From the article, the primary reason landlords are holding inventory back is because some of the predatory practices they were incentivized to use to deregulate their apartments got revoked and they are hoping court cases work in their favor.
It’s also important to remember that rent stabilization is not rent control - landlords are free to raise the rent by an amount set annually by a board of landlord and tenant representatives. As a practical matter, that means that the rent increases track closely to inflation and consumer prices.
What it protects isn’t rising rent, it protects tenants from landlords jacking up the rent to kick them out, and then lowering it back again to get tenants of a different age or ethnicity, or saddling tenants with the risk that if they advocate for their rights as tenants that their lease may not be renewed next year.
It’s easy to say “price controls don’t work” while ignoring that the landlord / tenant relationship is so skewed from a power dynamic that there needs to be some sort of protection from abuse.
It is absolutely a rent control and price control policy. You are literally preventing rents from rising.
Landlords abusing tenants is totally irrelevant because rent control doesn't address that problem at all, it just shifts that abuse to new tenants for the benefit of long term residents, since the entire policy is a wealth transfer to people who never move from where they live.
This is inaccurate. Rent control as defined in NYC is a wealth transfer mechanism. Rent stabilization is a mechanism for protecting tenants.
Without rent stabilization, landlords can and do raise rents arbitrarily to drive our particular renters and then offer better rents to preferred renters. Or equally likely drive out a family to subdivide an apartment into multiple rooms to rent.
If you pass laws that say, for example, you have to offer a renewal to an existing tenant, that doesn’t help, they’ll just play the same game with the rent. Mandate that the same rent has to be offered to new and existing? Well now we are in the realm of price controls.
The power dynamic is so massive between landlords and tenants, especially for people who aren’t fortunate enough to have disposable income, that there needs to be some sort of protection.
> ...landlords can and do raise rents arbitrarily to drive our particular renters and then offer better rents to preferred renters...
This is positing that landlords engage in complicated schemes to lower the rent they are paid. I speak with supreme confidence, the median landlord is not going to do that unless these 'preferred renters' are measurably better than the people getting kicked out, in ways that make objective sense. Frankly, if a landlord is engaging in this practice then they probably aren't a 'landlord', they've just taken the property out of the rental market so their kids can live there or something.
> ...drive out a family to subdivide an apartment into multiple rooms to rent.
A landlord is much more likely to do that, but the complaint here is that there are people willing to value the m2 of the apartment higher than the family. There is no way to block that from happening without price controls and, eventually, shortages emerging.
The landlords in the article are greedy, they don't want their apartments to be empty. They want to be renting them out for whatever the most willing renter is going to give them. But they also aren't stupid, and they aren't going to rent them out anticipating that they will make losses.
> there are people willing to value the m2 of the apartment higher than the family
That’s all well and good but that isn’t the issue. Part of the contract for renting an apartment in NYC is that you must offer renewals. A lease is a contract that, unless there’s an eviction, only the tenant can end. And allowing landlords to violate the spirit of the law by saying “we didn’t kick them out we only raised the rent to $10k/mo” defeats the whole purpose of it which is to not rip housing out from underneath people.
Yeah. The law wants people to be able to live in an apartment without paying to build it, where someone else handles the maintenance and the rent doesn't go up that much. Great deal for the tenant, if they can find it.
But it is going to be mighty difficult to take people who take up the landlord side of that deal. And things like, say, 60k rent controlled apartments sitting empty seems like a reasonable outcome - y'know, might have to be an idiot to rent out an apartment for a deal that bad. It sounds ruinous. Sounds like a bad law, really.
It sounds like you think landlords got tricked into this system - rent stabilization (again, that is different than rent control, as you named it) has been around for more than 50 years. Very few of these landlords owned these buildings before they became rent stabilized, so they knew what they were getting themselves into before they bought them.
I'll also point out that despite the fact that rent stabilization isn't required for new rental construction, there are a few areas in nyc where the city offered incentives in the form of property tax abatements in exchange for the landlords agreeing to rent stabilization - what do you think happened? Almost all of the new construction in those areas agreed to being rent stabilized. If it was so bad, so ruinous, why would they agree to that?
The story here isn't "rent stabilization is bad", it's "landlords are having a hissy fit that they can't exploit their tenants as much as before, so they're keeping apartments off the market on the off chance they win a court case"
Why do people work lousy jobs? It just has to be a smidgen better than doing nothing for a landlord to rent out there apartment. And the microeconomic situation of taxes and who-knows-what can cause strange things to happen. But if pushed far enough they'd start losing money and stop renting out apartments. Or you'd get some new rental stock but less than a freer market would provide.
And no-one is getting tricked here, it seems pretty obvious what is going on.
> The story here isn't "rent stabilization is bad", it's "landlords are having a hissy fit that they can't exploit their tenants as much as before, so they're keeping apartments off the market on the off chance they win a court case"
What do you think the symptoms would be if rent stabilisation was bad?
> What do you think the symptoms would be if rent stabilisation was bad?
Bad for whom? Tenants? Landlords?
If landlords of rent stabilized buildings were declaring bankruptcy and the city had to take over and operate the buildings, that would be a clear sign that the economics of rent stabilization made it impossible for the free market to work.
