

New York's Rent Regulation Fight - giles
http://www.bbc.com/news/business-32891544

======
exelius
This is the problem with housing subsidies: they very often go to those who
don't need them. In New York, your choice of apartment is primarily based on
location -- anything that's not in the >$1 million range is pretty similar. So
if you're looking at two apartments near your work and the rent stabilized one
is $1200/mo and the other is $3000/mo, you try to get the $1200/mo one even if
you could afford the $3000/mo one. I guarantee you it's not $1800/mo nicer.

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.

~~~
colinbartlett
Not necessarily disagreeing with you. But the practical meaning of that is
that, in the case of New York, this means the entire island of Manhattan
becomes a playground for the wealthy and the people who keep that playground
humming are relegated to the outer boroughs.

~~~
nine_k
Entire Manhattan, including 200th streets?

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.)

~~~
exelius
Eventually, yeah. There is a finite supply of land on Manhattan, and demand
from foreign buyers is growing. Downtown and midtown are already saturated, so
the billion dollar condo buildings of 2040 will need to be built somewhere.

~~~
runako
I hear this often, but it doesn't jive with my impressions of Manhattan (lived
there years ago, visit periodically). In particular, significant parts of the
island top out at walk-up heights (5-6 stories). The economics of rent in
Manhattan would change dramatically if the island were rebuilt using modern
technologies (chiefly: elevators and the taller buildings they enable).

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.

~~~
nemo44x
You can't just tear down some 4-story building and put up sky scrappers. There
is a maximum density capacity that a lot of Manhattan already exceeds. The
trains, sewers and electrical requirements need to be thought of too.
Especially the trains which are already way over capacity.

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.

------
yason
Subsidies and regulation doesn't work.

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.

------
bsimpson
Wow - a regulated rental market that makes San Francisco look comparatively
sane.

~~~
iolothebard
Lmao, not really. They're both fucked up. At least in NYC you can build up, in
SF you've only got SoMa you can build in.

~~~
bsimpson
I mean less about the building and more about the rental regulation. In SF,
you are either regulated or you aren't, and the rules are pretty simple (if
your unit is older than 1996 and is not the only unit your landlord owns, you
have rent control).

------
nextw33k
The correct solution to this problem is to tax the rental income and hand that
money to low income households. It would create a balance of correct market
prices and allowing low income people to stay.

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.

------
xname
"For renters like Soni Fink, 91, the rules have meant she can keep living in
the apartment she moved into in 1961. A move to market rate would easily eat
up her retirement income, she tells the BBC outside her two-bedroom home
towards the south of Manhattan."

Why Soni Fink, 91, is entitled to live in a two-bedroom home?

~~~
nextw33k
You need to learn about old age and how it effects the brain.

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.

