Rent control fundamentally cannot work, which is why it never works. Malicious noncompliance is a red herring.
My landlord didn’t provide any more utility this year even though they jacked up my rent $1000/month this year. Nothing about my place got any better and I’m not getting anything out of it. They’re doing it purely to extract money from me because they know no one else is building and we just had 150k+ migrants move into the city to compete for a fixed supply.
End of the day, landlords don’t deserve more money and I don’t know why anyone here argues for it. It’s like you want bezos to have even more money - it’s super weird.
Introducing rent control makes it even less likely to have new builds. Try to think like a millionaire that could potentially invest in real estate: would you buy a 2 million house not knowing that you can recoup that investment and also make a profit? Isn't it easier to just dump the money in an ETF and get 8% on the market?
> you need it to prevent landlords from just extracting more money
Why do you need to prevent people from making money? Would you like someone preventing bradlys from making that much money? How much is too much? If you work in tech like most people here, you're probably making more than 99% of the world.
Making money is not a problem, if there is money to be made in real estate, investors would flock to it, increasing supply and therefore decreasing prices and profits over time. The problem is when the economics are not allowed to float freely: because of rent control, limitations to building (like zoning laws), insufficient infrastructure (like being stuck on an island with bad connections) etc.
Fundamentally these are in disagreement. If you believe that landlords should control the world then keep believing this idea that housing should also be an investment.
I don’t think housing should be an investment. It is impossible for something to be a good investment and affordable. They go against one another.
Why do you think that's the case? Many companies are a good investment, while they still provide affordable products. Something can be cheap in an absolute sense, while still providing a good return on investment.
Can you see how that is not affordable? Things that go up in value forever are not affordable...
This seems like such an emotional response. The landlords are also controlled by mortgages if they are small, or by boards of directors - and shareholders if they are large.
The landlords can control the rent for their units, that's it.
As to investment properties vs affordable ones, there can be some issue there, for example if you buy a house just to park the money somewhere, but you don't rent it out, you keep it empty. That kind of behavior can be really damaging. These are the only kind regulations I would introduce: 1. don't allow properties to sit empty - tax them heavily. And 2. also don't allow airbnb's in highly troubled cities. Unless you're literally sleeping in the same house with the guests, airbnb's shouldn't be allowed for individual housing units.
> I don’t think housing should be an investment
Let's run a thought experiment: Let's assume you're a retired small business owner that has 5 million dollars in the bank. You can A. built a house in your city and rent it out or B. put the money on the stock exchange.
Everything else staying equal, which of the options would create more housing units in your city?
People keep trying to rationalize the status quo with complex explanations, when the dynamic is really "Army setting up a school" dead-simple (or, even more applicable, Soviets setting up apartment blocks): if you care about fulfilling the need, it gets done. The problem is that there are competing interests that profit from housing insecurity and homelessness, and the government routinely chooses them over us. Nothing will change until the choice is made to throw these entities - developers, management, investors, etc. - under the bus, instead of people who are simply looking for a safe place to live. Unfortunately, without a massive reorganization of the economy and even society, it's impossible to have both come out winners.
Just cause some capitalist lost a few dollars doesn’t mean anything. Capitalists don’t do any labor - that’s the whole point of why they invest in things. They put money in places hoping that they’ll get more out of it without having done anything. But it’s a risk - and the government shouldn’t be backing risk taking speculators who gamble with their money. It should be backing laborers!
But it doesn’t. Government is controlled by capitalists because capitalists have the discretionary money (thanks to stealing it from laborers) to keep lobbying to keep status quo.
See, to me, this vitriol is what seems super weird. It seems like you must be talking about some sort of property shark that owns 8+ figures in property and extracts the maximum possible from the poor peons that dare to want a roof over their heads. Maybe with some large company thrown in the mix for good measure.
My father and grandfather are both in rental (well, they did whatever they could to make their way, primarily carpentry; rental is only part of the picture). Both of them started with nothing and managed to bootstrap their way into some properties, fixing them up as they went. They do all the work on their respective properties themselves. There isn’t a management company involved. They aren’t some evil men trying to extort the populace, the goal is just to live, provide for family, etc. Yet by definition, they are landlords - that thing that so many here despise unilaterally with such passion.
Probably there is considerable diversity (or at least two classes of landlords). But laws are going to apply to both groups.
If you do something that drives up the value of the property - you'll get some amount of that when you go to sell the property. If your father buys properties, rehabs them, and then rents them out... Guess what? He's double-dipping. He's going to charge more for rent and he's going to be able to sell the property for more later. In one instance (selling the property), yes, he's doing labor and will reap some reward for his labor. In the other, he's not really doing any labor to keep charging more rent.
