‘It’s legal, there’s just no precedent’: first US town to demand a rent decrease
theguardian.com
theguardian.com
But this just does not feel right. It feels like tyranny of the majority. Who cares about the landlords? They are just bad people by definition, right?
I, for one, think they are people just like you and me. Inflation exists for them too, not just for me and my family. Ordering them to decrease the rents is not that different from confiscating part of their property.
And by the way, if you want to confiscate private property, there's a perfectly acceptable way to do that: taxes. Just reassess property values, or increase real estate tax rates, or both.
It's not tyranny. It's just democracy. Asset owners get lots of tax deductions, capital gains benefits and other goodies because they are the majority who voted it for themselves.
> Ordering them to decrease the rents is not that different from confiscating part of their property.
There have been rent stabilized apartments in new york for decades now. It's nothing new and it's nothing like confiscating property.
I know, I live in one such apartment. I have a very good relationship with my landlord. I'd be among the first to profit if NYC decided to force landlords to lower rent. It still does not feel right.
> It's not tyranny. It's just democracy.
Not in this country. Democracy is not just who has the most votes. There are checks and balances, and one of them is the justice branch of the Government, up to and including the Supreme Court. If something is not just, hopefully the Supreme Court will step in and say no. There were cases in history when this did not happen, for example the Dred Scott decision 166 years ago [1] that Black people do not enjoy the protection of the Constitution. But more often than not, the Supreme Court was there to undo the injustice resulting from the will of the majority alone.
Then leave your rent stabilized apartment. What do you think rent stabilized apartments are? They are apartments with legally and artificially lowered rents. Would you feel better if they called it stabilizing rent rather than lowering rent?
I think you have it backwards. If someone offers an opinion that is manifestly against their own economic interest, you are dismissive? Why?
> It's not tyranny. It's just democracy. Asset owners get lots of tax deductions, capital gains benefits and other goodies because they are the majority who voted it for themselves.
Democracy, by its ideal principles, relies on tyranny of the majority: Democratic voting relies on a majority of people voting for A, regardless of the voting mechanism used, with those voting for (B, C, D, etc.) getting the raw end of the shaft.
Even with the recent run up in real estate prices, housing is generally a terrible investment compared to stocks or actual productive investment vehicles. Even if there weren't massive transaction costs in buying and selling housing, which your proposal would force people to incur every time they move, it would force everyone to lock up their money in an objectively worse investment because you fetishize home ownership.
Taking your principle at face value, the same would be true of cars. Car rental agencies "add nothing of value to society" by simply renting out something they own that could otherwise be owned by the person using it. Should we force people to buy cars every time they travel somewhere and need one to get around?
Maybe a better analogy given this is HN is renting computing power. Why should companies like AWS be able to profit from "adding nothing of value to society," i.e. simply renting out server space/computing power?
Respectfully, this proposal shows a serious lack of economic understanding that seems important to have before making extreme policy proposals.
I agree with your point that outlawing rental properties completely is silly, but not your analogy to cars or compute, which are not real property nor nessecary for one to, you know, stay alive.
Most services landlords provide are compulsory if you can not afford to purchase a home, something made more difficult when others drive up the prices of homes by purchasing them and then renting them out for a profit.
Who would buy and develop rental units if landlords didn’t exist?
Landlords seem to fulfill a very valuable part of the supply and demand driven marketplace.
Are you suggesting we eliminate renting altogether and force people to buy?
No I’m not suggesting we eliminate renting altogether. I do think there is an opportunity to limit how many rentals can exist in an area or the form of those rentals (multi family or single) in order to drive down housing prices in areas where landlords own a substantial amount of land. Alternatively I would suggest not privatizing ownership of rental housing and socializing the housing.
If you limit the amount of rentals then that will increase prices, not drive down. That’s because if there are fewer homes to rent and the same number of renters, prices will increase to the level that the renters will accept before they move somewhere else.
What should be fixed is to provide sufficient supply of both private and rental homes. Thus driving prices of both down. And this should be entirely possible if certain tradeoffs like not everyone getting that single-family home next to downtown near lake and sea is possible...
Not to mention forcing even those who do somehow have massive amounts of cash or go into major debt to lock up all of that in an asset that historically underperforms productive investments (stocks), and putting their entire net worth in a single asset with no diversification whatsoever.
So it’s good news on people looking to buy, but bad news for people looking to rent. Sometimes renters are wannabe buyers but frequently renters have different desires and don’t want to buy.
The solution, I think, to the 30k income/300k house is to build more affordable housing. So that means getting condos down to $75-100k. In my area double incomes are common so many houses are built assuming two incomes, so at 60k that means 150-200k for a home to be affordable.
In the US the median salary per worker is $50k [0]. This will vary quite a bit based on geography but this means the “median affordable home” should be $150k or $300k for double income households.
[0] https://www.thebalancemoney.com/average-salary-information-f...
https://www.huduser.gov/portal/pdredge/pdr_edge_featd_articl...
As opposed to peivate landlords owning rental property where their goal is to simply profit as much as possible and raise rents while doing bare minimum repairs.
Combine that with the systemic issues in the american system keeping people in poverty and there are problems. It can work if people actually try to fix things and it can even create jobs in the process
This could then lead to a dumping of unprofitable real estate back on the market and drop overall house prices in the area.
The same is happening where I live. Rents doubled and cost of living is catching up.
Who would have thought printing trillions would do this!
Not the point of the article, but someone with her low income and only a two bedroom apartment should not have five pets.
