Over the weekend I met the proverbial couple that hit paydirt with their stabilized apartment. They’ve lived in Murray Hill in a typical white brick doorman building for 40 years now. And all those below market rent increases have allowed them to buy a beach house on Fire Island and a car to get there.
So much for protecting the middle class.
25
Stabilized tenants are so committed to the idea that they should be protected from increased housing costs. Why are NYC coop, condo and single family homeowners less worthy?
Real estate taxes and water/sewer charges (both controlled by the city) have skyrocketed in the past five years.
22
Rather than arguing about strategies, tactics, and legal issues, and hding goals, let's openly honestly talk about the goals. Broadly speaking there are two types of goals one can propose for NYC real estate laws:
A) This is a Capitalist country and rich people have a right to buy up as much land as they can and charge the highest rent they can, and the law should protect that right;
B) Working people should be able to rent a modest place to live without having to pay more than x% of their salary, and laws should ensure that is the case.
And: Everyone needs to have a place to live, and there's a limited amount of land available, so:
A) rents can be raised continuously, making being a landlord a great investment;
or
B) laws are needed to protect tenants.
Although a vocal 1% of voters are VERY interested in A), I don't think that many voters are interested in it, and that's why we have elected officials who pushed for this law.
However if there are landlords who can make valid arguments that goal B can be achieved in more productive ways, it would be interesting to hear.
And we could experiment with landlord-proposed alternatives to rent-regulation if goal B was enshrined in law as the bottom-line: eg what I proposed earlier (somewhat tongue in cheek): that rent-regulation be abolished, but if rents rise above x% of the average low-income working-person's income, the tax on real estate earnings would be increased to pay poor working people's landlords the extra rent.
2
Imagine if the courts do away with rent regulations. Landlords would raise rents through the roof, and no one would be able to afford their apartments, right? But if this were the case, that no one could afford the rents, then the apartments would sit vacant and landlords would have to lower rents to an affordable rent, No?
All rent stabilization has done is to provide very low rents for those lucky individuals, be they extremely rich or of modest means, who just happen to be in their apartment at the time it became regulated. They have a home for life and the rest of us have to scramble for housing, creating intense competition for the remaining apartments and driving us the fair market rents.
22
@Bill except landlords jack up rent and kick out small businesses in commercial properties all the time. Do they lower it later when no one can afford? No, they stay empty for years.
13
@Bill
My rent-stabilized apartment isn't that much below market but the laws protect us from arbitrary eviction. There are more that a million rent-stabilized apartments in NYC . Most of us are not wealthy people sitting on super-cheap apartments.
10
The Empire Strikes Back. Kushner (therefore Trump)--an aggressive NYC slumlord-- is behind this, and you can bet your bottom dollar they will work to fast-track this into their tamecat Supreme Court.
9
Give me a break. This is plain and simply about greed on behalf of the landlords and has nothing to do with the “privileged”upper middle class clinging to their brownstones for dear life. Rent stabilized tenants are still at mercy to arbitrary AMIs, slow and potentially harmful court proceedings when enforcing their rights in housing court, and are often dismissed and resented by their landlords looking for any way possible to oust these tenants. Many of these landlords in fact creating this mess because of the loopholes and arbitrary filings. Give me a break
9
Rent reform , rent laws , landlords vs. tenants keep us from dealing with the real issue of real estate tax reform. Owners of multi million dollar apartments pay less in taxes than equivalently valued rental properties. Who indirectly pays those taxes ? The tenant.
This is a unifying issue that should be reported on. As always media loves diviseness.
4
The landlords are receiving major incentives to have these units (eg tax breaks). They want more
5
in June the Supreme Court overturned prior precedent that required a litigant suing under a federal 'takings' claim to exhaust all their remedies in State Court - Under new case Knick v Scott Township, landowners can bring case directly to federal court.
Federal judges are not subject to the political pressures that NYS judges are.
The main impact here is that it will get to SCOTUS faster (and cheaper) and what if the SCOTUS throws out all of NYC's rent regulations?
11
@NYC Taxpayer The Knick Case definitely created more access to Federal Courts in cases of eminent domain or taking. Perhaps a lower court will strike down certain aspects of this new law .
1
The lawsuit argues that rent regulations violate the 14th Amendment’s due process clause and the takings clause of the Fifth Amendment, which says private property shall not be taken for public use without just compensation.
Be careful with applying that logic. The medical industrial complex an easily attempt to apply it to their IP with respect to pricing restrictions. Just as everyone needs housing they also need to stay healthy and alive....
1
@Snarky
The difference is they negotiate with private insurers . Medicare is the issue .
2
@Snarky Unlike medicine nobody will die if they do not live in New York City, one of the most expensive and desirable cities in the world. There are literally thousands of cities with affordable homes and decent jobs in the other 49 states. I live in Queens, but I feel oppressed because I don't have the funds to live on the upper west side overlooking the park. I must insist that other people pay for me to live there!
11
The US Constitution expressly allows Congress to create a system to grant patents and copyrights. Both are subject to time limits. Patents only last 20 years. Congress can change the law to reduce the term of future patents or limit what is patentable. There are also laws that allow the federal government to abrogate patent rights in rare circumstances when in the public interest.
By contrast, there is no time limit in these rent regulations. We’re in a seemingly never ending housing emergency since WW2. The City manipulates vacancy data for political reasons and rent stabilization never ends. Remember how in recent successive years zero rent increases were allowed.
8
The Supreme Court has held that these kinds of claims will turn "on a complex of factors including the regulation's economic effect on the landowner, the extent to which the regulation interferes with reasonable investment-backed expectations, and the character of the government action." It is a fact that rental building owners have thrived under stabilization in the post-1993 period and did very well before then. The new legislation is tougher but not significantly tougher than it was in pre-1993. In my opinion, the law as a whole will almost certainly be upheld, although particular provisions may not withstand scrutiny. The lawsuit will play out over a 2-3 year period and, to the extent particular features of the law are disallowed, the lawsuit itself contemplates a phase out of those elements - not an abrupt end. Also best in mind that if it looks likely that NYC is going to lose, they'll find another way to revise the to achieve substantially the same result in a legally permitted manner.
