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Re: Does rent control really help tenants?

Posted by Nick on April 20, 2000 at 18:57:43:

In Reply to: Re: Does rent control really help tenants? posted by brenda on April 10, 2000 at 17:59:39:

: This is true. I've read all the libertarian stuff about rent controls and none of it takes into account that there is no free market for rental housing in NYC, no give and take. Such objections to rent control usually assume a free market, not a monopoly. Where I live, a rent stabilized situation, every single long-time tenant would be out on the street, replaced by college kids with rich parents, if it werent for rent regs.
: There should be rent control for all. That was the situation in NYC through the early 1970s. Landlord groups got the current two-tiered system and the result is the current inequities.

Don't be so sure about rent control (and I'm talking about the current laws, not what they were before the 1997 Act). You assume that the only effect of rent control is to ensure affordable housing. But rent control has other effects, as well. First, it discourages residential construction. Why put up a new apartment building if the law will restrict your profits? Economics 101 teaches us that suppressing the price of any commodity reduces its supply. Denying that is economic fantasy. The advocates of rent control deny this, but they're just dreaming. They're just like the Reagan-era supply-side economics advocates who swore that we could cut taxes without reducing government spending, and all the while keep the budget deficit under control. Economic fantasy didn't prevent a $3 trillion increase in the federal budget deficit, and economic fantasy won't give NYC enough of a supply of housing to meet demands. And saying that anyone who recognizes this is a landlord stooge makes just as much sense as the Reaganite voodoo economists saying that those who argued for fiscal sanity were liberal commie pinko welfare cheats.

Second, rent control is just like California's Proposition 13: cut taxes for people here now, and raise them for newcomers. Newcomers to California subsidize the property taxes of long-term residents. Rent control (as it exists today) benefits only those here before the 1997 Act. Landlords raise rents for newcomers, who thus subsidize those here before. Just try to find a rent-stabilized apartment in Manhattan! But old-timers sit there in their $500/month two bedrooms complaining and whining that the landlord isn't kissing their fannies, while their new neighbors struggle to pay $3500 for the same apartment. If you believe that the landlord doesn't set the rent on market-rate apartments to reflect the deal the old-timer is getting, you're just the kind of person who needs to open a brokerage account at JT Marlin & Co. (fine, fine firm out on the Island). And don't tell me that only rich kids pay market rents. If ability to pay justifies dismissing their complaints, it sure justifies dismissing the complaints of those have rent controlled apartments even though they can afford to pay market rents. If you want a need-based rent control system, just say so.

Third, rent control gives "golden handcuffs" to tenants. We all know people with great deals on rent controlled apartments who can't move to a bigger apartment because they can't afford the market rents. Hey, just don't have kids.

Sure, rent control (in theory and in practice) has substantial benefits. But as practiced in NYC, don't dismiss its downsides just because you have a rent controlled apartment. Maybe it can be fixed. For example, getting rid of luxury decontrol would be a great start. Maybe we could get this by Mr Bruno and his buddies in Albany by offering to repeal succession rights.

One last point: dismissing complaints about rent control by those who have to pay through the nose for market-rate apartments plays right into the hands of the landlords. It just tells those who don't have rent control that those with rent-controlled apartments don't care about them and are only in it for themselves, and that market-rate renters correspondingly shouldn't care about the other side. It's the old strategy of divide and conquer.

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