Rent is expensive, but this subject is a bad example for “needing” a rent decrease. Her issue isn’t rent so much as it’s income and expense based. Disabled husband should have SSI income of $1k/month.
I didn’t read the article. But she shouldn’t have 5 pets. Maybe a turtle.
If you would like to give people money, i encourage you to donate to charitable organizations.
And yea, 5 pets for an impoverished person is too much.
If I’m having trouble paying bills and can’t support 5 pets then rehoming is something I need to consider. I don’t think I can expect government support to help me take care of them.
Did you just suggest that $12k/yr is a living wage?
For that matter, make it easier to evict people. I just started to the process to get a tenant out (who lives in the other house on our farm) who has not paid the rent and attempted to extort us. It could be six whole months before he’s gone. The tenant in the other unit has to live with him next door and between ourselves, that tenant and the next tenant we have to make up for what the deadbeat didn’t pay. Lower this expense and landlords can afford to lower the rent.
In our area we also have an irresponsible tenant’s rights group that supported a group of people who insisted that they could live for free no matter what and acted as if Habitat for Humanity (their landlord) was an evil NGO. They don’t get that with our high property taxes we are paying for the health care of the indigent in NY and they oughta just give us a break.
Unfortunately a lot of tenants mistook the eviction moratorium that we had for COVID-19 for a rent moratorium and it is coming due for those people, but landlords didn’t get any property tax moratorium.
Most landlords are interested in making a profit from renting. Therefore the rent the landlord demands will be set to a monthly amount such that they can pay the costs of maintaining the property, which includes paying real-estate taxes to the local government, and still make some profit.
So yes, renters are "paying the property tax", and always have been, they just do not see "property tax" as an itemized line item in their monthly rent amount.
Isn't it then also baked into the cost of owning your own home?
In the city of Ithaca there are rather large tax bills for the City of Ithaca, plus the County of Tompkins, plus the City of Ithaca school district. It adds up to a few hundred a month on the rent for the typical rental unit. Insofar as the local government thinks that "the rent is too damn high" there is a definite chunk of it they are responsible for.
A.) That sounds like a very reasonable price for health insurance.
B.) How does this increase rent on residential units by hundreds of dollars a month? Are you saying that if rental properties in Ithaca were instead primary residences, the city and county would collect what equals several hundred dollars per month lesss (let's call it $1200/yr) in taxes than they do for rental properties?
Is this unique to Ithaca, which is a college town?
https://www.ithaca.com/news/ithaca/cornell-s-tax-exempt-stat...
In particular that article asserts
“according to the rental real estate listing service Dwellsy, Ithaca has the highest rent of any small city in the U.S. The study shows the average price for a one-bedroom was $1908 per month in 2022, up 4.5% over 2021. Only eight cities had higher average rents…New York, Boston, San Francisco, San Jose, Washington DC, Santa Barbara, Los Angeles, and San Diego.”
I don't believe a property tax reduction gets passed on to tenants. The goal of landlords is to make money, so the incentive is to keep rents as high as possible without having long vacancies; the only reason to reduce rents is if your property is empty.
The hope of a market system is that with lowered expenses, some landlords would reduce their rent, which then allows renters to potentially move to those properties forcing other landlords to reduce rents in turn. This could theoretically happen in a cycle to a new equilibrium where rents have gone down by ~ the reduction in expenses.
But there's a lot of forces in play that interrupt this and allow high rents to continue even with a drop in expenses:
* The vacancy rate is very low, so there are very few landlords that would take advantage of the opportunity to lower their rent to get tenant.
* Landlords know renters can be long term, so often prefer a longer period of vacancy over reducing rent.
* Current renters are captive as moving costs are high, so their landlords are insulated from market pressure.
* The rental market is very coordinated by a) companies that own many properties, b) property management agents that manage many properties and c) rent information companies like RealPage. The result is similar to a cartel, where property owners will allow vacancies directly in order to keep the market rate from falling.
* Many current owners see the property value as a source of growth, and so care less about actual rental income.
All of these mean that a property tax reduction is more of a windfall to landlords than a way to bring down rents.
I worked at a mediation center and learned that it’s wrong to view a dispute through “social justice” or “conservative” viewpoints, race, gender, class and other things have nothing to do with who is right or wrong in a dispute. That said I think there are a lot of people in NY who wrongly think about landlords the way Mao Zhedong thought about them.
It all ends up being a wash in that not triple net leases just have higher payments. It’s a way to reduce management expenses.
[0] https://www.investopedia.com/terms/t/triple-net-lease-nnn.as...
I'm basically reading most of the comments on this article while I grease my antifa mechsuit, but to a certain extent I think I support this general concept. Lots of landlords in Mass will also have yard care included in the lease, and look at that they also own a landscaping company. If I could pay less AND not have an exploited minimum wage worker toss herbicide all over the tomato plants in pots on my patio, that'd be sweet.
And then do what? The usual answer is to convert it to condos. Most people aren't interested in personally occupying an entire apartment building. And if you decide to rent out the units, congratulations now you're a landlord!
> No problem, a government program can fund that just like PPP loans.
You realize this is having the government subsidize landlords to take rental units off the market and convert units to condos? For all the ire you seem to harbor towards landlords you're awfully eager to give them government money.
https://en.wikipedia.org/wiki/2020%E2%80%932022_Chinese_prop...
If anything, condominiums are a scam right up there with Amway, Bitcoin, and FTX and ought to be banned.
Everything to arrive at that is essentially tweaking an Excel formula of public policy.
(I’d also put forth community land trusts that enable non market housing solutions, keeping housing out of the market and at the whims of investors, but that’s a larger conversation)