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March 5, 2007

Rich Owners 1, Rent-Stabilized Renters 0

While affordable housing advocates had reason to cheer last week with HUD's blocking of the sale of Starrett City, they may have bigger problems in the long run from a smaller appeals court ruling that was handed down last month in the long-standing case of the East Village family that has been trying to clear an entire 15-unit building in the East Village for its personal use. Alistair and Catherine Economakis bought the building at 47 East Third Street in 2003 and told tenants that their rent-stabilized leases would not be renewed; they started eviction proceedings against the six hold-outs in December of that year. After several rounds of suits and appeals, an appellate court in Manhattan ruled in February that “the clear and unambiguous provisions of both the Rent Stabilization Law and Code permit an owner to recover an unlimited number of stabilized units for personal use and occupancy without D.H.C.R. approval.” The implications of this could be quite profound, it seems to us, given that there are over 200,000 rent stabilized units in Brooklyn alone. Basically, there's a huge arbitrage play for anyone with the financial means to buy and convert a rent-stabilized building. Does anyone know if this applies by extension to rent control? If so, what about SROs? Would this remove the necessity for a Certificate of Non Harrassment in the case of personal use?
Revising the Limits on ‘Personal Use’ [NY Times]
Photo by alaspoorwho

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Comments

Actually, this has always been the case.

Personal use means just that, personal use. Abuses in the past have resulted in penalties against property owners who abuse this policy.

In the case of this building, it USED to be a house. The owner is simply converting back into such a dwelling.

It's not like the courts are going to believe someone is emptying a 100,000 square foot building elsewhere. Let's be reasonable here.

Posted by: Eryximachus at March 5, 2007 9:06 AM

Shame on your brownstoner for making the assumption that owners of rent controlled buildings are "rich". As a homeowner, you know well the great amt of expense and time it takes to keep a building operating. Rent control often rents barely cover the cost of operating day to day. How could an owner get rich?

If anything, its the guy who is paying $200/month for a 2 bedroom that can bank his salary while his sorry landlord bankrolls a better life for a stranger.

There are rich owners out there but they definitely did not become rich by collecting rent control.

Posted by: Anonymous at March 5, 2007 9:14 AM

Shame on us? What are you talking about? We're against rent control. It's a totally inefficient way for society to allocate its housing resources. What's your beef?

Posted by: brownstoner at March 5, 2007 9:22 AM

Mr. B - I totally agree with you so my bad.

I read your title 'rich owners, 1 renters, 0" to mean that the building owners are getting rich off the backs of the tenants benefiting from rent stabilization. But I obviously misinterpreted it. Sorry.

Posted by: Anonymous at March 5, 2007 9:25 AM

In this case it could be a major financial windfall for the owner.
But the property priced as rent-controlled/Rent-stabilized building..
and now own one that is free of that.
Could not buy empty/free-market building at anything close to a controlled building.
PS... even when taking over space for own use-- I don't believe can evict RC over certain age.

Posted by: Anonymous at March 5, 2007 9:36 AM

Rent Control & Rent Stabilization should be abolished.

Posted by: Anonymous at March 5, 2007 9:38 AM

Please remember rent control and stablilization were instituted because of the greed of landlords. They brought it on themselves and now we are stuck with an inequitable system. But it is their fault.

Posted by: Anonymous at March 5, 2007 9:49 AM

Posted by: Anonymous at March 5, 2007 9:50 AM

there is a substantial difference between evicting a rent controlled tenant and a rent stabilized one, the former being much much morw difficult. anything this article shows just how difficult it is to evict all such tenants in general. they started in 03 it is now 06. suppose that a building traded at a 30 percent discount, that would only result in about a 7 percent annual compounded return. leveraging may amplify that, but carries its own bag of risks.

Posted by: Anonymous at March 5, 2007 9:54 AM

whhhooo I really should have proofread my post.....

Posted by: Anonymous at March 5, 2007 9:57 AM

I can't wait until rent stabilization is abolished and then all you bankers and brokers have no one left to police your streets, teach your kids, walk your dogs, or fix you your over-priced cappuccino. The entire city will have the personality and, more importantly for you, the complexion of Murray Hill (which I'm sure you'll appreciate). The elitism, snobbery and complete lack of any kind of empathy for those who can't afford to buy on this board makes me ill.

