Page 1 of 4 1234 LastLast
Results 1 to 15 of 47

Thread: Rent Control Questions

  1. #1

    Default Rent Control Questions

    I'm interested in pursuing a career studying the economics of rent control. Can any savy New Yorkers on this forum clue me in to the history of rent control in NYC, the agency responsible for monitoring and administrating it, or any other related topics you deem worthy. Any help would be greatly appreciated. Thank you very much.

  2. #2

  3. #3
    Forum Veteran
    Join Date
    Feb 2003
    Location
    New York City
    Posts
    1,752

    Default

    Interesting read...

    December 5, 2005 Edition

    N.Y. Rent Laws Enabling Out-of-Town Luxury

    BY DAVID LOMBINO - Staff Reporter of the Sun
    December 5, 2005
    URL: http://www.nysun.com/article/23919

    Thousands of New Yorkers, taking advantage of rent-stabilization laws designed to keep middle-class New Yorkers in the city, are using the money they are saving on rent to buy weekend or vacation homes outside New York in places such as Florida, Connecticut, and even Switzerland.

    A New York Sun investigation disclosed these examples of New Yorkers living perfectly legally in rent-stabilized apartments while owning weekend or vacation homes:

    * A doctor who specializes in weight loss, Howard Shapiro, lives in a two-bedroom rent-stabilized apartment overlooking Central Park and owns a house in West Palm Beach, Fla., that was assessed at nearly $1 million, according to Florida tax records.

    * William and Mada Hapworth, both doctors, have a three-bedroom rent-stabilized apartment on Central Park South with park views. They also own a Norwalk, Conn., home on Long Island Sound that is assessed at more than $1.6 million.

    * Ruth Golbin, a retiree, lives in a rent-stabilized two-bedroom apartment and also owns a Key Biscayne, Fla., condominium assessed at more than $520,000. A Dade County employee in the Department of Building and Zoning, Asela Martell-Molina, said the condominium, located in the Towers of Key Biscayne, would sell for about $1 million.

    * Andreas Scott-Hansen, retired from the shipping business, and his wife, Beatrice, have lived in the same rent-stabilized Fifth Avenue apartment, overlooking Central Park, for 37 years. They have owned two houses in Ridgefield, Conn., most recently a 2,600-square-foot home assessed at $825,000.

    * One man who lives in a rent-stabilized apartment with views of Central Park said he flies to Switzerland once a month to stay in his $1 million, three-bedroom house outside Geneva.

    Rent regulation in New York began in 1947, in part to relieve a historic housing shortage and to maintain diversity in New York City's neighborhoods. There are now 867,697 rent-stabilized apartments and 59,324 rent controlled apartments in the five boroughs, roughly half the city's total rental housing stock, according to the state Department of Housing and Community Renewal. Rent increases for those apartments are set annually by a government board. Living in a rent-controlled or rent-stabilized apartment and owning a second home is legal, and there is no database of people who fall into that category.

    It is illegal for a tenant to occupy a rent-stabilized or -controlled apartment if it is not their primary residence. Because the city and state do not monitor these occurrences, a cottage industry of attorneys, brokers, private investigators, and buyout specialists has grown to fill the niche. Most of the evidence of rent-regulated tenants who own second homes is unearthed in the recurring effort of owners to oust tenants who live elsewhere and sublet their rent-regulated apartments or rent them out as short-term hotel rooms.

    A real estate attorney for Greenberg Traurig, Steven Kirkpatrick, said, "Somebody can own a second home, a $2 [million] or $3 million dollar home, use it two or three days a week, and technically it is not their primary residence."

    John Gilbert, a top executive at Rudin Management, a real estate company with a portfolio that includes rent-regulated apartments, said there are "thousands of examples of people who live in stabilized housing and have second homes."

    "The fact that you are able to pay below-market rents, you are obviously much more able, with greater disposable income, to purchase second homes, a vacation home, a ski house, or a house at the beach," said Mr. Gilbert, who is the former president of the Rent Stabilization Association, a landlords group that opposes rent-control laws.

    Those few tenants who were willing to discuss their deals defended their practices.

    Ms. Scott-Hansen acknowledged to the Sun that the below-market rent on her rent-stabilized apartment seems "like a deal," but she added, "It's fair. I'm not going to move out because I have another house. I'm sure you wouldn't either."

    An editor, Kenneth Magill, and his spouse, Ludmila, who works in advertising, reside during the week in a rent stabilized two-bedroom apartment in northern Manhattan, and on the weekends drive up to their converted three bedroom house in upstate New York. The couple decided to purchase their upstate home and stay in their rent-stabilized apartment rather than buy another Manhattan apartment.