1
@Mario Suarez "The new legislation is tougher but not significantly tougher than it was in pre-1993." how so? These new laws removed the one thing that now makes this a case that is going to have traction which is the "sunset provision" Also these laws are way tougher than any law in the country, they remove the ability for building owners to remove an apartment from stabilization which all the provisions allowed. These laws are malicious.
10
The pendulum swings back and forth. In the 1970s and 1980s NYC housing was in a dire state with countless abandoned building due to extreme rent regulation where the average landlord could not make a profit.
Now it has swung the other way, where unless you are rich or willing to bunk up two, three or four other people to an apt. you cannot afford to live in NYC.
With either way you eventually get blight. Better to establish minimum and maximum rents so the extremes are less likely to happen and let the free market determine the rates in between.
Ok let's here if from the $100 rent controlled tenant and the free market extremists on the other side start carping.
6
Do landlords and investors have to show their books to a new tenant? I've heard of landlords asking about where you work and how long and what's your salary. Shouldn't tenants have the same right to know when they are investing in an apartment, a building, a neighborhood? As a renter I'm making a 1-2 year investment of my money my time,family time and adjustments and work considerations. Shouldn't I know everyone who owns the apartment or building and their tax returns? After all aren't we business partners investors in the same building or apartment? Or is my abode the equivalent of a bottle of milk? Apartments and other home rentals should not be just objects to be milked by one partner until they wear out.
4
@Jamie Lynne Keenan
No, is any other privately owned business required
to show their books to customers?
But landlords in NYC are required to file income info every year with the DOF. They have the numbers.
5
@Jamie Lynne Keenan
Investors have a ownership position , you are paying rent
to reside there. You have remedies if the owner does not provide a safe habitat and are not taking market risk.
5
@Henry Boehringer Lol. Remedies, ha!
1
If only we could look into a crystal ball and imagine what lifting of rent control would do. Oh wait, we don't have to:
Toronto Set for Record Apartment Surge After Rent Control Lifted
https://www.bloomberg.com/news/articles/2019-07-12/toronto-set-for-record-apartment-surge-after-rent-control-lifted
Apartment glut sows seeds of house price falls
https://www.afr.com/business/banking-and-finance/apartment-glut-sows-seeds-of-house-price-falls-20190411-p51dbw
200 years of consensus economics opinion proven right again. Who would have thought!
16
@B Right. The vacancy rate in Toronto rose to whopping 1.5% in the second quarter, the highest since 2015, when research firm Urbanation began tracking the data, the article says. Rents rose 7.6%, bringing the cost of an average-sized unit of 794 square feet to $1,894 (U.S. dollars).
2
@Ellen Freilich
What does that mean? Numbers must be put into a context.$ 1, 894 dollars sounds like a bargain. Renters pay that much for half the space in Manhattan.
1
@B In both these articles the key point is that the supply increased. In NYC thats a mute point becasue
1. The new supply is priced out of reach.
2. The new supply still isn't enough
3. We lack enough space to create a new supply.
1
By going overboard rent control will fall in the Supreme Court. The new law represents a taking, pure and simple.
22
Did you know Rent Stabilized tenants have right *right* to a lease renewal? If that is not a taking, I don't know what is. In what universe is it ok for the government to coerce a business transaction wherein someone else is given the right to permantly occupy your property? One of the central rights of property, is the right to exclude. Infact, many argue this the very definition of a property right. Impairing that right, beyond as warranted for the term of the lease is problematic under any sane reading of property law let alone constitutional law.
29
And so do any of their descendants after they die.
As long as they lived there two years prior.
13
@B By going overboard with greed, your type of arguments undermine the support in this country and elsewhere for the type of property rights you speak of. The right of hard-working people to earn a living which enables them to live in a simple apartment in the city they work in and always lived in is taken as more basic by most humans than the type of proeprty rights you favor. When enough working people are evicted by ruthless wealthy landlords and are fed up with the system, your type of arguments will only lead to changes in the constitution and to laws about property rights. Control landlord greed if you want to protect property rights.
6
@Avirab
You’re talking about communist expropriation. That didn’t work out so well in modern Venezuelan or Maoist China. Violating international norms on property rights would mean the US dollar ceases to be the global reserve currency and foreign investment in the US would collapse.
But expropriation will never occur because most American households are homeowners. Only in NYC do so many believe they have an entitlement to rent price fixing. Everywhere else in America, people move to suburbs or relocate to a lower cost region to find affordable housing. In NYC, that affordable housing obligation is forced onto private property owners.
Yet NYC has some of the most restrictive zoning laws in the nation. Historic districts keep vast areas permanently low rise. While high taxes that could be used for new public housing developments are squandered on a vast array of welfare programs, including those for illegals. The root of NYC’s affordable housing shortage are its own faulty public policy. While you may expect the City to provide for residents’ housing needs, the government has no right to pass of the responsibility mostly onto private property owners.
11
Dear Landlords:
If you don't like the laws in NYC, you can sell your property and move. Common people move all the time because the cost of housing becomes prohibitive; it's unfortunate, but that's the world we live in. Or you can work with your representatives to change the laws (the same as the tenants). But don't run to the courts and ask them to legislate something that's already been legislated.
43
@Andrew N
A property with rent control is worth less than one without it. Rent control is a "taking". The resulting reduction in value is also a "taking". Here's hoping the SCOTUS takes this up and throws out rent control nationwide.
48
@Kurfco Speculators bought those buildings from real landlords in order to throw out the rent-protected tenants. Those buildings SHOULD be taken from them.
12
....says the guy living in California and not in NYC...
3
It's interesting to watch what people who have no moral compass but a huge amount of money and lots of political power will do when the political power is threatened.
65
@QTCatch10
Thousands of small landlords were hurt by these new laws. Many will be forced to sell if they are not overturned in court.
31
@Tall Tree
I would be very interested to see whether what you say is true. I doubt it. It seems to me to be simply a statement that has no backing and is probably false. And if they are forced to sell, to whom will they sell if the building is losing money? So I don't even think your statement makes sense. And thousands of landlords were hurt already by a law passed so recently? I doubt that what you wrote can be backed up with facts.