Posted by: Middle-Class Renter at March 5, 2007 10:05 AM

let's clarify a few things here. by and large, rent- controlled tenants do not pay $200 a month. in fact, in some cases, they pay more than rent-stabilized tenants because they pay different percentages of rent increases.

second, the owners of this east village building have not yet won the right to reclaim the entire building. they have won the right to make the case in court that they need to evict the tenants for personal use.

third, in order to take advantage of the 'personal use' provision, the building must be owned by individuals. it does say this in the Times piece, but i think b'stoner likes the controversy of rent-regulation arguments on the board, and so ommitted it from his summary. i doubt that the 200,000 rent-regulated apartments in brooklyn are located in buildings owned by individuals.

finally, since this whole thread is going to turn into another long rant about rent regulation, and 'poor' landlords who can't do what they please with their property...well, maybe i'd be more supportive of them if just once one of these landlords would open their books and show the world how 'poor' they are. personally, as a taxpayer and property owner, i wonder why i'm subsidizing the builders of luxury housing with abatements. that's just as much an 'inefficient way for society to allocate its housing resources,' isn't it?

Posted by: Anonymous at March 5, 2007 10:07 AM

10:07, we didn't omit the personal use thing at all. we said that the arbitrage opp existed for "Anyone" with the financial means, as opposed to any corporation or group.

Posted by: brownstoner at March 5, 2007 10:18 AM

The personal use provision exists in rent stabilization law, and is not applicable to rent controlled units. Plus, the ruling was from an appellate division panel in First Department (covering Manhattan) not the Second (covering Brooklyn), so it is not a safe bet to assume that Brooklyn courts will reach the same conclusion and as a consequence I would not advise buying an entirely stablizied building in Brooklyn on the assumption that it could be converted for personal use without legal challenge. Finally as the article rightly points out, anyone seeking to use this provision to evict tenants should be taking over the building so they can live in it -- not to convert it to condos, market rate rental units or the like.

Posted by: Anonymous at March 5, 2007 10:30 AM

From that article, I understood that the limitation was really on the means of the landlord to occupy the building for his own personal residence and business. On a slightly different note, I have had a few friends who have had either rent controlled or stabilized apartments who chose not to buy because they had these good rents. I always worried about them a little because those apartments are NOT completely safe and they missed the whole wealth creating opportunity of owning real estate, which is the greatest way to build equity and create a stable living situation for one's self. One of them lived in Styvesant town and unless you are a real saver (I know somebody will say if you saved the money and invested it in xyz security, you would have x % return etc. etc.) you are in trouble. People tend to talk about this issue from the macro perspective - how it distorts market signals and inhibits investment etc (or a moral perspective....give me a break) but it is dangerous to depend on these market controls from the consumer perspective, i.e. having a stable living situation and financial equity. The liberalization of the "personal use" provision I think reinforces my thinking. Also, I'm not saying that renting doesn't make sense for people but depending on below market rents can be dangerous.

Posted by: donatella at March 5, 2007 10:42 AM

To Middle clas renter. I'm a homeowner and not a banker or a broker. Should I be protected by a law that guarantees that my housing costs (i.e. heat, taxes, water, insurance etc.) never go up by my than a regulated percentage? Regardless of income?

Posted by: Anonymous at March 5, 2007 11:04 AM

Technically, the ruling didn't center on the right to reclaim the building for personal use, only on the right to reclaim the ENTIRE building for personal use.

Tenants had argued that the economakis' had to go before DHCR since there is a statute to that effect, but the court ruled that the 'one or more' apts for personal use in RSC triumphed.

Yes, there is value play, but only if
a) you are a lawyer
b) you don't mind fighting your tenants for X number of years.

Posted by: Anonymous at March 5, 2007 11:08 AM

Anon 11:04, Income regulations are part of the rent-stabilization laws. So if I happen to win lotto and make over (I think this is the number) 175k two years in a row, I'm no longer stabilized. And, as a matter of fact, I think basic neccessities such as heating oil, water, etc, should be subject to some kind of regulation.

Posted by: Middle-Class Renter at March 5, 2007 11:09 AM

Such confusion between rent stabilized and rent controlled! The income cap is only on rent controlled units.

And to Anon 11:08, can you explain your distinction "Technically, the ruling didn't center on the right to reclaim the building for personal use, only on the right to reclaim the ENTIRE building for personal use." Not sure I get it.

