $300 on Craiglist for a bicycle that's only worth $50 and make him or her sell it for $30? If someone forks up $300 let that be. If nobody buys it, let the message slowly dawn upon the seller. > desirable areas of certain cities end up effectively "off limits" to lower income renters. Speaking of desirable: It is an undeniable fact, also that a lack of lower income renters is part of what makes those areas desirable. It's not just the views, quality of the suites or city convenience. It's also the fact that poor people aren't there. Same as country clubs, private schools, and all that.
bsimpson 11y ago
Wow - a regulated rental market that makes San Francisco look comparatively sane.
- iolothebard 11y ago
  Lmao, not really. They're both fucked up. At least in NYC you can build up, in SF you've only got SoMa you can build in.
  - bsimpson 11y ago
    I mean less about the building and more about the rental regulation. In SF, you are either regulated or you aren't, and the rules are pretty simple (if your unit is older than 1996 and is not the only unit your landlord owns, you have rent control).
xname 11y ago
"For renters like Soni Fink, 91, the rules have meant she can keep living in the apartment she moved into in 1961. A move to market rate would easily eat up her retirement income, she tells the BBC outside her two-bedroom home towards the south of Manhattan." Why Soni Fink, 91, is entitled to live in a two-bedroom home?
- kazinator 11y ago
  I can construe an entitlement story on behalf of Soni Fink like this: since 1961, she probably put in enough money into rent that if it had one into a mortgage, she would own the place, with enough left over for all the upkeep. The fact that she has been a tenant for more than half a century and paid into the building should count for something. It can be argued.
- nextw33k 11y ago
  You need to learn about old age and how it effects the brain. You take an alzheimer's patient out of their home and place them in a hospital or new home and you are effectively transporting them to another planet, it freaks them out. Your home is your kingdom, she's been there too long to feel comfortable anywhere else. Its not idea, its not economically the best utilisation of a resource, but it is human.
nextw33k 11y ago
The correct solution to this problem is to tax the rental income and hand that money to low income households. It would create a balance of correct market prices and allowing low income people to stay. Just letting the price float and pushing low income people out creates an unbalanced society where a class divide builds up over time. Modern housing policy in the UK is to mix social housing with regular housing developments, having social housing all grouped into one location was a catastrophically bad idea from the post war era.
yason 11y ago
Subsidies and regulation doesn't work. If you subside families, the subsidies will simply go into rents and then those who don't get subsidies still have to pay that same rate. Basically, the lowest rent turns into exactly the same level where you're entitled for full subsidies. In effect, you'll just give tax payer's money to landlords. If you regulate rents (or subsidize apartments), the apartments aren't taken cared of. The landlord is squeezed between the regulated rent and rising costs, and this doesn't lend to a very good and successful renting business. If the city builds public housing (council housing) and rents directly to poorer families, you'll get two things. First, a lot of poor people get flocked into the same building or neighbourhood, including problematic people (most poor people aren't problematic but most problematic people are poor), and this lowers the reputation of the area. Second, those who were poor but are now in the middle class still want to hold on to their cheap apartment because they would face a direct hit in their standard of living if they moved out to an apartment rented at market price. This is a huge disincentive to move because of a better job or to move because more (or less) space is needed. So far I've only seen one scheme that does work: public housing, initially at at-cost prices (no profit for the city) but with rents discounted based on the tenant's annual income. The subsidy isn't money that could go to anyone else but the tenant as the city "pays" for the subsidy by simply getting less money from that tenant. If the tenant begins to earn more money, the rent will go up in proportion to the extra income so that there's no big jump or disincentive to not get a better job. The rent always goes up less than the income, so that it's always worth taking a better job, until at some point the rent will equal market prices. This allows people to stay (if they like the place) or move away (because they already pay the market rent). The city could also sell individual apartments to long-term tenants if they wish to buy: this is to gradually balance the demography of the area and keep the houses from being populated by poor people forever.