I had "small time" landlords many times. They always jacked up the rent 10-20% every year. You think they're doing that because the 1920's house I was renting was getting improved every year or they were doing anything to make it better? Nope... They just wanted more money and because no one was building more housing - they knew they could get it.
> going to charge more for rent
You mean, be able to charge anything at all.. it’s not like we’re taking about buying turn-key properties and updating the cabinetry or something.
> not really doing any labor
Properties require upkeep. (N) properties require N times the upkeep. In addition to normal expenses, there are also risks; for example a tenant may damage your property, and then you need to fix it. You may think your security deposit covers that; in reality that amount of money can usually only cover minor repairs / cleaning. Landlords need to recoup that sort of thing over time, so it ends up getting rolled into your rent.
I really don’t think you understand how expenses for these things work. The way you’ve been talking, it sounds like you think your rent check goes directly into the landlord’s bank account as profit. Maybe you should try home ownership, and see what the actual ledger (expenses + time) looks like over time. Compare that plus your mortgage to rent. You may need to do this for the long haul to see the real picture though, not just a couple of years.
Better yet, acquire some properties and try your hand at rental yourself —- either you’ll end up filthy rich for nothing like you seem to think it works, or you’ll learn a valuable lesson about the true cost of services…
Because, while you assert that landlords offer no value, the fact remains that there are people in this world who want to rent, not own. Without landlords, how is that supposed to happen?
Rent control definitely works, because owners lock in the original price of the building with a fixed-rate mortgage. If you buy a building in 1960 to rent out, you can rent it out at 1960s prices pretty much forever, with only a tiny fraction added to cover increasing property taxes (subsidized for owners of rent-stabilized apartments) and the increasing costs of routine maintenance.
If I were to become Dictator of New York City tomorrow, I think I'd freeze rents as a factor on the acquisition cost of the property + prevailing interest rates on 30 year fixed mortgages. If you want to make today's market rates on your property, you have to build a brand new building. This incentivizes the creation of new housing, and provides stability to existing tenants through rent stabilization even for newcomers to the city.
NYC is full of vacant land. You can kick cars out of a parking lot and turn it into a 50 story residential skyscraper without any problem. You can tear down nearly-abandoned office buildings and replace them with housing. Tearing down a building where people are happily living is completely unnecessary. Profitable? Sure, it can be. But the city is under no obligation to making housing profitable. Housing is infrastructure; does the city make a profit by charging tolls on roads? Nope! They don't need to; they exist for the public good, not for your 401(k) plan.
Plenty of people are making TONS of money on brand-new buildings. In the 12 years I've lived here I've watched Downtown Brooklyn change from a forgotten wasteland to the home of the tallest building in Brooklyn. The neighborhood is full of $1M studio apartments (and up for more space) and they are sold before the building even breaks ground. People want new stuff and they can afford it. It doesn't have to come at the cost of existing residents.
In practise, I've yet to see anything working that doesn't make rentals either scarce or prohibitively expensive.
I don't think this meets the criteria most would consider “working”.
Rent control tries to make housing more affordable by reducing the cost, which immediately reduces the supply. At that point, rent control ends up increasing housing costs.
Theory and real-world case studies mean that this is so obvious, that I just assume anyone that's passed economics 101 and is advocating for rent control is either grossly incompetent, currently very drunk, or is disingenuous and actually wants to use the power of the government to make sure other people cannot obtain secure and stable housing.
Or they are one of the lucky few living in a rent controlled apartment.
Remove market economy and the Party will distribute housing as it sees fit, and you have affordable housing, like in the Soviet Union.
Otherwise, inevitably housing will cease to be accessible once a bit more than 50% of population is happy with their housing conditions - then they will vote for people who will help them build value of their house by locking out the underhoused minority.
I can't see a fix to this that won't undermine either democracy (by somehow making people's political choices matter less or not at all, openly or covertly, aka "Putin elections"), or market economy. Both of which sounds worse than just putting up with unaffordable housing.
It's hard to increase transportation infrastructure in a built-up area. And when you do, everybody says it didn't work because traffic is still bad or trains are still overfull. But they never notice that population increased during construction. If you could stop growth, then your transportation needs stabilize.
Doesn't really feel fair to me though, because it's so hard to move into the closed city.
Personally, I'm a fan of limiting rent increases to a max of something like 5-10% per year. Not so much that it's a total hardship to deal with a max increase; not so little that landlords have to do max increases every year or get way off market; also not so little that a landlord can't catch up later if they purposefully lag on increases to keep a preferred tenant.
But it's always supply and demand that gets the upper hand in the end. If there's a shortage of supply, and you put in more market rules & regulations, costs will shift elsewhere (like the broker in the article) or the black market will simply grow to clear the market.
Ask anyone actually living in Stockholm, and you'll hear how the system really works. Last I heard there was a 20 year wait to get an apartment the legal way.