Posted by: Anonymous at March 5, 2007 11:21 AM

Middle-Class Renter, you have the number correct, but there's a big piece you're missing. If your apartment's legal rent is below $2,000 per month, then it doesn't matter what you make, it cannot be destabilized because you exceeded income limitations.

My belief has always been that this debate is wholly based on asking the wrong question. The question isn't if rent regulations are bad, per se, but that if society as a whole decides that rent regulations are worthwhile, then why are landlords bearing the cost, instead of society as a whole (i.e., out of the general revenues)?

Posted by: grendel at March 5, 2007 11:27 AM

Rent stabilization has permitted me to save enough to consider purchasing a co op, as I am doing now.

Posted by: Kevin Walsh at March 5, 2007 11:31 AM

Anon 11:21, the income caps absolutely apply to Rent Stabilization. http://www.housingnyc.com/html/resources/faq/decontrol.html#undergo

Posted by: grendel at March 5, 2007 11:31 AM

Income caps only apply once a unit is priced over $2,000. As a result, the cheaper the rent, the longer the subsidy. i.e. Assume 4% annual rent increase for Household making $175k and paying $1,000 rent. It would take 18 years for the unit to be de-controlled or de-stabilized.

Posted by: Anonymous at March 5, 2007 11:43 AM

the truly rich have very little income

Posted by: Anonymous at March 5, 2007 11:50 AM

Middle-Class Renter and anyone pro-rent regulation. Rent regulation is bad b/c it has the opposite of the desired affect. The reason why rents are so high in nyc (and much more so than other major cities) is b/c of rent regulation. I am not going to explain why this is the case b/c its too complicated for this forum but if you don't believe me pick up any freshman econ. textbook and lookup shortages and you will see a case study of NYC rent regulation laws! Economists don't agree on anything but this is one issue that 99.9% of economists do agree about.

Also while this case is a step in the right direction this is certainly not a huge win. I looked up the laws on this a while back and anyone doing this must live (or at least not rent out) the units for at least 2 years. Furthermore the law doesn't makes exceptions for renters that are over 65. Those people can not be evicted.

Posted by: Anonymous at March 5, 2007 12:04 PM

To Middle Class Renter and Donatella and others discussing rent regulation: I agree that there are problems with the current system of rent regulation, but I don't believe that means we should abolish protections for middle and working class individuals who cannot afford to purchase a home. Do people know what it's like to be evicted from your home? Imagine it for a moment. Donatello opines that it's wrong to argue the prons and cons of rent regulation from "a moral perspective.... give me a break," but I think it is a moral issue. I don't think that just because I can buy a property means I should have the right to displace people. And I also think (and know from experience) that it's possible to successfully invest in real estate and act responsibly towards the people who live in the property one is lucky enough to be able to buy. Not only is it possible but it feels a hell of a lot better all around.

Posted by: Investor w. moral compas at March 5, 2007 12:27 PM

I am against rent control or stabilization. But if you are going to have it at least do it right. It should be based on a percentage of income rather than a fixed amount. I have no problem with someone who only makes 35k a year paying 500 a month but the problem is that a lot of the current tenants in these place are making a lot of money and should have to pay market prices like everyone else.

Posted by: Anonymous at March 5, 2007 12:27 PM

In response to the other question in the original post, I think the non-harrassment rules for SRO tenants are distinct from the occupancy/personal use issue the Economakis' family dealt with. So, I don't think this will change the rules regarding SRO conversions. (After all, even before this decision, owners always had the right to evict tenants in order to make personal use -- as the other poster pointed out, this was really a questions of whether DHCR needed to be involved because of the rent-control status.)

I do think there is a significant chance that there will be some legislative response to this ruling, especially if there is another similar type case (multiple tenants in tenement building evicted to permit owner to create a personal living space with more than 8 or 10,000 sq. feet).

Posted by: Anonymous at March 5, 2007 12:38 PM

I thought that the easiest eviction for personal use is for RS tenants. For RC tenants it's much more difficult, and I think for elderly RC tenants (which I guess is most of them), it's extremely difficult.

I'm not sure how long you need to hold the property in order to subdivide and rent it out again. I'd love to see more info from anyone who knows.

Posted by: JoshK at March 5, 2007 1:26 PM

Anon 12:27pm,

Just pigbacking on your comments, I wonder what posters believe renters should make in order to afford a $2000 apartment?