28 points by giles 11y ago

This is the problem with housing subsidies: they very often go to those who don't need them. In New York, your choice of apartment is primarily based on location -- anything that's not in the >$1 million range is pretty similar. So if you're looking at two apartments near your work and the rent stabilized one is $1200/mo and the other is $3000/mo, you try to get the $1200/mo one even if you could afford the $3000/mo one. I guarantee you it's not $1800/mo nicer. You see this effect anywhere that supply of rental housing is a problem. If you implement price controls, people with high incomes will seek out lower rents. They'll still often end up driving out the lower-income folks, because if you're a landlord with two applications for a vacant apartment, you're going to favor the one with better credit. Rent controls also deter landlords from investing, both in existing properties and in new ones. IMO the right answer (and this is not a popular sentiment) is to let rents float and have certain desirable areas of certain cities end up effectively "off limits" to lower income renters. Is it fair? Not particularly, but the side effects of this situation are that the people who can afford to shoulder the costs associated with their way of life are the ones actually doing so. They are going to crowd low-income renters out of the neighborhood eventually anyway, and hopefully a housing / worker shortage would prompt the city to actually develop a low income housing solution rather than forcing landlords to just deal with rents too low for even basic maintenance.

jellicle 11y ago
The type of "price controls" that you are railing against do not exist in New York City and to the best of my knowledge have never existed there. Maybe during World War II.
- dantheman 11y ago
  Here you go: http://www.nycrgb.org/html/resources/faq/rentstab.html http://www.nycrgb.org/html/resources/faq/rentstab.html
  - jellicle 11y ago
    Urgh, when I saw the downvotes I figured it would be people who knew nothing about NYC's rent laws except had heard the phrase "rent stabilized" and decided for themselves what it meant. And I was right. Every vacant apartment in the city can be rented by the landlord at market rates. The price controls complained of by the top commenter do not exist. There is no such thing as a law saying "This vacant apartment? You can only charge $1000 for it, even though it would normally rent for $3000." Is that clear? Or would you rather just downvote, despite not knowing anything about the city's rent laws?
    - evanpw 11y ago
      This seems to explain the rules determining the rent you can charge for a vacant rent-stabilized apartment: http://www.nycrgb.org/html/guidelines/vacancy.html http://www.nycrgb.org/html/guidelines/vacancy.html. Am I misunderstanding this page?
    - bradleyjg 11y ago
      That's simply not true. Vacancy decontrol for a rent stabilized apartment only kicks in if the legal rent for an apartment has reached $2500. So it is very much the case that a vacant apartment can be subject to rent stabilization and cannot be rented for whatever the market will bear. See this page for worked examples: http://www.nycrgb.org/html/guidelines/vacancy.html http://www.nycrgb.org/html/guidelines/vacancy.html
    - akgerber 11y ago
      That's completely untrue. I live in a rent-stabilized apartment I rented at (moderately) below-market rates three years ago. Had the landlord not done what they claim are $40,000 worth of renovations, they would have had to rent it to me at something like half the market rate.
    - nemo44x 11y ago
      I don't think that's entirely true. Almost every new building has to have 20% of the capacity rented to "Affordable living" standards - far below market rate.
- URSpider94 11y ago
  I'm not sure what you are referring to, but New York definitely has two levels of rent pricing controls: rent control and rent stabilization. With rent control, the rent never increases, it is fixed for the duration of tenancy, and can even be handed down (once) to a family member. Once that tenant or their heir vacates the apartment, then the rent goes to market rate with no further regulation. With rent stabilization, the city sets an annual percentage increase for the rent, which is typically not as high as the market-rate appreciation rate. When a tenant moves out, the landlord can raise the rent by a vacancy allowance, as well as an adder of 1/40th of any improvements made to the unit. Once the annual rent exceeds $2,500 per month, the unit is considered market-rate, and becomes unregulated (however, regulation continues until the current tenant moves out). SOURCE: I was a landlord in NYC. In my building, I had one rent-controlled unit occupied by a senior citizen who never paid rent (she needed the $100/mo more than I did), and 80% of the other units were rent-stabilized.
  - tzs 11y ago
    Hmm...from that description it sounds like eventually every unit will end up unregulated. Is there any mechanism that creates new rent controlled or rent stabilized units, or converts an unregulated unit into a rent stabilized or rent controlled unit?
    - bradleyjg 11y ago
      The mechanism for new rent stabilized units are set asides in exchange for tax credits and/or zoning variances in new buildings. They end up costing the city a lot more in forgone property taxes than residents save in rent, but nonetheless seem to keep getting renewed.
colinbartlett 11y ago
Not necessarily disagreeing with you. But the practical meaning of that is that, in the case of New York, this means the entire island of Manhattan becomes a playground for the wealthy and the people who keep that playground humming are relegated to the outer boroughs.
- nine_k 11y ago
  Entire Manhattan, including 200th streets? I can imagine that areas like this already exist, e.g. in most lower Manhattan and upper west side. Did it result in anything particularly bad, or at least measurably bad? (Disclaimer: I live in Brooklyn and work on Manhattan; my commute is still better than in most other places I lived.)
  - exelius 11y ago
    Eventually, yeah. There is a finite supply of land on Manhattan, and demand from foreign buyers is growing. Downtown and midtown are already saturated, so the billion dollar condo buildings of 2040 will need to be built somewhere.
    - bradleyjg 11y ago
      I don't see any particular reason that Inwood will be more desirable in 2040 than Brooklyn Heights. Being physically on the island of Manhattan just isn't that big a deal. What matters in the long run seems to be commuting time and to a lesser extent zoning and projects. Looking at this heat map: http://project.wnyc.org/transit-time/#40.75805,-73.98571,12,790 http://project.wnyc.org/transit-time/#40.75805,-73.98571,12,... I'd be bullish on Sunnyside / western Woodside.
    - runako 11y ago
      I hear this often, but it doesn't jive with my impressions of Manhattan (lived there years ago, visit periodically). In particular, significant parts of the island top out at walk-up heights (5-6 stories). The economics of rent in Manhattan would change dramatically if the island were rebuilt using modern technologies (chiefly: elevators and the taller buildings they enable). Without knowing the local politics, it seems obvious that there is some force that is preventing the low-productivity uses of land (broadly: "short buildings") from being converted into higher-productivity uses (chiefly "taller buildings"). There's only a finite supply of ground -- this does not mean there has to be a finite supply of usable indoor space. The latter is a choice that can presumably be changed when the will arises.
nuschk 11y ago
Well, economists often suggest a better way than just let the rich take over: directly subsidize people, not flats. So, if you want a neighborhood to not just attract bankers but also families with kids, pay the families for living there! The idea is to pay them only while they live there - independently of which accommodation they choose - and stop the payments when they move away. This way, the market isn't distorted, people don't get "sticky" in their ability to move to other apartments, and the whole setup is much more fair, as it's pretty easy to control who gets which benefits. The downside, of course, is that the cost of such payments is far more transparent to the public. Many economists would argue that it's in fact much cheaper, as you it's more efficient. Still, today's subsidies are well hidden and almost never show up in household budgets. And thus it's hard to get to a system of direct payment.
- exelius 11y ago
  Yeah, such a solution is difficult -- and costly -- to implement. For the reasons you mentioned, government tends to choose subsidization options where money isn't explicitly exchanged: i.e. rather than paying the landlord the difference between controlled and uncontrolled, they just tell him certain units are controlled and he has to deal with it. A solution such as the one you described also makes it difficult to distinguish between who to subsidize and who not to subsidize. How do you make sure you're not giving big payments to people who don't really need the money and just want the house? What's the difference between a family making $90k/yr and wanting to live in a $5k/mo apartment and a family making $500k/yr and wanting to live in a $25k/mo apartment off central park west? Neither can afford the rent in the area, but where do you draw the line?
  - evanpw 11y ago
    The subsidy shouldn't depend on the apartment, but it should depend on the renters. So you can explicitly set an income limit to exclude the $500k/yr family, but even if you don't, they don't get a bigger subsidy just because they want a more expensive apartment.
    - mseebach 11y ago
nuschk 11y ago
Well, economists often suggest a better way than just let the rich take over: directly subsidize people, not flats. So, if you want a neighborhood to not just attract bankers but also families with kids, pay the families for living there! The idea is to pay them only while they live there - independently of which accommodation they choose - and stop the payments when they move away. This way, the market isn't distorted, people don't get "sticky" in their ability to move to other apartments, and the whole setup is much more fair, as it's pretty easy to control who gets which benefits. The downside, of course, is that the cost of such payments is far more transparent to the public. Many economists would argue that it's in fact much cheaper, as you it's more efficient. Still, today's subsidies are well hidden and almost never show up in household budgets. And thus it's hard to get to a system of direct payment.
mathattack 11y ago
There are many many problems with the current system: - It locks people into poor locations. Someone that is unemployed lives in a massively subsidized apartment in the Bronx. A job opens up in South Brooklyn. Would they move and take it? Not when their rent will go up 4X. - It helps long term residents at the expense of shorter term residents, and companies who hire them. - It only helps the small subset of the needy who can get in, and leaves the others out in the lurch. - It discourages investment in the housing infrastructure. I can keep going, but it would take me an hour to finish venting.
kazinator 11y ago
> Is it fair? Absolutely. You can't dictate to the owner of private property how much it should sell or rent for. (Unless maybe your surname is Lenin or Zedong.) What's next? Why not have the government step in if someone dares ask $300 on Craiglist for a bicycle that's only worth $50 and make him or her sell it for $30? If someone forks up $300 let that be. If nobody buys it, let the message slowly dawn upon the seller. > desirable areas of certain cities end up effectively "off limits" to lower income renters. Speaking of desirable: It is an undeniable fact, also that a lack of lower income renters is part of what makes those areas desirable. It's not just the views, quality of the suites or city convenience. It's also the fact that poor people aren't there. Same as country clubs, private schools, and all that.