7
@Tall Tree Yeah. Sure. According to the Rent Stabilization Association's expensive campaign of television commercials that ran constantly while this law was being debated and passed, NYC landlords are just simple folk, with maybe a small building, doing all the repairs and garbage collection themselves. Not.
10
When the people who bought these buildings made their purchases didn't they know that they were buying rent-controlled buildings?
And didn't they know that, because the buildings were rent-controlled they were paying less for the building than what they would have paid if they were't rent-controlled?
As such, landlords, live with it or sell. You got what you bargained for!
20
The point of the lawsuit is that the new laws go further so they are in fact a taking of property vs when the buildings were bought.
5
Rent stabilization in NYC has been in place for decades.
It's been challenged multiple times in the courts and failed every time, most recently it was denied review by SCOTUS in the case Harmon v. Kimmel in 2012.
I've read the landlord's challenge and they really cripple their argument by saying that rent stabilization was unconstitutional the whole time.
I can't wait to find out more about the plaintiffs, which by the way are almost all anonymous delaware shell corporations.
10
@Ben If you read the complaint, you would know that several of the plaintiffs are mom & pop owners, each of whom own a single building.
And by the way, incorporating in Delaware does not equate to shadiness. It's a pretty common business practice. You sound like either a public-sector employee or an angry middle manager.
19
Well, de jure segregation was legal until it wasn’t. Same thing for the gay marriage ban and gender based discrimination. That’s how constitutional law work.
Property rights are individual rights. The state can restrict them but the issue is always how much. Given that residential rent price fixing has been promulgated as an emergency measure for decades, it’s pretty clear the issue is structural lack of supply. The state has many means to forward its interest in proving housing and community stability, but you don’t see much movement on limiting zoning restrictions, reducing historic districts, and building public housing. It only seems interested in severe restrictions on building owners. Even if some rent regulations are legal, the laws in NYS are very problematic.
18
@Steve There is only one plaintiff who is a natural person. The other 6 or so are corporate persons. The corporate landlords are the Katz's (who own DOZENS of buildings) and a couple with the last name Mycak (who own about a half-dozen).
2
I wouldn't be surprised if this Supreme Court decides rent control violates the freedom of businesses to do anything they want.
It'd fit in with their other rulings that corporations are people and can funnel unlimited bribes to politicians.
8
we are not talking about rent control but rent stabilization. this enables working class people to have reasonable rents that wont go up at the wim of the investors (there are no more landlords but investors and hedge funds.) the corporatazation of the housing market is destroying nyc and the suburbs. Greed is good. like
ex mayor bloomberg said (of the lower east side and downtown: "this property is too valuable for poor people to live in"
8
@edg
No, rent stabilization has no income requirements.
It only protects the lucky few who scored cheap rentals
long ago.
20
@Tall Tree He didn't say anywhere in that statement there were income requirements. I read it as rent stabilization benefits middle income renters. Tenants like me, who saw their non-stabilized rent go up by 20% after just 2 years.
1
@Annie
Sorry to hear about your rent going up so much. We charge much lower increases.
Don't they ever learn? How many times now has the "unlawful taking" argument been shot down? I've lost count.
Here's why it is a legally untenable argument - and it's something building owners do not want people to know: ALL owners of units subject to rent regulation are, by law, entitled to a minimum 7.5% profit. Any business owner would kill for such a profit margin. Anyone not making that minimum 7.5% profit is allowed to file for a hardship rent increase. All they have to do is... open their books.
So where a building owner is guaranteed by law a profit in exchange for regulation, there is no "taking" whatsoever.
https://emcphd.wordpress.com
12
@Rev. E. M. Camarena, PhD
Nope. No increases allowed upon vacancy. Zilch.
It's a massive taking, and we have a good chance to prevail.
13
What sort of behavior by landlords would be encouraged if large vacancy increases were allowed? I shudder to think of the consequences for existing tenants.
1
@BAM
The NYC Dems shouldn't have gone nuclear.
Everybody was ok with the old laws.
4
For 65 years or more NY & CA (Santa Monica )tenant rent regulations have been taken to court by landlords and the courts have always adjudicated that rent controls are legal and lawful.
Tenants under such laws ,don't let the Landlords (what a title!)scare you one bit.
3
Poor landlords. I feel almost as bad for them as I do for the foreign nationals who own apartments all over the city that they’ve never visited, complements of the Bloomberg administration.
9
I have several acquaintances that are NYC landlords. I have known these folks for decades, and they all complain about rent control. Not one has ever filed for bankruptcy. They live posh lives (although they try to play it down) and they just always complain about not making enough off their real estate -- as they drive home to their million dollar homes, or weekend vacation houses on Long Island. Maybe they are just narcissists and can't see their own greed. These laws protect the most vulnerable especially the working poor and the disabled. Gosh, do we really want to go back to an America where everyone is standing on soup lines? The landlords are certainly not standing on soup lines, so stop complaining already.
9
@Fred
Nope, there are no income requirements for rent stabilization in NYC. It protects multi-millionaires along with the poor. It's a stupid, unfair system.
14
But much more conducive to maintaining communities and opportunities for those with lower incomes than the so-called free market.
1
@Tall Tree
As I proposed earlier, let us tenants and you landlords unite to evict wealthy people living in rent-protected apartments..... in order to give them to the lower-income working-people who should have them - NOT to give the newly-emptied rent-protected apt to the landlords in order to renovate and rent at a multiple to a different wealthy tenant.
2
The late Esther Rand,a housing activist,said about landlords crying about not making enough profit and crying about hardship.She said basically to open your books and show your losses.Not surpisingly the greedy landlords never do.
4
@Lazarus Long
Being a landlord in NYC is very difficult. We deserve
more than zero percent increases for vacant apartments. The new laws are way too harsh and will destroy housing in NYC if allowed to continue.
I'm a small landlord of 25 plus years, and if the laws don't change back, I'll have to sell.
16
@Lazarus Long
Landlords are required by law to submit their books to the City every year. Your claim is completely false.
5
@Lazarus Long
I might add that true New Yorkers rather state their love-life affairs then tell you the rent they pay.
4
It'd be karmic justice if Kavanaugh were to write the majority opinion overturning this long-time socialist expropriation - at will and on whim - of private property...
