Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
New York City recently implemented its far-reaching Housing Stability and Tenant Protection Act of 2019. That law enacted extensive amendments, all plaintiff protective, to New York’s 1969 Rent Stabilization Law (RSL). The Act imposes the RSL throughout the state. It also reverses the state’s earlier position on Luxury Decontrol for High Income Tenants. Formerly, when a tenant earned over $200,000 per year and paid a rent of at least $2,700 per month, the unit was decontrolled to allow the landlord the benefit of market rate rents. But under the new law, well-heeled tenants can continue to pay at most 15 percent of their gross rent on city housing.
The new act also sharply limits rent increases when landlords make improvements on a tenant’s premises. The older system allowed increases of up to 6 percent per annum, but the newer rules cap that figure at 2 percent, which makes it highly unlikely that a landlord can recover the costs of those improvements (assuming these are still made) over their useful life.
Finally, the new law also works a major change for the many units covered by the RSL but which are rented at below the regulatory cap. These below-cap rentals show how rents are in many areas constrained solely by powerful market forces: landlords cannot move up to the maximum rent levels when demand is not there. Nonetheless, the 2019 law treats the tenant’s current rent as a statutory base for calculating any future rental increases for that tenant. These landlords are now severely restricted in the extent by which they can raise rents going forward.
Manhattan Institute’s Michael Hendrix interviews Mayer Brown partner Andrew Pincus, the lead attorney in a lawsuit taking on New York State’s sweeping rent-regulation laws.
In 2019, New York strengthened its already-strict rent regulations, while state legislatures in Oregon and California approved caps on rent increases. Representative Alexandria Ocasio-Cortez and Senator Bernie Sanders have even proposed national rent-control policies. Pincus explains what’s wrong with rent control, from violating due process and property rights to shutting out newcomers attempting to find housing in cities.
“Four things have almost invariably followed the imposition of controls to keep prices below the level they would reach under supply and demand in a free market: (1) increased use of the product or service whose price is controlled, (2) Reduced supply of the same product or service, (3) quality deterioration, (4) black markets.” – Thomas Sowell
Did anyone notice California’s governor imposing statewide rent control on September 10? It was done to make housing more affordable and more available. It was sold as a means of fixing the homeless crisis. Of course, the cities that already had rent control are the cities with the greatest housing shortages and highest rents, but why let reality intrude on a great theory.
We like to think of American cities as incubators of opportunity, and this has often been true—but today’s successful city-dwellers are making it harder for others to follow their example. In this year’s Wilson Lecture, Glaeser addresses the conflict between entrenched interests and newcomers in its economic, political, geographic, and generational dimensions.
Lawmakers in New York recently passed the toughest rent-regulation law in a generation, imposing new restrictions on landlords’ ability to increase rents, improve buildings, or evict tenants. The bill made permanent the state’s existing rent regulations, meaning that future legislatures will find it harder to revisit the issue.
Stratton is a musician and blogger, but he makes his living managing apartment units and retail space in a suburban neighborhood outside of his hometown of Cleveland, Ohio. He prefers to call himself a “landlord-musician.”
Big cities, we’re told, are engines of productivity. And that’s mostly true. Regions with capital and a high concentration of technological innovation — places like California’s Silicon Valley — employ people, drive economic growth, do all sorts of good stuff, right?
Well, not so much. And the reasons they’re lagging are interesting. Thanks to Greg Ferenstein, I found this study, from the University of Chicago, that says that it all comes down to… regulation. Land use regulation, at that. From the study:
We study how growth of cities determines the growth of nations. Using a spatial equilibrium model and data on 220 US metropolitan areas from 1964 to 2009, we first estimate the contribution of each U.S. city to national GDP growth. We show that the contribution of a city to aggregate growth can differ significantly from what one might naively infer from the growth of the city’s GDP. Despite some of the strongest rate of local growth, New York, San Francisco and San Jose were only responsible for a small fraction of U.S. growth in this period.
In the latest installment of The Libertarian podcast, Professor Epstein takes us through a thorough consideration of the issue of property rights: how the Founders thought about them, when the courts started distorting them, and what can be done to restore them to reasonable strength. Take a listen: