Landlord rights?
Comments
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If someone has a rent controlled or rent stabilized apartment, they will stay in the apartment forever, even if it is in excess of their needs.The perfect example is an widow living in a large 6 room apartment because her rent would dramatically escalate if she moved into a one bedroom. This scenario limits the amount of large apartments on the market, creating a tighter supply and higher priced rents for market rate apartments.
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Oh, God, here come the free marketers - run for your lives!
I wonder, have the Gods increased the size of NYC? Do we have new land upon which to build this new version of free market rentals? Will we be ripping down all our old, landlord owned rent stabilized buildings that have gone unattended to over the years to make room for brand new squeaky clean fair market apartments. Is this still the same NYC that was founded on making a buck we're talking about? Have the developers that run the city gotten a new sense of community? What do the Ratner haters have to say about all this. This thread could now become interesting again. -
Another reason why rent regulations keep the market tight is the fact that tenants that are regulated will always be the winners in housing courts. I know a few owners that have kept units vacant for years rather than renting them out because of all the stress. The owners of the smaller buildings are the ones more likely to abused by the system, they don't have a legal department like the big real estate firms.
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reader wrote: If someone has a rent controlled or rent stabilized apartment, they will stay in the apartment forever, even if it is in excess of their needs.The perfect example is an widow living in a large 6 room apartment because her rent would dramatically escalate if she moved into a one bedroom. This scenario limits the amount of large apartments on the market, creating a tighter supply and higher priced rents for market rate apartments.
Hmmm... I dunno if this is a good enough explanation. I mean, are there really THAT many widows clanking around giant 6 room apartments by themselves? Like thousands? Enough to be affecting the state of affordable housing in NYC? C'mon, really?
I don't buy it. I haven't been converted. This argument to get rid of rent stabilzation sounds weak to me. -
Why does anyone have a moral right to pay below market rent?
Doesn't this contradict the definition of 'market rate'?
SB -
Quigley wrote: [I mean, are there really THAT many widows clanking around giant 6 room apartments by themselves? Like thousands? Enough to be affecting the state of affordable housing in NYC? C'mon, really?
we have 8 units, and the coop owns the whole building. but three of those units are still lived in by original renters. two of the three have single, older widowed women in them. several bedrooms in these unrenovated units because they're railroads. the third unit is where the crazy person lives, with her adult children who pay no rent. the city pays her rent.
I don't buy it. I haven't been converted. This argument to get rid of rent stabilzation sounds weak to me.
yet before i lived here, i spent years saving to buy an apartment by being a renter in a rent-controlled building for over ten years. -
escap wrote: Thanks, that is approximately what I thought. As expected, the law has no logical basis--you have to buy someone out of a contract that they never purchased in the first place! Now that is a marvelous proposition. How to become so lucky as to have legal ownership of property that one never actually bought, but in fact received at a discount. Fascinating. (I'm pretty sure "theft" is the technical term for this type of transaction.)
I don't see how it's fundamentally different to an owner who purchased the building for $15,000 in 1969, and now after a couple of decades of high inflation and a pair of housing booms has an asset worth millions. I could say the owner stole from my generation by getting there first. The renter did buy into a contract: a rent stabilization contract that was once cheap / plentiful, and now has a very high market value. The owner chose to enter into that contract and surrender a certain component of their asset in exchange for certain benefits over the years. This is only theft in the sense that property is theft, tax is theft, capitalism is theft, etc.
Not to say that it's a good system, far from it... but to say appreciation of the value of a deed is a capital gain whereas appreciation of the value of a contract to use an apartment on that land is theft seems illogical to me. They're both just two documents covered by different laws that confer different rights to use what's on a piece of land, and both are subject to changes in value under market forces. -
Quigley wrote: [quote=reader]If someone has a rent controlled or rent stabilized apartment, they will stay in the apartment forever, even if it is in excess of their needs.The perfect example is an widow living in a large 6 room apartment because her rent would dramatically escalate if she moved into a one bedroom. This scenario limits the amount of large apartments on the market, creating a tighter supply and higher priced rents for market rate apartments.
Hmmm... I dunno if this is a good enough explanation. I mean, are there really THAT many widows clanking around giant 6 room apartments by themselves? Like thousands? Enough to be affecting the state of affordable housing in NYC? C'mon, really?
I don't buy it. I haven't been converted. This argument to get rid of rent stabilzation sounds weak to me.
I think the implication is that without rent stabilization the elderly would go to nursing homes where they belong, and the riffraff would scurry. This would place more apartments on the market, creating competition between landlords, lowering rents for us good yuppies. -
Quigley wrote:
Removing rent stabilization would increase the liquidity of the rental market. Rather than staying put come hell or high water, people would move around more in proportion to their needs and means. The increase in supply would cause the market rate to drop, because someone looking for an apartment would have more choice and could thus demand a lower price. However market price would not drop as far as the stabilization level. For a given supply and demand, where there were two comparable apartments, where previously the only difference was rent stabilization, the total rent extractable for the two would remain the same but the rents would equalize instead of being different. Imagine your neighbor is paying $1000 and you're paying $2000 for an identical apartment, and your neighbor loses stabilization. You can threaten your landlord you'll outbid your neighbor and move in next door if he doesn't lower your rent. Your neighbor's landlord can start raising the rent on your neighbor so long as it isn't higher than what you're threatening to pay. You'll end up splitting the difference with your neighbor and paying $1500 each (or maybe $1550 vs. $1450 because there's a cost of moving vs. staying put).
I feel like I'm being dense, because I still don't understand this. Why would the market equalize if there was no rent stabilization? I don't get why it would free up housing... there's still the same amount of people renting, right? They're just not paying stabalized prices, they're paying market prices. I don't get why it would lead to more available housing.
Would someone mind explaining again? I'd really love to understand this argument. Sorry if this is a stupid question.
To illustrate the effect of liquidity: a third person coming into town now has the choice of bidding $1550 for either of two apartments, rather than $2050 for one apartment; the extra liquidity lowers the price for a newcomer and makes the hunt or waiting time shorter. Greater liquidity also reduces the risk that the apartment will go empty for a period, which is not efficient for either tenants or landlords. Liquidity reduces the risk that if you have to move, that you'll be homeless for a while because everyone is too scared to move so nothing is available in the location you need to move to.
A secondary effect: more apartments would come back on the market because it would no longer be better to have them empty, or derelict, hoping that the whole buildling could one day be sold vacant. It would pay to renovate and re-let. Thus removing stabilisation would create supply, which would lower the average price. You would also find some people downsizing according to their needs, allowing others to upsize according to theirs.
A third effect: when rent stabilization reduces liquidity and makes it difficult to move to a location, it is more difficult to hire more people to work in that location, or more difficult to move there to start a business. A more mobile population tends to be more productive, and higher productivity leads to higher wages or profits, which leads to greater housing security. -
From reading this, I'm starting to realize that we just don't have enough expensive overpriced apartments in downtown brooklyn. Hopefully some more of that cheap Crown Heights property will open up in the near future. </sarcasm>
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Doctorj, two things:
To your first point about comparing compensation due someone who never bought the property in the first place to a great investment: you're joking right?
To the second point where you explain how stabilization raises prices, everything you said is correct, but I fear you're drowning us in overly complex logic. The effect is quite simple: increasing supply will push down prices (and yes, there is still plenty of room, including up, to build in NYC). Price controls discourage investment and thus constrain supply, driving prices up.
I know that on Brooklynian construction=>higher prices, but in fact this is not the case despite what people believe. Check out any review of the hottest and coldest RE markets, and you'll see that in all the crashing markets the consistent comment is "overbuilt", and in the priciest markets, the underlying cause is always "kept construction in check"/ "supply shortage", etc. Spurring a crash in housing prices would in fact probably be bad for the city, but let's at least be clear that increasing construction would lead to lower prices, not the reverse!
But wait, it gets worse! The first effect of rent control is to cause a housing shortage that makes housing unaffordable. However, as I've stated before, the second awful effect is that it creates a market with no middle ground, as the only profitable development opportunities come at the super high end. In a normal market prices would match what people could pay, meaning that distribution would be normal, with most prices clustered around the middle. Instead, over a half-century of rent control has brought us the inverted bell curve that we see today.
If you want to see a city with chronic housing shortages, poor housing quality and no middle class, then by all means continue to support rent control. But don't for a second think that you are supporting a policy that will make housing affordable or help the middle class! :x -
escap wrote: Doctorj, two things:
I'm not joking. Under the law, and under the contracts signed by the title holder and the stabilized tenants, the tenant has a form of ownership, i.e. the right to use. The lower price paid by the owner reflects the fact that they're not getting the full property. The price required to remove such a tenant reflects the fact that they've got a valuable claim over part of the property. At some point, an owner and a tenant entered this ownership sharing arrangement at will. The fact that the renter lucked into this situation many years ago when it cost 0$ is no different from the fact that the owner lucked into a discount property many years ago. It's only in hindsight that we can say that the tenant made a good 0$ property investment that is now valuable. Contracts in which 0$ changes hands but assets and legal rights do change hands happen all the time. "Buying the property" is loaded here, because you're assuming private individuals own property in NYC 100% as they do in many other places. But so long as there are rent stabilized tenants in place who have the right to use the property under certain conditions in perpetuity, 100% of the property is not for sale on the real estate market.