7
@W in the Middle
Those who call this 'socialist' are the ones who make socialism popular. Ordinary people understand that rents for lower-income working people, those who are citizens and legitimate residents of a city, maybe born and grew up in that city and want only to work and earn a living, should be protected from the greed of super-wealthy landlords, and when they hear that this is socialism, they become interested in it. Communism failed, and Socialism has mostly been rejected, but pure Capitalism has also been rejected by most people now that its excesses have caused so many people to lose their homes or be evicted from their apartments.
What prevails in the US is a mix of Capitalism & Socialism: we have free commerce but protection from monopolies etc, free public schools and social security, and unemployment insurance etc, and if someone calls these Socialist, then to ordinary people it only makes Socialism sound a lot better than it really is. Maybe you are a publicist for Bernie? :)
2
What a crazy system! I am a physician and was making over 200k when I applied for an apartment and they told me instead I got a rent stabilized apt in the same building. This system has no rhyme or reason. I still have no idea why they gave it to me.
13
@Allright
Your statement is unclear, did you wish to buy an apartment then your pay could well be to little for a mortgage depending on the location in our city.
Did you wish to pay market rate and was offered a rent stabilized apartment by your landlord ? then please do as they say the not look a gift horse in the mouth.
1
There should be a income restriction for rent stabilized apartments.
2
@Carlyle T. I was applying for a market rate apartment to rent in the building that would have been about 2500 and they gave me a rent-stabilized for 1600.
1
Rent regulation is the only answer to the housing crisis ,everything else has failed
4
@John Doe
NYC has had rent regulation wince WWII.
Clearly it's a huge failure.
9
@Tall Tree
To the extent tha rent regulation has failed it's because there isn't adequate ENFORCEMENT of the rent-protection laws. Many SROs and other buildings housing the working poor and lower middle class were bought by individual wealthy landlords, vc funds, wealthy multi-generational landlord-families, and the residents kicked out one way or another - read the many articles abut the despicable tactics often used - and too often the police & courts did not stop them, or maybe just gave fines which were simply part of the 'cost of doing business' for these landlords.
What is needed is STRONGER ENFORCEMENT of all these laws. If the existing laws had been enforced, there would not have been so much pressure to enact this new law.
Landlord greed, and the evil tactics many used in order to empty rent-protected buildings of tenants, are what caused this backlash. Anyone who wants to protect Capitalism and property rights should act to reign in excessive greed, especially when that greed so severely damages so many voters.
2
Shouldn't it be the Anti-Rent Stabilization Association?
4
@New Senior
Exactly. Their name indicates the level of disingenuousness of all their arguments.
2
From the complaint:
In 2013, Plaintiff (also a registered nurse) was the primary caregiver for her terminally ill husband, who was painfully suffering from congestive heart failure, HIV, & Chronic Obstructive Pulmonary Disease (COPD). Climbing the stairs to the couple’s 2nd floor apartment became difficult, even dangerous, as his heart condition & overall health deteriorated. A solution existed. Plaintiff could simply move into one of her 1st floor apartments. She issued a notice of nonrenewal to a tenant in one of her 1st floor units— 1 of 3 stabilized apartments in the building. She even offered her own 2nd floor stabilized unit to the 1st floor tenant she would be displacing. The tenant refused to cede the apartment. So Plaintiff took her case to housing court to recover possession of the unit. With her husband dying, the court dismissed her claim on a technicality. The RSL entitles the tenant to another lease term, the court found, because Plaintiff was late when sending an earlier lease renewal notice, rendering the notice of non-renewal defective. Plaintiff & her husband were forced to stay on the second floor, and her husband’s health worsened. She took him to the hospital shortly thereafter, where home hospice was recommended. He would be carried up the stairs after returning home. Plaintiff's husband died 15 days later, on the 2nd floor of her building.
There is a special place in hell for the tenant who refused to move and for the court who denied the plaintiff.
17
@Steve
The story is not so clear- I guess the Landlord of the building was a nurse and lived on the 2nd floor of her building? And she had various non-rent-protected units in that building, so they were earning a nice amount of money.
So if the husband was dying, and no ground-floor apts were availalbe in the building she owned, why not rent a ground floor apartment somewhere else?But I guess rents were so high in that region that even a landlord of a building could not afford to move into a ground floor apartment!
So this is a good argument for rent-control! :)
2
What’s amusing to me is that you take what the plaintiff’s aver in a complaint as fact. If a man can’t walk up one flight of stairs I say he’s not long for this world in any event. I seriously doubt it was the stairs that killed him.
Let me know what happens to your parents when they’re old and grey.
1
We should let the government control rents......witness the the ineptitude at the the "projects"....Sad
9
@Tony
The USA is a mix of Socialism and Capitalism. Government should NOT be building homes, but greedy wealthy people should also not be allowed to create situations which make it impossible for ordinary people to rent a modest apartment.
The FACT is that rents have become outrageous, far far beyond affordable, and therefore something has to be done to reduce the ability of wealthy landlords to raise them as has been the case util now. How to do it is up to debate, but the end-result, the goal, has to be this: rent for lower-income hard-working people that is a fair percent of their earnings.
1
Yup. Filing suit in Federal court. Courts that are now full of Mitch McConnell's hand picked and confirmed conservative 'profits over people' judges. Be prepared for more of this.
Oh, and another reason that elections matter.
The GOP is hell-bent on making sure that only those who can afford it get a place to live, a decent education, and the right to healthcare. If you can't, you're more than welcome to die homeless on the streets. Or in your car that you live in. If you're lucky.
3
Ohhhh NO, Al this does is allow LL to price people out of apartments! I was recruited to work for our country and I left a rent controlled apartment in the Bronx. I will N E V E R find an apartment in any of the 5-buroughs that I can afford to ever move back to NYC ever again in my life. SHAME ON YOU!!!
2
If you can’t afford to live in NYC, then live somewhere else. Problem solved.
3
There was also a Supreme Court decision in 1986, Fisher v. Berkley, that found local rent control was not preempted by the Sherman Antitrust Act where it was not the result of concerted action.