    They bought the house for $115,000 in 2003, and have since spent an additional $50,000 on landscaping, an added bedroom, and a hot tub. Mr. Magill is a former employee of the Sun. Now they pay about $1,000 a month in rent for their city apartment and about $900 a month on the mortgage for their upstate home.

    "For the cost of keeping the elevators running in a Midtown co-op, I have a house upstate," Mr. Magill said. "I'm personally opposed to rent-control and -stabilization, but I didn't make the rules, and I have to do what's best for me and my family."

    The man who shuttles once a month between Manhattan and his house in Switzerland would speak only on condition of anonymity. He said his New York landlord has tried to oust him but has failed because no laws are being broken. "That's the law in New York. If the law changes I will have to pay more. In the meantime, I'm going to take advantage of it," he said, asking, "Why should I feel guilty?"

    New York's rent regulation laws are widely known as among the most sweeping in the country, and they have been a frequent lightning rod for controversy.

    In 1997, the state Senate majority leader, Joseph Bruno, attempted to end the city's rent regulations. He received death threats, encountered busloads of protesters, and had an unexplained fire in one of his district offices.

    Under high-rent vacancy decontrol, established in 1994, a landlord is permitted to charge market rate for a regulated apartment if its rent rises above $2,000 and it becomes vacant. Many argue the city's entire stock of rent-stabilized and -controlled apartments will eventually be deregulated through this provision, although it may take decades to do so.

    The 1994 law also established luxury decontrol, which prompts deregulation if a stabilized apartment's rent is more than $2,000 and its occupants' income is $250,000 for at least two years in row. In 1997, as the result of a deal brokered by Mr. Bruno, that income threshold was lowered to $175,000.

    Still, under a loophole, a tenant who consistently earns more than $175,000 a year can legally live in a rent-stabilized apartment if its rent is less than $2,000 a month.

    The associate director of New York State Tenants and Neighbors, a tenant advocacy group, Michael McKee, said that it was "very rare" for a wealthy family to occupy a rent-regulated apartment. "The income of a tenant is and should be irrelevant," Mr. McKee said. "Many people start out in a rent-regulated apartment when they are making less money, and they make more over time. Some people think they should be forced to move. I disagree with that," he said.

    "The rent regulation system is constantly under attack. If you want to talk about people who have money, talk about landlords - these are some of the richest people on the planet, and they are certainly not losing money on rent stabilized apartments," Mr. McKee said.

    Mr. Bruno told the Sun that further reform of rent stabilization and rent control is unlikely until 2011, when the current law expires. "When we did the luxury decontrol, there were others who were bucking, kicking, and screaming all the way," Mr. Bruno said.

    Nevertheless, he said that his legislative effort led to the deregulation of at least 20,000 apartments that were occupied by wealthy residents.

    A spokesman for the state Department of Housing and Community Renewal said 1,900 certified apartments have been deregulated since 1997 because of luxury decontrol.

    Mr. McKee, the tenant advocate, said that many of those units were deregulated incorrectly, because tenants failed to submit paperwork, or to the detriment of poor tenants that needed the below-market rents.

    Landlords who are watching the real estate market and who now must bear higher fuel and insurance costs say they are tired of subsidizing their tenants' vacation homes.

    A veteran New York building owner and attorney, Maria Sachs, said that some owners of buildings with rent-stabilized apartments "bear this burden of supporting someone who is better off than they are."

    "It is an irrational system of distribution on the benefit side, in terms of who gets the apartments, and on the other side - the imposition of the costs on the landlord," Ms. Sachs said. "The person who can afford the second house isn't really in need."

    An agent who is paid by landlords to broker buyouts with tenants in rent-regulated apartments, Michael Grabow, said he receives frequent complaints from owners about tenants with second homes. "I tell them, you may not like this law, but it's the law," Mr. Grabow said. "Tenants who pay $450 a month are accumulating a lot of money. They want a place in the Adirondacks, and there is not a thing you can do about it. They get angry, but I tell them, 'It's not the tenants' fault. Be angry at the system.'"

    In October, Mayor Bloomberg outlined his administration's expanded second-term housing plan to build or preserve 165,000 units for low-and moderate-income New Yorkers by 2013. The cost of the 10-year plan, from 2003 to 2013, is about $7.5 billion. Both candidates in the recent mayoral election spoke of the need for more "affordable housing" in the city and vowed to create new units to be set aside at below-market prices.

    Mr. Gilbert, of Rudin Management, said that the private sector would bear more of the cost of building new housing if rent regulation is abolished or phased out at a quicker pace.

    "If there is an upside for investors and developers, they will build. If you cap their profits with rent stabilization, they won't build," he said. "There will always be a need for the government to meet the needs of the housing segment that the private sector can't meet. But you would have less of a need if you had more of a free market."

