New York's Rent Regulation Fight
bbc.com
bbc.com
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.
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?
See this page for worked examples: http://www.nycrgb.org/html/guidelines/vacancy.html
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.
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?
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.)
Looking at this heat map: http://project.wnyc.org/transit-time/#40.75805,-73.98571,12,...
I'd be bullish on Sunnyside / western Woodside.
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.
Look at what has happened in Williamsburg and the L-train. As more and more warehouses have been converted into apartments and new condo's have gone up, the L-train has become awful for large parts of the day. And the train runs as often as possible during those times.
I'm not saying you can't do these things but I do think other things need to be considered.
I imagine that depends on the timescale you're looking at. A similar thing has happened in London over the past 30 years - the upshot is that schools and hospitals are now finding it practically impossible to recruit teachers and nurses in the city because they can't afford to live within a commutable distance. That's quite bad.
Then they will pay more, all the extra money will go to rent, and things will stabilize again.
Do Hospitals located in expensive places receive extra reimbursement from the government?
Manhattan is already far too expensive; I have a friend who commutes daily to Manhattan from Philadelphia because rents are 25% of what they are in Manhattan. It's only 90 minutes to Penn Station on the train, which is about the same time it would take from the affordable parts of Brooklyn or Queens.
That being said, you are also right about living directly above Penn Station. I can get really far in 20 - 30 minutes in philadelphia, but almost nowhere in NYC because of human congestion.
not that 1.5 - 2 hour commutes leave much for a life. I did that for 2 years and while I got a lot of reading done, I didnt have any time at home. You get home 7-7:30 and make dinner. maybe you are finished eating and chores by 9 and you go to sleep between 10 and 11 (you aren't staying up very late because you are leaving early in the morning hours too).
You can drive from Philly to Trenton or a similar station (takes ~30 minutes from NE Philly), then spend ~1 hr on NJ Transit. This makes the trip cost $15.50+gas, or $440 monthly.
also the hour and a half is optimistic, parking walking overhead waiting for the train would probably again push time up
I would very happily pay more for services that get more expensive because workers demand higher wages for their longer commutes (etc.), in exchange for the drop in market-rate rent (which I pay) that would come from throwing out rent regulation.
Most of the people that currently live in rent controlled or price stabilized apartments got them decades ago. The waiting list for any units that become available is extremely long.
That effectively means most rent control is helping the elderly. I present that without comment or judgement, it's just a fact. The elderly are generally not the people manning the counter at your local bodega. They are not your local construction workers, doormen, or bartenders.
All of those people, the ones that are the backbone of the service economy within Manhattan, already live in the outer boroughs.
So the question effectively becomes does it make sense to subsidize the rent of retired people in Manhattan? On one side you can be the assholes kicking elderly people out of the homes and neighborhoods they have lived in for 30 years. On the other side you can be the assholes forcing the working class to commute 90 minutes a day. Take your pick of the bad options.
Another interesting fact from that paper: the median person in a rent-stabilized apartment in core Manhattan has a higher income than the median person in a non-stabilized apartment in most of the rest of NYC.
There are more rent stabilized apartments in NYC than market rate apartments. Over 20% of all rent stablized apartments in Manhattan go to people over 65. Less than 5% of people in market rate apartments are over 65 years old.Over 65% of people in a rent stabilized apartment in Manhattan are white.
I think people have a picture of rent stabilized apartments as the place where your local bodega employee lives. The fact is the neighborhood rent stabilized apartments are where retired people live.
[1] http://furmancenter.org/files/FurmanCenter_FactBrief_RentSta....
My lease in Manhattan is for about 60% higher than what we are paying. We are then given a "preferential rent" rider which allows us to pay what we pay... This I assume is so the landlord keeps the building at his rent stabilization maximum which are about $3k higher than market rate. This is probably happening everywhere (at least in my last 3 apis) and it really amounts to no stabilization at all...
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.
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?
All other things being equal, giving everybody a subsidy just bumps the rent by the same amount.
The biggest problem with the subsidy idea is deciding who gets it - and it can't be anywhere near everybody.
People would get VERY sticky against moving away from a subsidised area, even if it might actually suit them better, and they could afford it - leading to sub-par allocation of resources.
Also, there's the question of how/when/if to pull back the subsidy. If you do it according to income, you create a very high marginal tax rate at the beginning of the pay scale - that's toxic to work and traps people in poverty. If you do it when the children are grown, you're suddenly kicking people of of family houses they've lived in for decades (see "Bedroom tax" in the UK). If you don't, then what started as a family neighbourhood becomes a neighbourhood of middle-agers living in large apartments - while their kids struggle to find a decent place to live.
Incentives are HARD.
- 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.
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.
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.
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.
Why Soni Fink, 91, is entitled to live in a two-bedroom home?
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.
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.