1
@Vince of course they had a legal right to assume the regulations wouldn't get worse... the Constitution explicitly forbids government takings. The court will rule as much.
Current legislators were unwise to make the most restrictive rent laws in our country's history at the same time the SCOTUS leans to the right.
The court will abolish rent stabilization as we know it. It's a clear taking. After stabilization is abolished we should then expand Section 8 vouchers, the SCRIE/DRIE programs, and government grants for 1st time home buyers.
We should also simplify the process to convert rental buildings to co-op/condo. We should put ownership into the hands of the people. It's ridiculous that we have so many renters in our city. We should flood the for sale market with condo conversions. At today's interest rates, renters could own their apartments for a similar monthly payment as their rent.
13
The housing shortage is itself government action. It is zoning mostly, but also a lack of effort to get more housing built. Such efforts could take many forms, from loan programs and market making to planning and placing out tenders.
In the face of such shortages, private efforts build for only the most profitable, high rent needs. Of course.
I'll bet the owners now suing would be even more opposed to any of this. I'll bet that has a lot to do with it never getting done.
3
I want the government to regulate how I use my property and when we the people do so it is not 'taken' from me but enhanced: cars are subject to speed limits; guns are kept out of courthouses; etc. If someone owns a dwelling and decides to rent it out, that decision also comes with obligations designed to reflect - and also form, in a positive, humane manner - social realities (including the benefits the landlord receives from society/government). If money and property always rule, its owners will eventually suffer from the resulting social decay; just look at the chaos in countries where inequality reigns even more than in the U.S.
4
@Hippo
What if the government says you need to rent the apartment for $1,250/month but you know your expenses are $1,300/month?
The median rent for a stabilized unit is $1,250 (a two bedroom). Compare the $1,250/month to the monthly maintenance fee for a 2-bedroom apartment (plus interest expense on the mortgage) and that gives you a good idea of why landlords are upset.
Under the old rules (also a taking) landlords could make money by deregulating units, under the new rules they can't make any money. Fair? Or illegal?
I'll bet the court says it's illegal.
11
@DeSean
I want to learn about this issue. Why is it that of all expenses, only rent has risen so much, way way beyond inflation. Why is the percentage of their income paid by lower-income hard-working people for rent rising over the decades, so that they have less and less for everything else?
Maybe as you seem to imply it's because the workers doing maintenance charge so much? We should make a laws against that!
No. It's not that. It's the simple fact that there is so much wealth around now in so few hands that a relatively small amount of people can buy up so much land, so many buildings, that they effectively have a monopoly - since one cannot just make new land, and everyone needs somewhere to live - and so they can raise the rent so high.
The sytem is broke, and needs to be fixed. How to fix it should be debated, but the end result, the goal, should be affordable rents for hard-working low-income people.
2
In the 2018 election proponents of rent control attempted to expand it outside of California cities like San Francisco and LA to the whole state - they were defeated by 20% in the election. Most people realize rent control privileges a small number of lucky renters over the population as a whole - and they don't like it. Progressives, who want to control every aspect of people's lives, don't like that so they sneakily attempt to pass new laws through the legislature, like they did in NY. Here's to hoping SCOTUS smashes the whole crumbling edifice of rent control across the entire nation.
18
This lawsuit argues that rent regulations violate the 14th Amendment’s due process clause and the takings clause of the Fifth Amendment, which says private property shall not be taken for public use without just compensation. I though that the high rent that I pay for my rent stabilized apartment was just compensation. But I knew what I was getting into when I acquired the lease.
2
@Sendan
Dude, everything was ok before the new rent laws, but
then they outlawed vacancy increases and stopped us from being able to renovate old apartments profitably.
They went way way too far, and now this happened, of course. . .
8
@Tall Tree Here's how landlords renovate apartments. They do it cheaply and then exaggerate (lie) about how much the renovations cost so that could "legally" bump up the rent high enough to take the apartments out of rent stabilization. That is how we lost a quarter of a million rent-stabilized apartments in New York City. Landlords also cut apartments in half, creating two inferior apartments out of one decent apartment. Then they used the cost of those "renovations" to raise the rents on each of those apartments and take them out of rent stabilization. And on and on. There was so much fraud and exploitation going on that the democratically elected state legislature and governor finally cracked down.
4
@Ellen Freilich
Most property owners are honest.
I've never made up numbers because the
penalty was too large.
The city could have found a more effective way to crack down on cheaters than effectively banning rent increases upon vacancy.
It's unfair to stop people from profiting at all.
3
As a landlord of a small Queens building, and a life long tenant of Queens, I can see both sides. Finding an affordable place to live in the city is hard. But so too is managing a building where rents increase incrementally while costs like repairs, taxes, water, sewage, electric, gas and general maintenance rise exponentially. Until now, the rent laws sought to strike a balance. Now, the legislators have just obliterated that equilibrium and put their thumb firmly on the side of the scale that overwhelmingly benefits tenants to the extreme detriment of small landlords. Those landlords, like me, will eventually just give up and be bought out by large scale property owners (ie, the Kushners). Forget the colossal injustice inflicted on small landlords. Forget that I worked years to be able to afford this building that I soon will not be able to afford. The current rent laws will wreak immeasurable harm on tenants who will now inhabit building where no repairs are done because the incentive to do so is gone. The resulting deterioration of living conditions in NYC is on the hands of the legislators.
31
Thank you for your comment, but please let us know how many rent controlled and/or rent stabilized (there IS a difference) apartments are in your building.
@Mike
Most NYC apartments are stabilized.
2
@Steven When you say "bought out" you mean they will give you millions of dollars in exchange for the building correct?
2
What's missing from this story is more information about James Harmon who lost a similar case in 2012. His story is NOT poor landlord vs. freeloading tenants. Harmon inherited the building, then brought a series of cases to overturn NYC rent regulations, all backed by a coterie of rightwing groups from around the country. More recently, Harmon sold his 5-story building on West 76th Street, less than a block off Central Park. Don't worry about him; he's doing fine.
This 2019 case is likely a loser, too, but the super rich landlords bringing the suit can afford what for them is a small investment with a potentially huge payday. Hey, anybody with money can sue.
8
Yup. And with our increasingly right-leaning 'profits over people' federal court judges, courtesy of Mitch McConnell, maybe they'll get lucky this time.