Posted by: supergirl at March 5, 2007 2:14 PM

The current system is broken, yeah, but protections for people who don't make a fortune *definitely* make sense.

I'm a poor-ass college student. After much travail, stabilization hooked me up with a $1300 2-bedroom, in a good neighborhood in Brooklyn. I make maybe $21K wage-slaving (maybe a little more from freelance gigs), so paying $650 is still pretty squeaky, but certainly doable if I'm careful with my cash.

That said, I realize that this is mostly my own doing. But let's not pretend my landlord isn't doing OK on this deal -- this isn't new construction, and they're certainly not paying much to finance a building they bought back in the 70s. My rent stays a tick low (around here, you'd expect more like $1500, $1600 for this place) and Brooklyn gets to keep a stable middle-class presence. (Assuming I one day manage to become middle class, yeah...)

The system needs an overhaul. But if you just threw it away right now, I'm down to living three to a little room in a walk-up apartment -- what's that about? There's definitely got to be a middle ground that's still good econ policy.

Posted by: Shoot at March 5, 2007 2:23 PM

Middle-Class Renter:

I'm broke. Could you please pay my electric and gas bill? C'mon, you're a champion of the little guy, right? Just front me a couple a hundred a month for the next five years, kay? Can you swing it?

Posted by: Anonymous at March 5, 2007 2:32 PM

Shoot,

Since you're paying close to 40% of your salary on rent (does this include utilities?), I hope a) that you don't have any credit debt, b)don't have any student loans, c)are putting some % to savings.

I'm assuming you also aren't getting any parental assistance?

Posted by: supergirl at March 5, 2007 2:33 PM

Re Anonymous at March 5, 2007 12:04 PM

..."at least 2 years. Furthermore the law doesn't makes exceptions for renters that are over 65"....

If I'm not mistaken (and maybe I am), I think it's a five year minimum, and that you cannot evict any occupant over 62 years of age, in the case of RS. In the case of RC, the same applies, plus if an occupant has occupied the apt for over 20 years, he or she also cannot be evicted.

Investor w/moral compass,
"I don't think that just because I can buy a property means I should have the right to displace people."

Just out of curiosity, do you feel the same about hotel rooms? If you pay $250 for the right to sleep in a room at the Marriott for a night, and open the door to find someone else there, do you feel that you do not have the right to displace those people? Why or why not? If ownership does not give you the right to possess, what is the actual point?

My own $.02 about RC/RS:

It is essentially a subsidy from newly arriving New Yorkers to New Yorkers who have been here a long time. RC/RS drives up the cost of a new rental and a new purchase, but keeps down the costs of apartments which have been occupied a long time.

One of the biggest problems that I see with RC/RS is that the rent increases are based on a percentage of the rent, rather than a fixed amount per room (with perhaps some adjustments for location), so that someone paying a very low rent can only have it raised by a miniscule, which ultimately results in rents which are totally absurd, like the $49/mo 2BR I saw in Brooklyn Heights.

Ultimately, if society thinks that certain people deserve to pay a reduced rent, society should pay the difference itself, rather than shucking the expense off on someone else.

Posted by: BrooklynJon at March 5, 2007 2:55 PM

re supergirl

Utilities: Just electric, usually 30 or 40 bucks
Credit debt: No more than 10 bucks or so every month
Student loans: Very little (nothing I have to pay off for quite awhile)
Savings: Slowly growing, but quite small. Enough to live through any medium-level emergency.
Parental assistance: see above.

I mean, it's pretty much hand-to-mouth, but I'm getting by. I've got good financial aid, so tuition is basically limited to books (used) and random fees (a pain in the ass).

I mean, what's the latest stat on how many NYers spend more than 40% on rent? There's more than a couple of us. We just eat ramen and don't have that much fun. And some months I ride my bike instead of the subway (8 miles, not recommended in winter...) When I lived in Boston, I just jumped the turnstile or snuck in through the back gate pretty much every day, but the MTA makes it tougher, so exercise it is.

It beats Canarsie, anyway.

Posted by: Shoot at March 5, 2007 2:58 PM

Rent control and rent stabilization unfairly place the burden of subsidizing housing for low income persons on individual landlords. If you want to help a better way to do it would be to give low income people vouchers so that they could afford to pay market rent. In that manner it is the whole NYC tax base that is subsidizing housing for these folks not the individual land lords.