bsimpson 11y ago

Wow - a regulated rental market that makes San Francisco look comparatively sane.

iolothebard 11y ago
Lmao, not really. They're both fucked up. At least in NYC you can build up, in SF you've only got SoMa you can build in.
- bsimpson 11y ago
  I mean less about the building and more about the rental regulation. In SF, you are either regulated or you aren't, and the rules are pretty simple (if your unit is older than 1996 and is not the only unit your landlord owns, you have rent control).

xname 11y ago

"For renters like Soni Fink, 91, the rules have meant she can keep living in the apartment she moved into in 1961. A move to market rate would easily eat up her retirement income, she tells the BBC outside her two-bedroom home towards the south of Manhattan." Why Soni Fink, 91, is entitled to live in a two-bedroom home?

kazinator 11y ago
I can construe an entitlement story on behalf of Soni Fink like this: since 1961, she probably put in enough money into rent that if it had one into a mortgage, she would own the place, with enough left over for all the upkeep. The fact that she has been a tenant for more than half a century and paid into the building should count for something. It can be argued.
nextw33k 11y ago
You need to learn about old age and how it effects the brain. You take an alzheimer's patient out of their home and place them in a hospital or new home and you are effectively transporting them to another planet, it freaks them out. Your home is your kingdom, she's been there too long to feel comfortable anywhere else. Its not idea, its not economically the best utilisation of a resource, but it is human.

nextw33k 11y ago

The correct solution to this problem is to tax the rental income and hand that money to low income households. It would create a balance of correct market prices and allowing low income people to stay. Just letting the price float and pushing low income people out creates an unbalanced society where a class divide builds up over time. Modern housing policy in the UK is to mix social housing with regular housing developments, having social housing all grouped into one location was a catastrophically bad idea from the post war era.

yason 11y ago

Subsidies and regulation doesn't work. If you subside families, the subsidies will simply go into rents and then those who don't get subsidies still have to pay that same rate. Basically, the lowest rent turns into exactly the same level where you're entitled for full subsidies. In effect, you'll just give tax payer's money to landlords. If you regulate rents (or subsidize apartments), the apartments aren't taken cared of. The landlord is squeezed between the regulated rent and rising costs, and this doesn't lend to a very good and successful renting business. If the city builds public housing (council housing) and rents directly to poorer families, you'll get two things. First, a lot of poor people get flocked into the same building or neighbourhood, including problematic people (most poor people aren't problematic but most problematic people are poor), and this lowers the reputation of the area. Second, those who were poor but are now in the middle class still want to hold on to their cheap apartment because they would face a direct hit in their standard of living if they moved out to an apartment rented at market price. This is a huge disincentive to move because of a better job or to move because more (or less) space is needed. So far I've only seen one scheme that does work: public housing, initially at at-cost prices (no profit for the city) but with rents discounted based on the tenant's annual income. The subsidy isn't money that could go to anyone else but the tenant as the city "pays" for the subsidy by simply getting less money from that tenant. If the tenant begins to earn more money, the rent will go up in proportion to the extra income so that there's no big jump or disincentive to not get a better job. The rent always goes up less than the income, so that it's always worth taking a better job, until at some point the rent will equal market prices. This allows people to stay (if they like the place) or move away (because they already pay the market rent). The city could also sell individual apartments to long-term tenants if they wish to buy: this is to gradually balance the demography of the area and keep the houses from being populated by poor people forever.