Rent control was originally upheld as an emergency response to housing shortages created by World War I. Well that war and it’s emergencies are long over and any housing shortages today are caused by the State’s own actions via zoning and rent control itself. This challenge is long overdue and stands an excellent chance of success in the Supreme Court.
18
@Douglas
Wrong. They're building multiple buildings in my lower-middle class ethnic neighborhood in Brooklyn.
The problem is that none of them will offer "affordable housing".
No one is going to build affordable housing in NYC - except perhaps the State or City.
Getting rid of rent regulations in NYC will only lead to chaos and riots.
6
@Matthew Carnicelli Nobody is building affordable housing because almost half the housing inventory is effectively off the market, so the only way to make money is to target the luxury market. High market rents for the rest of us are is precisely because of rent control.
8
And thank you for your input on a uniquely New York City topic from the great state of Maine. Yours truly, a resident of New York City.
2
There's a very good chance SCOTUS will accept the case, and ultimately rule in favor of the landlords.
New York's new law is extraordinarily onerous on landlords, and a strong case can be made it is a regulatory "taking" in violation of the Fifth Amendment.
The law is beneficial to tenants, at least those fortunate enough to live in regulated apartments. (It is likely to reduce housing supply and raise housing costs for those not so fortunate.) It's a zero sum game; the tenants benefit at the expense of their landlords and apartment owners. Given the severe and costly constraints imposed by the new law, it is unlikely to pass Constitutional muster.
12
@Alex
Tenants are a horrible demographic. I think we should punish them by having tenant-groups manage all NYC residential buildings, and they will be forced to set the rents for those buildings in a way that guarantees the owners their 7% minimum profit or whatever the amount is - no moe and no less. That would serve those evil tenants right!
1
If anyone wants an example that the absurdities of NYC's laws have wrought, one need look no further than a few years back when the actress Faye Dunaway fought tooth and nail to retain her rent-stabilized apartment. After spending thousands on surveillance and investigations, the landlord decided that she didn't spend the required half a year in the apartment. Dunaway moved out before the case went to court.
14
@HKGuy No-one thinks wealthy people should have rent-controlled apartments, even proponents of rent-control would agree on this, so this is a fake ('straw-man') argument. Also: once a wealthy person is out of the apartment, it should then be rented to a working-poor resident, not handed over to the landlord to take it out of rent-control and making it a luxury apartment.
9
@Avirab
Not true at all. The entire changes to the code in 2015 we ALL targeted at ensuring wealthy people could retain their stabilized units.
And the 2019 laws actually eliminated any testing of income. If you make a billion dollars/year you can now keep your stabilized apartment forever.
10
@DeSean OK Technically if you made a billion dollars a year you COULD continue to live in your rent stabilized apartment but why would you? I think we can safely say there are no billionaires living in rent-stabilized apartments in the Bronx, Queens, or even Manhattan.
2
I grew up in New York and there's really no way to devise an affordable housing program more unfair than rent-control
Rent control isn't means-tested, which is insane. How in the world can liberal lawmakers be comfortable with a system that randomly reaps windfalls on tenant regardless of their income?
Rent control is random. If you happen to have been hit by the lucky stick and landed a rent-controlled apartments, you're all set. Your quality of life (and your children's) is now permanently better than the other sorry half of New York that is paying market rates. The other half of the city just resents you.
Rent control makes everyone who doesn't have a rent-controlled apartment pay much more in rent. That is just basic economics. When you eliminate half the inventory of market-rate apartments, the rent goes up on the remainder.
Rent control perpetuates crummy, crumbling, eyesores all around the city. If rents are fixed at a below-market level, but building costs, repair costs, furniture and fixtures, etc., keep getting more expensive, you end up with barely-maintained dumps.
This is why rent control has ended virtually everywhere except New York. If people in NY want to supply affordable housing to a segment of the population, then means-test them and give them direct subsidies. It's not that hard. Rent-control is byzantine, unfair, corrupt welfare that doesn't even fix anything, unless you think it's OK for a city to have a 70-year long "housing emergency."
89
@J. D. "Rent control makes everyone who doesn't have a rent-controlled apartment pay much more in rent." FALSE! Rents went up way more than inflaiton, and so the market rate rent is NOT necessary in order to maintain a building, it is only in order to obtain a very high return on an investment. The buildings can make a profit with the rent-control amount plus LEGITIMATE adjustments for repairs etc. The rents have been this amount plus inflation adjustments for decades and they made profits for small-business landlords. The new law is not against legitimate repairs and fair increases to rent due to repairs, it is meant to prevent wealthy people from buying up buildings from the small-business landlords in order to use various tricks - like luxury conversion - to kick out rent-controlled residents and raise the rent.
14
I live in NY now. In a rent stabilized apartment. I pay $2,375 a month in rent. Given the neighborhood I live in, maybe this is lower than a market rent would be, maybe not. All I know is that I've lived in market rate apartments where the rent was lower, and the neighborhood better, because that particular landlord wasn't out to maximize his profit, he was simply making a decent living by owning residential properties. AND reinvesting back into the neighborhood by helping small businesses. What's going on now is simply price gouging, fueled in large part by the market distortion in real estate in NYC from the use of real estate as a new means of money laundering. But sure, all these pretty new 'luxury residence' buildings go up, sit owned but unlived in and everyone from the mayor to the DOJ to the NYS AG looks the other way and pretends the don't see what's happening. Honestly, I find it disgusting.
16
@Avirab The polite way to respond to your argument is that you don't know what you are talking about. Even the examples you cite don't support your point. If half the market rate units are taken off the market (per rent control), then the price on the remainder goes up. Period. If no apartments were rent controlled, the average price would be in-between the current rent controlled rates and market rates.
You seem to be making some kind of social justice argument in your replies to my posts and many other points. This is fine, but recognize that you are making a slanted, political argument and not an economic one.
13
Of course rent control is a "taking" under the Constitution. Name anything else where they state steps in and dictates the selling price of a good or service. Milk? Eggs? Airfare? Cars? Dry cleaners?