Posted by: Anonymous at March 5, 2007 3:04 PM

re Anon 3:04

Basically true. But voucher programs have completely bombed. Ever try to get an LL to take a Section 8 voucher? You're lucky if they call you a crackhead and slam the door on your face. Not to mention the paperwork involved.

I always thought a better rule in NY was that you couldn't rent an apartment in a building you lived more than 2 miles away from... it'd probably encourage improvement of housing stock in run-down, absentee neighborhoods. Except (a) half the buildings in NYC aren't owned by individuals and (b) people don't like being told where to live (nor should they). But with a surplus of housing that's really shitty and a huge demand for cheap housing, it seems like we ought to bring these two problems together.

Posted by: Anonymous at March 5, 2007 3:09 PM

Don't forget anyone can build a new building and charge whatever rent they want.
City does not extend rent controls/RS on these apts...so how does the system inhibit new developement?
Landlords get plenty of tax breaks that are being subsidized by everyone else....i.e. depreciation allowance.
You can make some case for when system came in existence---but that was long time ago....and just about anyone making the investment in a rentregulated building knows the score when buying .
And all these rent-reg. bldgs still go up in price...so if not good investment would not be able to sell.
Obviously not the case.

Posted by: Anonymous at March 5, 2007 3:16 PM

Still, how do you make the case for subsidizing rent control/stabilized tenants without any true means test? (i.e. someone making $150K per year with a stabilized lease of $1,000 per month). If there is going to be a rent subsidy it should go to demonstrably poor people.

Posted by: Anonymous at March 5, 2007 3:32 PM

oh, b'stoner, i love how you have nothing to say about the substance of my 10:07 post, but only wish to quibble with my attempt to clarify your original use of the word "anyone."

what about 421-a? do you think that's been--or ever will be--an efficient way for the city to allocate housing resources? i certainly don't. you've got a link to a Post story on this topic today; you could've editorialized on that.

rent regulation isn't perfect, and it's definitely not the solution to NYC's current lower- to moderate-income housing shortage, but it is still the only state/city system in place offering any amount of assistance to those folks. and, contrary to all the 'free-market' advocates on this site (who assert that rents would go down across the board if it were abolished), even economic studies commissioned by the landlords of rent-regulated buildings acknowledge that rents would go up.

and really, b'stoner, now that you're doing this full time, could you perhaps do a little more research before you post? maybe read some housing regulations? a little real-estate law? knowledge of FAR for every lot in Brooklyn is great, but you really should've been able to answer the three questions at the end of your OP for yourself. just sayin'.

Posted by: Anonymous at March 5, 2007 4:00 PM

Anon 4:00

Rents of previously controlled apartments would certainly go up after decontrol. The net effect on the market as a whole would very likely be downward pressure on rents. Ask any economist.

Ultimately, the bigger question is, if society wants these people to have lower rents, why doesn't society pay for it. If society wants you to go to college for free, society doesn't tell NYU it has to educate you gratis. Why should this be different?

Posted by: BrooklynJon at March 5, 2007 4:07 PM

I'm a landlord with quite a few rent stabilized and rent control apartments. The ones paying below $500/mo, I'm completely subsidizing.

Of course the system is rigged against landlords by tenants with voting power who scare the hell out of politicians.

What pisses me off is that so many of my rent regulated tenants abuse the system by illegally subletting their apartments for far above their legal rents or actaully live elsewhere, but maintain their "primary residences" in their rent regulated apartments, but really live in houses upstate.

I've been a landlord in Manhattan for ten years and I've only successfully evicted one tenant for illegally subletting an apartment and that was because the subletter refused to vacate and I could prove what was going on. Normally, that's not the case.

The system is set up to be abused by folks who don't even need their cheap aparments. It's a joke and I feel like I'm being laughed at every day.

Posted by: Jake the Snake at March 5, 2007 5:45 PM

By the way, I don't think all rent regulated tenants abuse the system, but at least 25% of them do.

If the rent laws were changed to make it easier for landlords to evict rent regulated tenants who don't really live in their apartments, I for one would buy a beer for every Brownstoner who showed up at the bar to celebrate.

I might even throw in a round of shots!