To your first point about comparing compensation due someone who never bought the property in the first place to a great investment: you're joking right? -
Thanks veets! I held off sharing that story for a while but I wanted people to know the other side. I don't think all landlords are bad but I know owning a building is a business. If they can make more money they will. If people like me are driven out of the city because of rising rents who will do our work? It's not likely people will travel an hour (or spend more than subway or bus fare) to a job that pays minimum wage, they'll look for a job closer to home. I found a good article by the Village Voice through Curbed about Bushwick. I recommend it highly. (It's too long to post here)
http://www.villagevoice.com/news/0726,robbins,77040,2.html/1 -
caseopele wrote: If they can make more money they will. If people like me are driven out of the city because of rising rents who will do our work? It's not likely people will travel an hour (or spend more than subway or bus fare) to a job that pays minimum wage, they'll look for a job closer to home.
If people doing valuable jobs start to leave the city, then either or both of two things must happen: the landlords will not be able to raise the rents because there won't be enough people willing and able to pay, and/or employers will raise wages because they need to in order to keep enough people doing those jobs in or near the city. That's how the job market and rental market work. Either way, abolishing rent stabilization overnight would not cause mass migration or mass economic pain or housing stress. -
If people doing valuable jobs start to leave the city, then either or both of two things must happen: the landlords will not be able to raise the rents because there won't be enough people willing and able to pay, and/or employers will raise wages because they need to in order to keep enough people doing those jobs in or near the city. That's how the job market and rental market work. Either way, abolishing rent stabilization overnight would not cause mass migration or mass economic pain or housing stress.
(Not meant towards you doctorj, I mean the general you)
While this is working itself out though, it's sure going to suck for us. It's easy to talk about rent stabilization when it doesn't affect your living situation. Sure, things may even out in the end but how many people will be forced out of NY while it's happening? I have a hard time understanding how rent stabilization is to blame for housing woes. And why the tenants of these apartments are thought to have more power than the landlords. There are good tenants and bad ones, just like there are good landlords and bad ones. People with more money will always have power over the people with less though. -
I don't know... I live in a rent-stabalized apartment, so I'm really trying to understand all these arguments against. But I have to say, I don't feel like a leech. I just feel lucky. It's the only way I can live in this great neighborhood.
But I also live in a building that is only "ok" compared to surrounding ones (not a falling-down, slum lord building, but also no fancy extras.) So I guess you get what you pay for. But I'm ok with that... -
Dream on...maybe not overnight, but it will happen, just as surely as day turns to night.
http://greeneconomics.blogspot.com/2006/05/future-vision-of-new-york-city-as.html
http://nymag.com/realestate/features/2016/17143/ -
caseopele wrote: It's easy to talk about rent stabilization when it doesn't affect your living situation. Sure, things may even out in the end but how many people will be forced out of NY while it's happening?
By the way, rent stabilization has affected my living situation. I was almost forced out of a country because I had a good job but could not find an apartment because they were all stabilized / controlled (and the tiny free rental market was five times the price thus out of the question). It was very stressful, and I only managed to stay by convincing someone to share their tiny apartment with me. And I was affected again when I moved to NY and had to pay artificially high rent to live side-by-side with people paying artificially low rent. You're worried about people possibly being forced out, but there are people every day now who are being forced out or unable to move here for a job because of artificially high non-stabilized prices and artificially restricted supply.
I believe in fairness, and that social mobility is important, and rent stabilization works against both these things. -
doctorj, again I didn't mean you specifically. I've heard from alot of people who had plenty of money bitching about rent stabilization (hereafter referred to as RS). Your comment showed me another side though, one I hadn't gotten to see yet. One of the things I love about this board is the ability to have discussions like this that I normally wouldn't. I'm glad you were able to stay here. I don't really believe a free rental market would work here but RS obviously isn't working. I'm at a loss though to think of something that would work.
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caseopele wrote: I don't really believe a free rental market would work here but RS obviously isn't working. I'm at a loss though to think of something that would work.
