Thursday, March 1, 2012

Myths vs. Facts about Rent Regulation


MYTHS & FACTS ABOUT RENT REGULATION in NYC
MYTHS  PROMOTED BY LANDLORDS


 
FACTS



If rents were de-regulated, free-market competition would lower them.

Landlords raise the rents of de-regulated apartments, higher & higher. Manhattan rents rose 9.5 percent last quarter to an average $3,121” (Feb. 28, 2012, Bloomberg News). 

And only apartments in buildings with 6 units or more, built before 1974 are required to be regulated.  In the 38 years since, landlords have built thousands of luxury units  - and sometimes voluntarily included some temporarily regulated units in order to get tax breaks.   Unless they get huge government subsidies, developers are not building affordable apartments, and they don’t want vacant condo units used for affordable housing.



Poor landlords are suffering – unable to meet their expenses.

The NYC Rent Guidelines Board meets annually to consider owners’ costs (including the cost of living, fuel, staff wages, taxes and the "economic condition of the residential real-estate industry, the housing supply, and vacancy rates") to ensure that leases renewed the following year will cover those costs and a profit. 



"The RSL [Rent Stabilization Law]  fosters stability in the rental-housing market by controlling the pace of rent increases in regulated apartments, while ensuring that landlords are able to earn a reasonable rate of return." March 2012 Brief from the NYS Attorney General to the U.S. Supreme Court, opposing landlord James Harmon's petition for the Court to take his case and rule NYS rent regulation unconstitutional.  

Most real estate is owned by only a few big landlords:“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. "  Met Council on Housing. See also Quora.com: As of 2011: “Most of the real estate in Manhattan is owned by a handful (perhaps 30-40) of long-standing real estate ‘families.’"

Rich tenants are luxuriating in cheap apartments.

Rent-regulated apartments are occupied by people whose median income is $38,000 a year.    The media report the few rich people in regulated apartments because they are rare --  the “man bites dog” story – and because the media take advertising from big real estate.  


Rent regulation should only be a subsidy for poor people

While most regulated tenants are poor or middle-income, regulation is not a subsidy. It levels the playing field between landlords and tenants.

Rent regulation "aims to ensure a fair and stable rental market by preventing the worst forms of rent profiteering that such a tight housing market would allow. . . . By regulating evictions and the pace of rent
increases, the RSL protects tenants, particularly the
elderly and disabled, from dislocation, and limits the
disruption to neighborhoods and communities that would result from dramatic changes in rental rates and rapid turnover of tenants year to year." March 2012 Brief from the NYS Attorney General opposing landlord James Harmon's petition for the U.S. Supreme Court to take his case and rule NYS rent regulation unconstitutional.  

“Rent and eviction regulation is a system of protections designed to preserve economic fairness, and to prevent disruption and dislocation, in a market where chronic shortages allow landlords to exert excessive bargaining power. Because this market failure affects all tenants, rent regulation should not be targeted by income.
Tim Collins (former Executive Director of the Rent Guidelines Board), Rent Regulation – Buying Into the Rhetoric.

“The purpose of rent control and rent stabilization is to mitigate the potentially disruptive and displacing effects of a chronic, severe housing shortage in New York City and its surrounding suburbs. . .
Although rent regulation is a form of consumer protection that protects tenants at all levels of income, rent control and rent stabilization are especially important to the tenants who are most vulnerable to the housing shortage – those with low and middle incomes.”
Sheldon Silver, Speaker, NYS Assembly, and the Community Service Society, in The New Housing Emergency:


Rent regulations favor tenants already there – leaving the less lucky to pay more.

Met Council  on Housing: “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 those apartments – as they routinely do.”

More regulated apartments  - without vacancy deregulation - would mean more affordable apartments for the next batch of tenants.


Rent regulation keeps development down

Mayor Bloomberg reports (2012) that development has soared. Most of that development is skewed toward “luxury” renters  - even as some developers choose to include a few rent-regulated units in order to benefit from tax breaks. (Otherwise, rent regulation only applies to apartments built before 1974.)


De-regulating apartments would not hurt those who live there already

The fact that landlords can take vacant apartments out of regulation and charge whatever the market will bear is a huge incentive for them to try to evict tenants. 

Because vacancy deregulation reduces the already dwindling stock of affordable housing, there is no place for our children – and newcomers to New York to live affordably.  See Met Council on Housing. The newly-built developments are filling up with groups of roommates – the only way for the middle-class and poor to pay the rent.