  4. #4

    Default

    Not surprising. There's nothing fair about rent control/stabilization. The good news is that only half the city rentals are now under such restrictions, more drop out all the time, and tons of market rate stuff is being built all the time, plus a lot of stuff that's under stabilization will naturally fall out because the buildings were built under 12-year stabilization deals.

    So it gradually becomes more and more politically feasible to demolish the whole rotten system.

    Quote Originally Posted by TonyO
    Interesting read...

    December 5, 2005 Edition

    N.Y. Rent Laws Enabling Out-of-Town Luxury

    BY DAVID LOMBINO - Staff Reporter of the Sun
    December 5, 2005
    URL: http://www.nysun.com/article/23919

  5. #5
    Disgruntled Optimist lofter1's Avatar
    Join Date
    Jun 2005
    Location
    NYC - Downtown
    Posts
    32,654

    Default

    Wow - Almost a dozen examples out of almost a million rent stabilized / controlled apartments (hardly any of which lists the amount of rent paid) !!

    New [stupid] Rule:
    Make all laws based upon less than .00002 % of those involved (even using the "thousands" cited, it still comes to ~ 0.5 %).
    Better Rule:
    Go after those who are BREAKNG the law, rather than using time / energy / resources to punish those who abide by the law.

  6. #6
    Senior Member
    Join Date
    Oct 2005
    Location
    New York City
    Posts
    796

    Default

    Rent Control is one of the most ridiculous systems out there. It's a socialist framework in the middle of the financial and market capital of the world. The price for the apartment should be based on supply and demand. And this situation when so many people live in upscale and luxury apartments at the fraction of the cost only because they happened to be in the right place at the right time many years ago is unfair and wrong on all counts.

  7. #7
    Disgruntled Optimist lofter1's Avatar
    Join Date
    Jun 2005
    Location
    NYC - Downtown
    Posts
    32,654

    Default

    If the supply for all these "market rate" rental apartments is so great then why are there not hundreds of thousands of market-rate rentals being built?

    Don't developers believe in supply & demand?

    Build them and they will come!!

    Rent Stabilization laws were enacted due to a "housing crisis" (per legislative language) and said laws will CEASE to exist when the vacancy rate goes over 5% -- something that has failed to happen in NYC for the past 30 + years.

  8. #8
    Crabby airline hostess - stache's Avatar
    Join Date
    Jun 2004
    Location
    Nairobi Hilton
    Posts
    8,511

    Default

    As an example, in my building, there are about 250 units, 2 are still controlled and a few are still stabelized (including me). I have lived here for about 15 years and my apt. is about $400 below market rate. This is hardly a bargain hunters dream, but it's still a good rate for me for the time being. Rent controlled people in many cases are now paying more than stabelized people because of upkeep and fuel surcharges. Further, a second home is pretty common among the middle class, especially for Europeans, and the prices quoted in the article for second homes are hardly astronomical. A million dollars doesn't go very far in densely populated areas these days.

  9. #9
    Chief Antagonist Ninjahedge's Avatar
    Join Date
    Sep 2003
    Location
    Rutherford
    Posts
    12,781

    Default

    The point is that rent control was originally established to try to help people have a home. Not to help people afford a vacation home.

    No matter how cheap or expensive that second home is, if you have enough to afford a second home, why are you in a rent controlled place?


    I think that things like stabilization are needed as a buffer for things like the real estate bubble we just experienced, but at the same time it is difficult for a lot of landlords to afford keeping their places going when they cannot charge for the expenses directly...


    Maybe a change needs to be put in the laws that have a few more outs in them. Things such as:

    1. Anyone earning more than a certan ammount, PERIOD.
    2. Anyone owning a house above a certain market value within a certain radius of the city, and within another bracket anywhere else (commuting concerns verses vacation home)
    3. Have an auditable expense statement dividing certain costs between the tenants and the landlord. The landlord DOES own the place, but it is hard to put the burden of maintainance all on the owner, especially if teh tenants do not respect the property.
    4. Have a rate of increase that does not need state legislation every 3 years, such as %% above state declared inflation rates, etc etc.

    And here is a doozy:

    5. If anyone is no longer elegible for the rent controled place, the landlord does not get to charge them what he wants, but needs to take another tenant in at that price. Until then, the current resident is still entitled to live there at the previous rent. ALSO, they get at least 30 days to relocate once another tenant is found.


    We need to make it so that people do not take advantage of the system. That goes for both sides though....

  10. #10

    Default

    But rent control is a prime cause of Nimbyism because those that get a good deal never move. They become highly invested in their neighborhood and that causes them to be very sensitive to any changes. And it's people like this who lobby for downzoning and design all the hoops that builders have to go through to build anything in this city, and that puts a tight noose on supply.