How about means-tested housing vouchers for low income tenants, paid for by real estate taxes, so that landlords and owners support only those people who really need it and to the degree that they need it? -
armchair_warrior wrote:
I back this. I am living in gravesend now, while I have a deal on the cheap end. I pay $780 for a full 1 bedroom apt with private entrance(part of private house). While is not perfect, its nice area, very safe, close to several trains, and cheap
check out bensonhurst, gravesend, bath beach, fort hamilton and tons more areas in that area.
rents are cheap. owners haven't raise rents in long time!! -
How about making businesses pay taxes instead of giving them exclusions and exceptions that last for decades. How about legislating that no new developments can be built unless there is rental housing for moderate to middle income folks included? I have called every new development on Atlantic Avenue and the prices are through the roof - seriously through the roof. I mean who can really afford all these new places being built? And not one rental in the mix!
You free marketers want to impact the rental environment in this town? Good luck - unless and until you have the real money paying their fair share you haven't a chance.
You should also seriously look into how many apartments are "warehoused" in this city - by both government entities and private owners - all holding out for the biggest buck. It's a disgrace.
My vision of NYC in the future - half the seriously rich and half the seriously poor. The rich will live behind security fences and the poor will be begging in the streets. There will simply be no middle class left.
Ending RS will not alleviate that reality - ending RS will hasten that reality.
NYC is a constant and consistent failure in urban planning - and the last bastion of good sense - Sty Town and Peter Cooper - have been sold to the highest bidder and along with the deal go the broken dreams of thousands of people.
And, BTW, here's another great thing about RS - once you turn 62, if they want you out 'cause they're taking the apartment back for a blood relative - the owner of the building has to find you a comparable apartment in close proximity and with comparable rent to that which you were paying at the time of removal.
Ain't NYC a great place? I sure think so. -
Doctorj, I agree with your suggestion for a means-tested voucher system. The ultimate key with social policies is to target the appropriate people rather than use a crude broad stroke that sweeps up all kinds of unintended people and causes terrible side effects. Aid the people in need directly, don't just warp the market by regulatory fiat. A voucher system will have its own detrimental effects as well, as with any policy, and will probably drive up the cost of low end housing, but it's at least well intentioned.
As for the painful correction away from rent stabilization, this is one of its most insidious aspects, and why this sort of legislation is so dangerous in the first place. R.S. was never intended to be permanent; it was a war era policy that was intended as a temporary fix, but predictably it instantly created an entrenched special interest that was impossible to oust. As with so many other economic policies, pain is concentrated but gain is diffuse, so no one notices the broad secondary and tertiary costs of r.s., but if you eliminate it the pain will be felt acutely. Same with trade, agricultural subsidies, and so on.
It amazes me that people look at the obvious results of decades of rent control: housing shortage, squeezed middle class, market skewed towards the high and low ends, and conclude that more rent control must be the answer. Rent control is what brought us to where we are, and yet people say they think liberalization will cause the very problems we have already. Hey, since we know our current policy has failed, can't we just at least TRY something else?
Better yet, is it so awful to listen to experts on the subject? Don't we rail against Bush, for example, for ignoring scientists' warnings and foreign policy experts' warnings? Why not follow the advice of virtually every housing economist on the planet, from the most liberal to the most conservative? Rent control is an issue, unlike nearly every other economic issue out there, in which there is nearly universal consensus among all shapes and sizes of economist; and you guessed it, the consensus is that rent control (as with most other forms of price controls) should be abolished. -
Livetotravel, sorry, I just can't let this go. You complain that no rentals are being built, but doesn't it occur to you that this is the direct result of laws that make building rentals unprofitable? You complain that the places being built are unaffordable, but then why encourage policies that discourage an increase of housing supply?
Honestly, I find this argument incredibly frustrating (if you hadn't noticed). Why are people so in LOVE with rent control, despite the unanimous opposition of economists, tons of evidence of its detrimental effects, and not to mention common sense? Characterizing the argument as one of greedy capitalists vs. compassionate socialists is so disingenuous!! Why, for example, would you be opposed to an income tax credit for the poor and working class (this is better than a voucher, btw) to help them pay for housing? Such a policy would be equally compassionate, FAR more effective, and FAR FAR FAR better for the city as a whole. It is not the cold-hearted stuff of "free marketers" nor the simplistic stuff taught in "Econ 101". In addition, there are many other measures that could be taken to encourage greater investment and development, which would lower prices across the city, from tax breaks to zoning changes to regulatory streamlining to brownfield cleanups, and many more.
