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Comment by smutticus | Hacker News Reader

How about: San Francisco restaurant becomes casualty of America's obsession with private property rights.

The sane way to handle renters vs owners is to restrict the amount rent can increase per year. It might slow gentrification and decrease profit of landowners but it would solve this restaurant's problem.

I own property in The Netherlands and rent it out to tenants. There are increased risks for me because tenants have a lot more rights in The Netherlands than in the USA. But having been a tenant in the past I can appreciate the stability that comes with restricting rental increases.

Does it mean I probably make less money? Yes.

But I like being able to walk around my city and not see homeless people everywhere.

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Not only is the opposite of what almost all economists think, but it's a moot point. San Francisco has among the strongest rent controls and tenants' rights in the USA, and remains bafflingly expensive. If you want to pick the perfect counterexample against old-style 'progressive' housing policy in the USA, you just did.

The rent controls are for residences not for businesses.

Businesses operate on leases, and usually long term leases, like 10 year leases for a restaurant. This will protect the business for the duration, then when it is up, its up.

Actually, the exact opposite of what you said is the solution. Allow stronger property rights. Allow developers to build up using simple real estate economics - for residential and commercial projects. Rent control is the quickest way to turn one of America's best cities into vast slum.

I'm a commercial real estate appraiser. Real estate already has very low margins (10% - 20% for strong operations) - how do you expect the property owner to maintain the property (expenses, taxes, mortgage) and make enough of a profit to consider holding onto said property? Let's turn that around - you presumably like your job. Now, take a 40% pay cut - can you still afford to keep your job?

In what world are 10-20% margins low? Perhaps the problem is with real estate operators having unrealistic expectations towards real estate appreciation rates and profitability.

Grocery stores average a 2.5-3% profit margin, and I'd consider them a pretty essential business (because, you know, you have to eat).

> Rent control is the quickest way to turn one of America's best cities into vast slum.

NYC has rent control, and it's hardly a vast slum.

And as a counter-dynamic, overbuilding and its associated crime rate increase is another way to turn a city into a slum. Few things breed crime like abandoned housing.

NYC was a vast slum during a time when rent control, public housing, and social policy were a much bigger deal than they are now.

New York is able to build up, which helps. But overall, the NYC rent control is considered a failure by those who it is intended to help.

Rent control? New York tried that, it didn't go so well. http://online.wsj.com/article/SB122126309241530485.html

I don't see any evidence in that piece of how it "didn't go so well". What I see is sentence after sentence that indicates that there are too few apartments available at reasonable prices. That might be exacerbated by low rents and distorted incentives, but how would it help if more flats were built because prices were high enough to make it attractive?

It might be a demonstration that rent control without appropriate planning controls doesn't work so well. But that's a very different claim.

Oh, of course. In addition to strong rent controls we need better central planning of the real estate economy.

Very good ideas, comrade.

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