Five Myths About Rent Controls
By Steven Wishnia
Five claims about what is wrong with rent regulations dominate most discussion of the subject in the media. They are all myths -- propaganda promoted by the well-financed self-interest of the real-estate industry and the free-market fanaticism of right-wing ideologues. Some of these myths are attempts to convince tenants that they would be better off without rent controls. Others are half-truths intended to hide that the city's biggest landlords would get a monster windfall if there were no limits on what they could charge.
Myth #1. Rent regulations cause abandonment. In real life, most abandoned buildings are in the city's poorest neighborhoods, where landlords would have trouble collecting significant rent increases even if they could charge them. Detroit and St. Louis, which never had rent controls, have suffered massive abandonment; Berkeley and Santa Monica, California, which limit rents, haven't.
Myth #2. Rent regulations "skew rents" and give the rich bargain apartments. Real-estate shills portray the typical rent-regulated tenant as a rich widow paying $386 a month for an eight-room apartment on the Upper East Side, while a single mother in East Harlem is paying $785 to share a small one-bedroom with two kids. "These bargain rents are not available to New Yorkers looking to move," writes Joseph Strasburg of the Rent Stabilization Association, city landlords' leading lobbyist.
In real life, according to figures from the 1993 federal Housing and Vacancy Survey, the median income for rent-stabilized tenants in the city is $19,000 a year. Of the 212,000 rent-stabilized apartments that still rent for less than $400, only about 200 are occupied by households that make over $100,000 a year. In contrast, half the tenants paying less than $400 have incomes below $10,000 a year, and 80 percent make under $25,000. One-third of these people -- about 70,000 households -- pay more than half their income in rent.
Rent regulations do favor tenants who have been in the same apartment for a long time, because their landlords have had fewer opportunities to exploit the loopholes in the system (vacancy decontrol, renovation, illegal vacancy increases, etc.) But the last thing deregulation would do is deliver bargain rents to the "deserving poor." It would simply allow landlords to raise the rents on apartments that haven't slipped through the loopholes.
Myth #3. If rents were deregulated, free-market competition would lower them. This is what Paul Atanasio, a Giuliani appointee to the city Rent Guidelines Board, claimed in 1995. He hung up when I asked him how this would actually happen.
Would deregulation spark a building boom and thus increase the supply of affordable housing? It wouldn't reduce construction costs, and it would most likely increase the cost of land by encouraging speculation. And if eliminating rent controls might reduce rents, why are landlords pushing so hard for it?
Myth #4. Deregulation would help small landlords most. Small landlords show up at every RGB hearing bearing "We Need $500 a Month MINIMUM" picket signs. Yet 12 percent of the city's landlords own 70 percent of the rent-regulated apartments -- a group of less than 3,000 owners, with an average of 238 apartments each. Deregulation wouldn't distinguish between Donald Trump and an immigrant widow with one six-unit building in the Bronx. Many small landlords say that getting breaks on their taxes and water bills would help them more than being allowed to charge higher rents.
Myth #5. Vacancy decontrol (or similar measures) wouldn't hurt tenants, because it wouldn't affect people who stay in their apartments. And a law mandating the slaughter of all children born after Oct. 1, 1997 wouldn't affect kids already conceived.
Aside from being a titanic incentive for landlords to harass tenants, massive vacancy increases would bar all but the richest tenants from moving. What about couples who break up or couples who get together? What about people who have children or whose children move out?
These five claims don't stand up to even the slightest scrutiny, but are still widespread. Meanwhile, one of the most important protections the rent laws give tenants is usually overlooked: The right to renew your lease automatically, with evictions only allowed for specific reasons (such as not paying rent, creating a nuisance, or if the landlord wants to move his relatives into your apartment). Without this protection, tenants would be at the mercy of the market every time their lease ran out -- and we all know how little mercy that is.
Portions of this article originally appeared in The Shadow.