A truly compassionate person who really cared about the poor and about inequality in the city would have the intellectual curiosity to explore progressive, thoughtful measures that address the underlying problems while considering side effects, rather than dogmatically clinging to archaic, failed ideas that have no logical or empirical support!:!: -
escap wrote: Why, for example, would you be opposed to an income tax credit for the poor and working class (this is better than a voucher, btw) to help them pay for housing?
How does an income tax credit assist a retiree with little taxable income to keep living in their home? Which is surely desirable as long as possible. I can only see that working if the retiree is allowed to nominate a primary caregiver and transfer the credit to that person, who then helps out with the rent. -
Can we agree that for the revocation of rent stabilization to level out rental pricing people must move out of these apartments, or many of them? and if not out of the city entirely, then at least out of the desirable neighborhoods?
How many rent stabilized apartments do you really think are sitting empty in the hope that it will collapse?
What is your criteria for underutilized? An elderly woman by herself in a two bedroom apt? -
doctorj wrote: [quote=escap] Why, for example, would you be opposed to an income tax credit for the poor and working class (this is better than a voucher, btw) to help them pay for housing?
How does an income tax credit assist a retiree with little taxable income to keep living in their home? Which is surely desirable as long as possible. I can only see that working if the retiree is allowed to nominate a primary caregiver and transfer the credit to that person, who then helps out with the rent.
Oh, believe me, I wouldn't for a second claim that there's a single perfect solution. In fact, that's the very nature of interventionist policies--they are inherently imperfect and lead to all kinds of unforeseen problems, which is why they should be mostly avoided and implemented only with proper prudence and care.
The biggest problem with vouchers is that landlords will generally charge what the market can bear, and if you increase what people can pay, landlords will increase what they charge. This is a depressing phenomenon that has played out spectacularly in college tuitions, which have risen in lock step with federal aid. The more aid the govt provides, the higher tuition will rise along with it. Like I said, very depressing if your goal is to help the disadvantaged. The tax credit still is vulnerable to this same flaw, but dilutes the effect slightly and at least saves you a layer of added bureaucracy.
Make no mistake about it, there is no perfect cure. However, just as the doctor's creed is "do no harm", we're better off with no policy than a policy that actually worsens the situation. My personal belief, widely ridiculed on this board as naive, is that the best way to make the housing market affordable and broadly targeted towards the middle class is to reduce govt involvement altogether. But as I recognize such libertarianism is unpopular in the city and most others lack my faith that "things will work out", at least I urge people to strongly consider the concept of "do no harm" and to be as progressive as possible in their remedies. -
filmlover - thank you for that, and thank God it came from a right-wing think tank.
Here's some other stats to chew on...
According to the 2005 Housing and Vacancy Survey, there are now 43,000 rent-controlled apartments in New York City. The median income of those households was $22,200. The median rent is $551 per apartment, and the median household pays over 33.5% of income for rent. The city’s rent-controlled tenants are mostly elderly – with most tenants having lived in their apartments since 1971 or before.
And, according to the same survey,
The median rent stabilized household income in this survey is $32,000, a real dollar deduction of 8.6% from the survey three years ago.
The median rent for a rent stabilized apartment is $844, an increase of 8.2% over three years ago, and the median unregulated rent is $1,000 per month.
The median gross rent/income ratio is 31.2% (gross rent is rent plus utilities) which is dangerously high, especially for the lower income members of the population.
Most disturbing, the city now has 28.8% of its household paying more than 50% of their income for gross rent.
The surveys are done under the auspices of The NYC Dept of Housing Preservation and Development.
And once again I ask, how will free market economics help these folks? -
Newsome wrote: Can we agree that for the revocation of rent stabilization to level out rental pricing people must move out of these apartments, or many of them? and if not out of the city entirely, then at least out of the desirable neighborhoods?
I don't see why people would necessarily have to move in order for rental pricing to even out. Some people are able to afford much more than the stabilized pricing they're currently paying, and some people are under severe stress because they're paying artificially high market rates. In both cases, the price can even out without anyone physically moving. And has been noted before: the current system is a disincentive to increasing supply, and demand outstripping supply is what causes high prices.Newsome wrote: How many rent stabilized apartments do you really think are sitting empty in the hope that it will collapse?
It would be interesting to find out the numbers. Anecdotally we have the OP, and a lot of properties that come on the market with one remaining tenant.Newsome wrote: What is your criteria for underutilized? An elderly woman by herself in a two bedroom apt?
If the elderly woman can afford so much space at market rates, that's well and good. Otherwise yes, since supply is limited, and if we're talking about subsidized housing, it would be fairer to have the elderly woman in a 1 bdrm and a family in the 2 bdrm.
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