36
@Kurfco If the wealthy 1% bought up all the milk, eggs, bread, etc, there would be the French revolution in NY. But they don't buy it all up - partly because one can always just produce more eggs and milk. However they do buy up all the land, and one cannot produce new land. So yes, rent price SHOULD be regulated so that land/apts doesn't end up all in the hands of the wealthy and unaffordable to the working-poor, and lower middle class people.
7
@Avirab And so that landlords don't simply raise people's rent at the blink of an eye so that they can move in their kids.
2
@Kurfco Ugh, you do know that MILK prices are regulated right? It has been for decades.
2
I don't see how anybody could argue that telling an owner of a property that they have to rent below the price they could get on the open market is constitutional.
We don't force Ford or GM to sell below their market value. We don't force people who sell pots and pans at a garage sale to sell below what they can get on the open market. We don't force Avis to rent at rates below the market value.
Rent control is a do-gooder solution to a bad problem. And simply cannot be constitutional.
55
@Travelers "have to rent below the price they could get on the open market" The open market for apartments in NY is 'open' only to the rich. Imagine if a law was passed allowing air-rights to be purchased by individuals, and rich people bought it all up. The market rate for air to breathe would be pretty high, and desperate poor people would pay whatever they had and live in squalor and work more and more hours and eat less and less in order to buy air at ever-increasing prices. It's somewhat similar with apartment rents. We NEED regulation.
3
How about this as a work around. Albany taxes these landlords who raise rents on their tenants (taxes are totally legal) and then gives the money back to the renters as a tax break, to pay the increased rent. I'm no tax attorney but it sounds Kosher to me.
1
@FXQ
Great idea, but it's too logical.
Since the end of World War II, rent control laws have been in a constitutional limbo. They were upheld as "emergency" measures and the Supreme Court has avoided the issue since then. The latest NY legislation makes it very likely that the Supreme Court will eventually revisit this issue and strike down the laws. This would be a fair and just result because private landowners should not be required to shoulder the financial burdens of pro-tenant politics that truly take property rights without compensation. This is yet another example of the lesson that pushing too far in a supposedly righteous cause arouses the Newtonian equal and (at least) opposite force.
28
@Cato Developers get property tax abatements if they build rent stabilized apartments in NYC. It's not a forced program.
14
@Maria That is a 421(a) which, while related, is not what is at issue here. Here we are talking about apartments that were coercively forced into the Rent Stabilization mechanism following a so called housing emergency following WWII.
3
@Cato The old-time landlords who own one building and run it as a small business are NOT the targets of this law, the targets are real-estate speculators, vc funds, wealthy families, who buy up all the available land in order to squeeze out ordinary people and then rent the space to other rich people at 10 times the rent. We need strong regulation and strong ENFORCEMENT to make NYC affordable to all the people who work there.
5
I expected this would happen when the laws became more onerous to property owners and the Supreme Court became more conservative.
Ideally, everyone should pay their own way for housing. Those that cannot, ought to be given a subsidy. However, the present system is not based on need and requires a building owner to supply housing for potentially generations. Without these ensconced tenants, small apartment buildings could be demolished for larger ones increasing the supply of housing. However, I have my doubts as to whether "affordable housing," whatever that is, can be built today given the cost of land, taxes, and construction. Presently, this amounts to some tenants paying more to subsidize other tenants in the building. NYC is an expensive place to live and unless you are working or retired, there is not much reason to be here. If one looks at the carrying charges for co-ops, which operate at cost, you can see what it takes to run a building.
27
@David Proponents of rent-control are NOT saying that landlords should subsidize tenants. Everyone agrees that LEGITIMATE building expenses should be reflected in rent hikes. The problem is that rents rise MUCH MORE than inflation, they are NOT pegged to legitimate expenses. And that is what the new laws are trying to fix.
5
@Avirab
Nope. Over the last ten years rent stabilized increases in NYC averaged 1.875%/yr, much less than the rate expenses increased.
6
@Tall Tree You conveniently omit mention of the notorious rent increases for Individual Apartment Improvements and Major Capital Improvements where the costs are permanently added to the rents in perpetuity, decades after the cost of the improvement has been covered. You can get the cost of new windows, for instance, folded into your rent permanently. Then new windows are put in again 15 or 20 years later and THAT cost is folded into your rent permanently. And contractors sometimes provided landlords with inflated invoices so landlords could increase rents even more than was warranted.
4
To those readers who are for the current form of rent control:
I'd like to let you know that you are making up for the tax not paid by the landlords, whose property value was depressed due to rent control. (Commercial residential property value is based on cash flow income; lower rent, lower property value.) It is all good if our tax dollars are helping those, who need help. Since rent control does not test the means of those, who benefit from it, you and my tax dollars may be helping the rich. Shouldn't we ask questions as taxpayers?
20
@Proton Look at the SF Bay area, high taxes, no rent control, housing shortage, SKY high rents pushing people out. The market concept isn't working. It has been tried and has failed.
4
@Proton No-one is saying the rich should have rent control. That is a 'straw man' argument.
@Avirab
Wrong. Your local legislature said exactly that.
The just removed high income deregulation.
A billionaire can live in a rent stabilized apartment for life. Read up.
4
Yes, of course, rent stabilization became unconstitutional only when the lawmakers got fed up with giving property tax breaks to the real estate industry in exchange for nothing. It wasn't unconstitutional to build for free, utilize creative loopholes to violate the intent of rent stabilization and reap the profits, right?
32
@Maria The 'intent' of Rent stabilization was to address an accute housing 'emergency' in the wake of WW2, so New York State impaired the title to these properties by making them Rent Controlled. This 'emergency' then morphed into a generic housing 'emergency' so the title continued to be impaired under the Rent Stabilization mechanism. This 'emergency' has been going on for 70 years now. Rent Stabilization was a taking then and it is a taking now.
Those gleefully saying that this matter has already been adjudicated could not be more wrong. Previously, takings claims would die in politically appointed State courts. Luckily the recent Knick decision will allow adjudication of this issue to proceed directly at the federal level where it belongs.
