Rent controlled: How Grandma Pays the Blitzkrieg Rent
Jeffrey Hill | Fri, Dec 28th, 2007 | Category: Commentary | Tags: jeffrey hill, new york city, 1970s, 1960s, war emergency tenant protection act, metcouncil.net, rent control, cato institute
It’s every angry teenager’s dream to move to New York City. Watching Annie Hall, listening to the Ramones, buying a cordoruy suit ... it’s all about romance until they pick up a free Apartment shopper’s guide and find out that it costs an average of 2000 dollars to rent a closet with bad wiring and a malfunctioning water heater. What happened to the dream of living shoulder-to-shoulder with America’s undiscovered twenty-somethings? What about all those movies where shaggy-haired poets and part-time bartenders have flats with hard-wood floors and track lighting? Why does grandma pay 400 dollars a month for her apartment? She lives next-door to Moby, for chrissakes!
The answer to questions one and two are: the Reagan years and Rudy Giuliani. The New York City you saw in Taxi Driver is gone. The answer to question three is rent control.
In New York City, rent control is also known as The War Emergency Tenant Protection Act. The war being referred to is World War II. That’s why grandma is getting the special treatment; rest assured, it is not because of her good nature and charm. She’s been living in that luxury investment continuously since before July 1, 1971. Way back before The Ramones, grandma moved into what was then considered a dump. She signed a lease that included a ceiling on how much her landlord can raise her rent. Also, she agreed to a clause that outlined her landlord’s responsibilities to the property. If the landlord fails to live up to these responsibilities, grandma can demand lower rent ... and will most likely get her way in court. Why? Because back in those days, the Starbucks underneath grandma’s apartment that you find so charming was most likely a successful crack house, and your grandma’s landlord was desperate for tenants at a time where nobody was moving to SoHo.
What is frustrating for landlords, as well as the angry teenagers trying to get within eyesight of The Big Apple, is that most of these Rent Control agreements included clauses that could pass on the terms of their contract to family members that have lived with grandma for at least two months before her death. So, that’s why your deadbeat cousin, who seemed so sincere to help Grandma with that illness this year, may also end up chatting with Moby about how they need to do something about those hideously lit staircases next year. Yes, this is socialism.
Go East, young man! All 0.81% of you ... to the wide open NYC renters market.
-courtesy of urbandigs.com
The CATO institute’s William Tucker explains that, “In many cities, policymakers understand that controls drive out residents and businesses. Thus many exempt significant portions of housing from controls, creating shadow markets. Yet as controls hold down rents for some units, costs for all other rental housing skyrockets. And tenants in rent-controlled units fear moving to more desirable neighborhoods since the only units available for rent are very high-priced.”
Walter Block writes in The Concise Encyclopedia of Economics: “Economists are virtually unanimous in the conclusion that rent controls are destructive. In a late-seventies poll of 211 economists published in the May 1979 issue of American Economic Review, slightly more than 98 percent of U.S. respondents agreed that “a ceiling on rents reduces the quantity and quality of housing available.”
Some people argue that rent control is essential to protect vulnerable citizens from unlawful eviction. These concerns are valid. Metcouncil.net explains that rent control expands the rights of tenants: “Among these rights is the right of remaining family members - including “nontraditional” families such as gay or unmarried heterosexual partners - to inherit or succeed to the tenancy under certain circumstances upon the departure of the tenant of record.”
Whatever way you look at the issue, it is important to know why grandma holds on to that cozy little brownstone and why Moby pays 12 times more for the same brownstone. It is important to know your rights as a tenant, especially as affordable housing continues to disappear. Before moving into your apartment building, be sure to speak with other tenants who have been living there first. Research the history of the building. Who knows? Maybe your friend’s grandma sublets in the winter! Money spends quick in Miami.
Jeffrey Hill is News Editor for Access Intelligence, a business and technology information firm, web editor for Next American City and a freelance writer based in Washington D.C.
tmchale
Fri, Dec 28, 2007 at 1:43pm
Your view on the role of rent control in maintaining economic diversity in NYC’s neighborhoods is kind of odd. The fact that rent control has enabled low-income seniors to live next door to kids with trust funds is part of what makes New York great. You seem to be suggesting that it’s a bad thing. Do we really want such homogenious neighborhoods? Why do all those kids move to New York? I think diversity is a big part of it.