Posted by: Jake the Snake at March 5, 2007 5:51 PM

NY could learn a thing or two from Berlin...Berlin is also at the moment going through extreme gentrification. However there is much more protection of tenants and rent control as well...This ensures that although many new residents and business enter these neighborhoods, the old ones that made it hip and desirable in the first place are usually able to stay as well..so things don't get completely sanitized, homogenized, unaffordable and downright lame..(as happens in NY)..the people who have to pay slightly higher rents rightfully are just the newcommers(who can usually afford it anyway)..its not nearly as easy to just kick someone out on their ass, like is done on the daily in ny.

where is NYC really heading these days?

Posted by: BerlinProud at March 5, 2007 6:57 PM

RE: "Rent control and rent stabilization unfairly place the burden of subsidizing housing for low income persons on individual landlords."

There are two ways to become a landlord who owns a rent stabilized or controlled building: inherit it or buy it.

If you inherit it and think you'll lose money on it, sell it and enjoy the windfall.

If you bought it, you got a discount because it's stabilized. If it wasn't, maybe you wouldn't have been able to afford it and become a landlord in the first place. But you made your financial calculations and thought you could make a go of it. If you can't, sell it. I bet you'll get more for it now than you paid for it. If you want to keep it, please stop pretending you're shocked - shocked! - to discover that your income is limited by the regulations. And stop pretending you're subsidizing anyone - your discounted purchase, which you freely decided to make, was subsidized by the rent regulation laws in the first place.

Posted by: anon at March 5, 2007 8:16 PM

Wrong, Anon 8:16,

Most landlords, including myself, did not get a "discount" because of the stabilized rents. We bought years ago when rents were lower and never imagined the arcane rent laws would last this long. Many landlords, myself including, assumed they would eventually be deemed unconstitutional and overturned.

Expenses and property taxes have drastically increased yet rent regulated rents have in no way risen in perportion to the costs of running and properly maintaining 100 year old buildings.

Why do you think so many old buildings in NYC are run down? Do you think it's because landlords are hoarding their profits and don't care about their properties? Of course not. It's common sense that a rational landlord would take excellent care of a property if it were in his or her economic interest to do so.

You know very little about economics and obviously do not run a business or know anything about running one. If you had any business experience whatsoever, you wouldn't believe that the government should manipulate the rental market by forcing landlords to accept below market rents. You'd understand that such a system only benefits the lucky few at the expense of the masses.

Posted by: Anonymous at March 5, 2007 9:30 PM

"The lucky few?" Last I checked, almost exactly half the rentals in the city were regulated. That's hardly a few select billionaires, guy.

It doesn't take a huge financial investment to perform basic maintenance on a building. A lot of landlords are slumlords. Sure, there's an economic incentive involved -- but that doesn't excuse dilapidation.

Also, read up on the concept of "unconstitutional." Or wish you'd read a newspaper back when you bought your building, because like it or not, tenants are certainly a political force around these parts. They were in 1971, and they are now.

Posted by: re Anon 9:30 at March 5, 2007 9:45 PM

"The lucky few?" Last I checked, almost exactly half the rentals in the city were regulated. That's hardly a few select billionaires, guy.

Posted by: re Anon 9:30 at March 5, 2007 9:46 PM

I lived in San Francisco for a while. Rents there were stabilized unitl a tenant moved at which time the apartmnet would go to market rate. Not perfect, but makes better sense NYC.

Posted by: Anonymous at March 5, 2007 9:54 PM

i do agree with the anti-RS/RC contingent, i really do ... however -

"This ensures that although many new residents and business enter these neighborhoods, the old ones that made it hip and desirable in the first place are usually able to stay as well..so things don't get completely sanitized, homogenized, unaffordable and downright lame..(as happens in NY)"

yes. ah, shite, what's the answer? damned if i know.

Posted by: Suzy at March 5, 2007 10:50 PM

Anon at 9.30

You prove my point. You bought low, taking advantage of government price controls that depressed the cost of your building. You gambled (or invested money hoping) that the price controls would disappear and raise both the value of your property and your rental income. I don't have a problem with your having done that. It's just that it hasn't worked out the way you wanted and now you're complaining about the system you were ok with when it kept your cost low. It's like you invested in Betamax. I'd feel and do the same as you if I were in your shoes. Please just have some perspective.