6
The most of the unfairness of rent control is that it doesn't help people based on their income level but based on luck. If someone happens to be able to move into a rent controlled apartment, he benefits from the low rent, sometimes extremely low, no matter how rich he is. There was a ballot in last year's election in California to expand rent control for all. It amounted to asking taxpayers to subsidise rent for Google and Facebook employees. It makes sense to provide affordable housing but the way rent control currently work makes no sense at all.
30
@Proton There are more people in NYC ho qualify for rent control and NEED it than there are rent-control apartments left. So let's throw out the rich people from rent-control apartments and give the apartments to those who truly deserve them (though there still won't be nough apartmentss for all who need them).
There, the problem is solved.
I'm sure thelandlords will be overjoyed at this and will immediately stop suing the Supreme Court if my solution is adopted.
@Avirab
NYC should increase Section 8 vouchers for poor people who qualify. Rent stabilization has no income thresh-hold at all.
7
@Tall Tree
I'm not familiar with the amount section 8 pays, but this sounds like a way to keep rents very high, just that it would be the government (ie taxpayers) who pay the rent, not the tenant - so all taxpayers are contributing to the wealth of the landlords.
.......
Capitalism should not be a system where rich people make money at the expense of poor people, or at the expense of the taxpayer, it should be a system where innovative people create wealth for themselves (as opposed to Communist/Socialist systems) by creating useful products & services which help everyone including poorer people.
Outside my office window, facing south from a high floor in a building on 41st Street, for a couple of decades I have seen luxury tower after luxury tower go up, and up, and up. One of the tallest buildings every built in the city is still under construction barely 10 blocks south, with a landlord who presumably aspires to fill the floors with wealthy tenants. I'm not sure there isn't a limit on the number of billionaires in the world, but the real estate industry doesn't seem to think so, at least not yet (which is why we have the monstrosity called Hudson Yards now, too).
If they did, they'd start building affordable housing somewhere, even in Manhattan. But the real estate industry doesn't seem interested in making a nice living anymore. They want to make a killing.
52
@Charlie
Tell your local legislators to allow larger apartment buildings. Zoning changes are needed, not rent laws.
4
@Charlie And you think rent regulation motivates any developer to build affordable housing?
Even building these high-scale apartments puts new supply in the market. Rent regulation does absolutely nothing to increase supply.
2
The politicians in Albany need a refresher course on basic microeconomics.
Rent regulations hurt landlords and limits the supply of housing.
33
@John Doe
The benefit many tenants however ,no one if forcing landlords to say in their business are they?
3
@John Doe Legitimate landlords could make a nice living owning and operating one rent-control building with working rent-paying residents. However the wealthy real estate speculators with portfolios of many buildings would not make enough money to justify their efforts... too bad... get the buildings out of their hands and into the hands of the small-business owners like things used to be.
1
@John Doe. I take back everything I wrote here .Rent control works
I never understood why people think rent regulation is for the “community” or against the real estate owners.
It is like any other restrictive zoning or land use regulations. Essentially you limit the value of a property and push the demand and money on a smaller number of parcels, raising their value.
Simply put, it’s a (usually) very progressive tax that benefits a poor minority lucky enough to find such a rental. It benefits many but not all the poor; you have to be the luckier among the poor. And it shifts the value from regulated property owners to market property owners.
We should dispassionately call it for what it is, instead of using vague, flowery, obfuscating language about what it is or isn’t. Stop the propaganda. Then we can figure out what the best collective policy and outcome should be.
A rational debate, in other words.
18
Rent regulations have been on the books in NYC for more than 70 years.
If you bought or built your building during those 70 years, then you should have fully understood what you signed up for.
These landlords were all free to buy or build elsewhere, in communities where no rent regulations existed.
66
@Matthew Carnicelli What you're saying is not accurate. They bought, potentially, under the rules in place last year. They could deregulate if the rent rose above X or the tenant moved, etc. So presumably they paid Y based on the net present value of expected future rental income - including newly deregulated units.
But then the state came in and said, "No, no!" We're changing the rules. You bought the building based on being able to do X which was what the law said. We changed the law and now your building is worth less and your future revenue stream is less.
46
@John NONSENSE Regulatory risk is one of the major risks in any business. that is factored into the price. They had Absolutely no legal right to assume that the regulations would not change. Giving them that right would represent an enormous windfall..I was a law professor in consumer economics and taught this area.
16
@Vince The landlords who are being targeted are vicious, like the ones buying up all the SROs in the city over the last few decades, they bought the buildings in order to victimise the tenants and get them out and convert to luxury buildings. They need to be stopped, and the buildings should be run by people statisfied to provide good service in return for making a nice small-business income, not a vc-fund return on investment.
3
It's a sad commentary on New York courts that the plaintiffs didn't even bother to file on the state level and instead are seeking relief on the federal level where property rights are still respected.
31
@Steve Propert rights of the working people of this country ought to be respected, namely the right to be able to live in a property in the city they work in, where they perhaps were born and grew up, and where they are willing to pay a fair rent, such that a building owner can make a fair profit, but not a gouging profit. Would you allow a rich person to buy up all the land in the country and then not rent it to anyone, so everyone had to live outdoors? There is a palce for 'property rights' of course, but the fact that NYC and many other places have become unaffordable to working people means it has to have limits.
3
@Avirab what about the basic property rights of the owners, namely their rights under the 5th and 14th amendments? I see you've left quite a few comments. Perhaps, use that energy to actually read the complaint.
7
...and now begins another episode of whether the special interest groups will win out over the public good. In this case affordable housing and predatory landlords.
41
Except that the landlord owns the land and is limited in the amount of income he can generate from it. No one has a right to live wherever they want. The market determines the rent.
62
@Damon. If people are willing to pay more than the land is worth based on the factors you raise, then how is the landlords’ wish to get the most for their property predatory? A lot of factors go into determining fair market value. Those who are willing to spend more to live there should be permitted to. They might be fools but that’s their choice. Those who can’t afford to live in NYC can pay rent or own in another state where property values are less. Again, why should the gov’t harm one group to benefit another? Sounds like a taking to me.
27
@Damon not exactly, the premium value of land in NYC comes almost entirely from scarcity, demand is driven by more people chasing NYC rental property than there is supply, that is what drives the rent up, not anything inherently associated with who New Yorkers are, what they do or those who wish to become New Yorkers
8