Mainstream neoclassical economists agree that rent controls “reduce the quality and quantity of housing available”—but as a proponent of rent control I don’t argue that its purpose is to increase the quality and quantity of housing. Rather, it’s an important tool to significantly slow the pace of gentrification and displacement, giving long-time residents the chance to stay in their neighborhoods, reducing commute times, preserving social networks that are mapped against physical space.
A New York without rent control would be a far more segregated city, where minorities and low-income families would be banished to Outer Queens and Central Brooklyn. There would be more housing production in Manhattan for sure, luxury housing production, and it’d be of a greater quality, certainly. But is that really the New York City we want? Maybe it’s the City that right wing libertarian cranks at the CATO Institute would be interested in.
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Jeffrey Hill in Washington, D.C.
Fri, Dec 28, 2007 at 2:33pm
“it’s an important tool to significantly slow the pace of gentrification and displacement, giving long-time residents the chance to stay in their neighborhoods, reducing commute times, preserving social networks that are mapped against physical space.”
I agree with your first two statements. However, in my opinion (which is based on stories from people I know with rent-controlled apartments and from testimonials I’ve read from landlords and tenants), it seems like rent control began as a way of keeping the WWII generation in the cities and turned into a form of motivation to prevent them from leaving because of the crime rate in NYC circa 60s-70s.
“A New York without rent control would be a far more segregated city, where minorities and low-income families would be banished to Outer Queens and Central Brooklyn.”
Are you suggesting that New York isn’t a segregated city? It has been for years. Where’s the diversity on 71st street and 10th ave, or 125th street and Adam Clayton Bvld? They don’t even show Harlem on most Manhattan street maps or tourist guides. There is no more low-income housing, downtown or uptown and minorities are already being pushed out. Queens, Brooklyn, parts of Staten Island, Bronx… even these places are being targeted for expansion. Harlem is even seeing an influx of professional / high-income housing.
I tried to present both sides of the Rent Control issue and simply explain how it works - the history of it and so on. I think there are benefits and drawbacks.
Do you have rent control? If so, how do your neighbors feel about it? Just curious.
Jeffrey Hill in Washington, D.C.
Fri, Dec 28, 2007 at 6:23pm
Here’s a solution- what about a salary requirement for rent control? For example, if you make a certain amount per year before taxes, you do not qualify for rent control… This way, it protects the vulnerable and keeps the rich from sitting on these apartments. What do you think?
tmchale
Sat, Dec 29, 2007 at 4:08am
“Are you suggesting that New York isn’t a segregated city? It has been for years.”
Every old American city is segregated, of course. But racial and economic segregation in New York would certainly increase if it weren’t for rent control. And the fact that people are “already being pushed out” is a great case for even stronger controls on rising rents.
An income limit on rent control sounds interesting-- perhaps using % of AMI to create something similar to the existing “inclusionary zoning” requirements for 421-a tax incentives. Of course the big issue with these kinds of programs are that they usually tend to exclude undocumented immigrants.
I currently live in a small New Jersey city that does have rent control, although the control board approves fairly hefty yearly increases that NYC tenant advocates would fight. The old African American neighborhoods here are turning over and being rented to large Latino families, mostly undocumented. Public housing, section-8, and other income-restricted housing here is mostly black; low-income market rate housing in these neighborhoods has become mostly Hispanic. Beyond the cultural barriers, most of these people don’t have documented status to qualify for income-restricted programs.
Sorry, didn’t mean to come off too confrontational. I did want to clarify what I think rent control advocates should stress: that allowing people to stay in their neighborhoods as they change is what rent control is all about, not increasingly the supply of housing. It’s too easy to use an oversimplified Econ 101 view of “housing” and argue that it’s all about supply and demand. It’s not. These lines of thinking even get used by a lot of affordable housing advocates, which I think is wrong. NYC’s inclusionary zoning laws have been criticized because the City could more efficiently build stacks of income-restricted units out on cheap land in Brownsville instead of tying it to market rate developers and levying an indirect tax on all. But again, that’s not the point…