Rent Board Chief on Shifting Onus from Landlords
The Observer ran an interesting interview yesterday with the head of the Rent Guidelines Board, Marvin Markus, that lays out some of the common-sense problems with rent control and stabilization. If we as a society deem it worthwhile to subsidize certain people (and clearly there are lots of reasons to do so), then the cost…
The Observer ran an interesting interview yesterday with the head of the Rent Guidelines Board, Marvin Markus, that lays out some of the common-sense problems with rent control and stabilization. If we as a society deem it worthwhile to subsidize certain people (and clearly there are lots of reasons to do so), then the cost should be borne by society as a whole not individual landlords, argues Markus. “There are poor tenants, they should be protected, but the individual owner is not the one that should protect them. The population at large clearly should be the ones footing the bill,” he says. And how would be do that? “One suggestion is a rent tax/surcharge of some limited amount, on all rents in the city … and all co-op and condo charges in the city. … It’s very important for the city of New York that there be a mixed income base—from an economic standpoint; from a social standpoint—and we want to make sure, I want to make sure, that that continues.” While landlords make easy political targets, it’s hard to make any rational arguments in favor of the current system: Lifetime entitlements makes no sense at all; nor does a system that dis-incentivizes landlords from maintaining the housing stock.
Rent Board Chief Markus Pleads for ‘Rationality’ [NY Observer]
Photo from the Tenement Museum
etson, could not agree with you more. I also am not in favor of rent stabilization, but the people who bought these buildings knew the rules going in (and also enjoyed the discounted price on the building). Its all about cash flow – the reason the building these landlords bought was cheaper than comparable free market buildings when they made the purchase is because the expected future cash flows are lower due to rent stabilization. Now, the landlords want the cheaper initial capital outlay but don’t want the reduced rent income that goes along with rent stabilization. Sounds like wanting your cake and eating it to. It is the owners of the buildings that should incur the cost of subsidizing the tenants since they benefited from lower purchase prices at the outset.
Another question is- since renters pay to landlords, how is this subsidy supposed to be collected? Is my landlord going to be responsible now for taking care of this? Am I going to pay diretly into an agency?
This is such a stupid idea- they’ll spend more money on setting up and running the office with staff and equipment, than will ever go to landlords.
back40- that was the intent but of course things change. I think laws should be stricter regarding RS/RC but I agree with Etson on this and sam. Landlords do get breaks and abatements, as do developers. Many of them took advantage of tax abatements to build affordable housing and never did. Its a business, and like etson says, they knew the deal. Asking the general public to give them a subsidy is like patting them on the head for running a business badly.
People should also stop confusing rent stabilization and rent control. They are very different and you will ntot find a 6 room (or more) apartment on the UWS for 300$ if it’s rent stabilized. You might if it’s rent controlled and you lived there for 40 years. But rent stabilization regulates the amount of increase and as such, many rs apartments, while lower than market rate, are not all that miuch lower. There is no lifetime entitlement with RS either.
There’s plenty of people who abuse the privilege of rent control and that should be stopped. No question. But to add another tax onto my rent to subsidize landlords (I pay mine. Why should I pay someone elses?) – no thanks. Life is tough enough.
Just to be clear, I don’t agree with rent stabilization in general, but think it is a difficult system to dismantle and so has to be done gradually.
It’s just that the proposal hits market rate renters even harder. Stabilized apartments stay off the market thus keeping supply low, and then market rate renters would have to pay the surcharge as well.
Finally, I am very skeptical that most stabilized landlords simply don’t have the money to maintain their buildings. If so, they should be forced to sell. I simply don’t see how the current system is ‘unfair’ to them, as troll claims, given that most knew the rules going in.
Back40 talks sense @ 9:23.
I’m not sure how this would help landlords at all to be honest.
If my budget for rent is $3000/mo, but suddenly there is a new 5% tax on rent, well, guess what my new monthly budget for rent is?
It’s about $2850.
The rental tax just makes me lower the amount of rent I’m willing to pay.
why is it they (free market junkies) complain about this but never a word about price control on taxi fares.
Maybe the intent of rent stabilization is actually to stabilize rents and not necessarily to subsidize poor people. In a stabilized world, landlords are guaranteed some sort of return but don’t get to gouge tenants in tight housing markets. The downside is that developers don’t get the extra incentive to increase supply afforded by high profits when the market is at the top. So instead, they could get tax breaks to increase supply. In this manner, the stabilization of rents is in fact subsidized by the larger public in the form of developer tax incentives.
Just thought I’d offer a different way of looking at this issue.
speaking about rent control in New York is like speaking about religion in Teheran. It is a sensitive subject. Years of orthodoxy makes “common sense” a very dangerous subject to try to broach.
One of the problems with his premise is that there are no income requirements for receiving the advantages of rent controls. Society would not be helping the needy by subsidizing it. Some on rent control are needy and others are real estate attorneys with villas in the Hamptons and chalets in Crested Butte. It is hard to bring rationality to a completely irrational set of laws. You may as well lecture about the safety of eating pork and drinking bourbon in Rijadh.