Except that hasn’t happened, in fact, being a landlord is still so lucrative that they can afford to keep units off the market in the event of the small chance that the laws get changed in the next year.
I can guarantee you that once the court case is settled, those units will gradually come back on the market and everything will go back to the way it was.
I am - I'm a shareholder in blackstone, which among other things is the owner of Stuyvesant town, a 10k+ apartment complex in NYC that is entirely rent stabilized. Presumably the people at blackstone are savvy investors who wouldn't buy an asset like that if they couldn't make money off of it.
Wow, so the rate at which the price of RENT is increasing is being subject to CONTROLS?
In any case, the exact same economic phenomena has been observed regardless of if you fix rent increases to inflation or never allow for rents to increase, because the two approaches are just incredibly similar variants of price controls.
> What it protects isn’t rising rent, it protects tenants from landlords jacking up the rent to kick them out
The landlord is the property owner. Yes, they can kick renters out of their house after the lease, a contractual agreement to temporarily live in it, has expired. As long as the renter signed the contract, understood the terms, and wasn’t under duress that should be the end of it.
When someone otherwise takes something that doesn’t belong to them (In this case, someone’s house) that’s called stealing. When the government enables people to steal you get a bunch of weird market dynamics that reduce the supply of affordable housing.
Problem is that the contract has additional terms, and the relevant one is you must offer lease renewal in NYC. The contract is only temporary from the perspective of the tenant, it’s actually indefinite from the landlord’s view. And both the tenant and landlord knew the law when offering the lease and signing it so that’s the end of it.
You cannot end run around the law by trying to be “clever” and technically offering a lease renewal of 10 billion dollars a month. The world doesn’t work by programmer logic.
It's not called stealing. When you purchased an apartment in NYC you purchased it with the understanding that it was subject to rules and regulations of the city, which could change.
Some rent control systems have a safeguard against jacking the rent, then lowering it: The prior tenant gets right of first refusal when it comes back on the market within N years.
I can imagine other creative ways to achieve the goal. However, I'm having difficulty wraping my head around your scenario.
The landlord decides they want an 18 year old Liliputian, but accidentally rents it to an 85 year old Belfuscian instead? Later, they realize their error, and temporarily jack the price up to kick out the Belfuscian they were totally fine renting it to earlier?
Isn't it more likely that, instead of suddenly becoming racist/ageist, the landlord is trying to get rid of them for some reason that became apparent after they signed the lease (late payments, noise, illegal activity, etc...)?
Appreciate the engagement with the idea, but you’re missing the mechanics of all this.
There are a few scenarios:
- landlord rents to belfuscian because that’s the market. Then a Lilliputian makes a popular tv show that depicts the neighborhood as cool and affordable. Landlord starts getting interest, so they force out the belfuscian so they can get the Lilliputians.
- landlord just wants to run a building and make a living. They get an offer too good to pass up and sell the building. New owner plans to make the money back by forcing our existing tenants and jacking the rent.
- the tenant believes that they have a right to an apartment without roaches and mice. The landlord feels like that’s not reasonable because it’s NYC, and there are roaches and mice. The landlord decides to get rid of these tenants and hope to raise the rent.
And yes, sure, there are bad tenants who landlords want to kick out. But let’s talk about who is more likely to end up in a bad situation- the low income tenant trying to get by, or the landlord who owns a building they want to maximize revenue from?
That makes sense. I forgot that tenants typically come with the building when they change hands in NYC.
Around here, most bigger buildings are corporate-owned (equally good or terrible to all), or small enough where loopholes allow everyone to be evicted at sale.
With stablization, the rent can be set to market rate when you rent to a tenant. Afterwards, the rent increases are controlled. The increases are based on inflation and consumer pricing.
Rent control is where both the initial rent price, and the increases are controlled.
We're in a technical forum, so it's reasonable to actually differentiate terms we're discussing.
Tell me you know nothing about NYC real estate without telling me you know nothing about NYC real estate.
“Rent control” in NYC is a specific term that applies to a separate set of regulations and laws that govern a particular set of rental properties. Tenants who live in these properties are effectively immune from rent increases for as long as they or their families live in the apartment.
Of course rent stabilization is a form of rent control, but it is not the same as Rent Control in NYC. In online discussions about NYC rental law, the two things often get conflated, as they have at several points in this thread.
> rent stabilization is not rent control - landlords are free to raise the rent by an amount set annually by a board of landlord and tenant representatives
It’s not rent control, but someone else is, ah, controlling how much I can charge for the building I paid for.
It’s also important to remember that rent stabilization is not rent control - landlords are free to raise the rent by an amount set annually by a board of landlord and tenant representatives. As a practical matter, that means that the rent increases track closely to inflation and consumer prices.
What it protects isn’t rising rent, it protects tenants from landlords jacking up the rent to kick them out, and then lowering it back again to get tenants of a different age or ethnicity, or saddling tenants with the risk that if they advocate for their rights as tenants that their lease may not be renewed next year.
It’s easy to say “price controls don’t work” while ignoring that the landlord / tenant relationship is so skewed from a power dynamic that there needs to be some sort of protection from abuse.