Posted by: anon at March 5, 2007 10:57 PM

Boy, I really love this. Landlords whining about the tenants they make money off of. face it- being a landlord is a business. that's been well-established and it's also been well-established that landlords get breaks- tax breaks, subsidies, abatements. Well why should that be? we practically throw money at developers (and even other people's property) at them- yet we are complaining about tenants having affordable housing? And FYI- affordable housing means for the tenant. It's not a promise to the landlord. And it isn't as if a landlord buys property without seeing it or finding out the facts before the purchase.

So who needs more protection? Landlords or tanants? I bet tenants. And there is a moral component that factors in- like it or not, they type of socoety we are, the sucess of a society is really reflected in how well it takes care of its weakest or most vulnerable. fix the system- but stop blaming the tenants for its problems. I'm not saying there aren't those who take advantage, but that pity the poor landlord crap is exactly that- crap.

Posted by: Anonymous at March 6, 2007 3:45 AM

You're a major idiot 9:30 to think that laws would be overturned.
They have been around forever and upheld.

Posted by: Anonymous at March 6, 2007 9:32 AM

Yes, of course value is directly related to income (do a search for capitalization rates).

Rent stabilized buildings are actually considered "safe" investments because the rents are so low - it is an alternative to government bonds.

Rent control only hurts other renters, especially young renters. The elderly and the infirm, who elsewhere in the country would relocate to a part of the country they can actually afford stay in the city, wasting housing.

Apartments, historically, are for people just starting out. Not in NYC, where most rent stabilized tenants in Manhattan are over 50.

They also hurt other tenants in buildings as landlords will do ANYTHING to keep expenses low, as long as it is legal. This is why most NYC apartment buildings are dumps - the landlord simply can't afford to maintain the building.

Posted by: Eryximachus at March 6, 2007 10:24 AM

Eryximachus, Are you kidding me? Yep, let's kick out all the old, the infirm and the poor so the young trustfunders can take over their apartments.
Who will serve you your coffee and ring up your purchase at the drugstore so on and so on if affordable housing is not regulated? If it's not, all the poor people will have to follow the old people moving somewhere else....

Posted by: Anonymous at March 6, 2007 12:11 PM

One of these days rent regulation in NYC will be overturned like it was in Boston (where rents have decreased 25-35%) since decontrol.

You folks who claim poor people need a break, are right. They should get tax breaks, food stamps, free government medical care, free education, and perhaps rent subsidies from the city, but private landlords should not have to pay their rent like they do in NYC.

It costs a fortune to properly maintain old tenement buildings, and whoever claims otherwise is plain wrong.

Posted by: Anonymous at March 6, 2007 2:41 PM

Um, do you have some support for the claim that rents in Boston have gone down 25-35%? I have read a couple of studies that show exactly the opposite. I would be interested to see these figures. Could you post a source?

Under the current NYC rent regime, Landlords have a direct incentive to put money into their buildings. When they do, they can increase the rent by 1/40 of their costs (this is an increase above the allowed annual increases). After the 40 months it takes to pay off these expenses (or maybe a few more to take into account the time value of money) the rent does not revert, it stays at the increased level. This is the reason why so many landlords have been replacing the windows in the building. Not only does it save heating costs, but they can permanently increase the rents.

I'm not about to defend the current rent regulation laws, but I wanted to point out that not all economists agree that rent regulation is bad. Almost all economists agree that strict price controls are bad, but if you ask them if a system where new construction is exempt and rents are allowed to be increased annually for various reasons, you get a much different answer. The latter type of system just doesn't work as nicely in Econ 101.;^)

It's also interesting to note that the difference between market rents and rent regulated rents is only significant in prime Manhattan and Brooklyn Heights. In almost all of the outer boroughs, there is a neglible difference between market rents and rent regulated rents (I know, I know, I should post a source for this, but I don't have the time or inclination at this hour to dig through my stuff and find that article). One interesting implication of this is that if rent regulation went away tomorrow, rents would not increase substantially in most of the outer boroughs. In prime Manhattan, however, the increase would be significant. I've always contended that this is primarily a Manhattan problem.

Posted by: grendel at March 7, 2007 12:37 AM

Regarding the comment by Eryximachus

This building was never a one family house. It was always a 15 unit old law tenenment and a multiple family dwelling, with airshafts and two store fronts.

And not everyone works on Wall St, in many professions people are lucky to get a 2-3% raise, with no perks. Some people don't have the luxury of being able to buy something.

Posted by: erinyes at March 12, 2007 5:32 PM

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