    And then many of these same people moan about the lack of affordable housing. Hey, remove a few constraints on supply, and you'll see a lot more built. It takes forever to get anything done here.

    You could remove rent control tomorrow and the biggest effect would be that people currently able to afford Manhattan might have to settle for Jersey, or Long Island or Queens. Guess what? That's not a tragedy. Some people can't afford a Mercedes either, we don't artificially constrain the price of those...

    Quote Originally Posted by lofter1
    If the supply for all these "market rate" rental apartments is so great then why are there not hundreds of thousands of market-rate rentals being built?

    Don't developers believe in supply & demand?

    Build them and they will come!!

    Rent Stabilization laws were enacted due to a "housing crisis" (per legislative language) and said laws will CEASE to exist when the vacancy rate goes over 5% -- something that has failed to happen in NYC for the past 30 + years.

  11. #11

    Default

    Whatever system you put in, people will take advantage of it. Count on it. The only system where that's not possible is market rate.

    Cambridge MA had tight rent control in the 80s. It was abolished in the mid 90s. At the time, it became apparent that a lot of the cheapest, most desirable rent controlled places were occupied by city politicians, bureaucrats etc. They were insiders, they knew how to play the system.

    Quote Originally Posted by Ninjahedge
    We need to make it so that people do not take advantage of the system. That goes for both sides though....

  12. #12
    Forum Veteran
    Join Date
    Feb 2003
    Location
    New York City
    Posts
    1,752

    Default

    Quote Originally Posted by vc10
    Whatever system you put in, people will take advantage of it. Count on it. The only system where that's not possible is market rate.

    Cambridge MA had tight rent control in the 80s. It was abolished in the mid 90s. At the time, it became apparent that a lot of the cheapest, most desirable rent controlled places were occupied by city politicians, bureaucrats etc. They were insiders, they knew how to play the system.
    What is the rental market in Cambridge like now?

  13. #13
    Disgruntled Optimist lofter1's Avatar
    Join Date
    Jun 2005
    Location
    NYC - Downtown
    Posts
    32,654

    Default

    This question still has not been answered:
    Quote Originally Posted by lofter1
    If the supply for all these "market rate" rental apartments is so great then why are there not hundreds of thousands of market-rate rentals being built?
    Removal of Rent Stabilization laws will not effect building costs for new housing in any way, shape or form, so that is a red herring.

  14. #14

    Default

    The thing the bothers me the most (and there are many) about rent control is the unfairness of the system. Who gets a rent controlled/stabilized apartment and how? It is patently unfair that the some who need it get one and some who need it don't. It is even more unfair the some who don't need it get one while some who need it don't.

    Its a perfect recipe for corruption from people sub-letting their apartment at a profit to people making under the table payments to get a unit.

    The fact of the matter is that there will never be enough housing in Manhattan for everyone who wants to live here and at a rate that everyone can afford. I fail to see a good reason why the government should subsidize some folks to live here and not others.

  15. #15

    Default

    Haven't been to Cambridge in years, but my understanding is that it gentrified like wildfire and rents skyrocketed. Lots of folks moved away.

    And that's basically how it should be. Cambridge is a very desirable place to live---rents should reflect that. The fact that some people can't afford Cambridge and have to move to other places in the Boston area is not a tragedy, it's the way things should be, and it's better for the economy overall if prices reflect underlying supply and demand.

    Quote Originally Posted by TonyO
    What is the rental market in Cambridge like now?

Page 1 of 4 1234 LastLast

Similar Threads

  1. NYC's Fight for Gun Control
    By Kris in forum New York City Guide For New Yorkers
    Replies: 53
    Last Post: January 28th, 2011, 07:10 PM
  2. Billions for Brooklyn—No Questions Asked
    By sniperwolf in forum New York Real Estate
    Replies: 9
    Last Post: February 14th, 2007, 02:03 AM
  3. The Bottom Line May Close Over Rent
    By ZippyTheChimp in forum New York City Guide For New Yorkers
    Replies: 17
    Last Post: January 26th, 2004, 02:14 AM
  4. U.S. is a joke - homeland security out of control
    By Qtrainat1251 in forum News and Politics
    Replies: 14
    Last Post: September 5th, 2003, 06:32 PM
  5. How do you evaluate a co-op? - Questions about Co-op purchas
    By ddoriann in forum New York Real Estate
    Replies: 1
    Last Post: August 3rd, 2003, 11:15 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  


Google+ - Facebook - Twitter - Meetup

Edward's photos on Flickr - Wired New York on Flickr - In Queens - In Red Hook - Bryant Park - SQL Backup Software