The Negative Effect of Rent Control and Basic Housing Rights

Written on July 13, 2015 by , updated on May 13, 2016

Negative Effects of Rent Control

When I bring up “basic housing rights” here, I’m not talking about the implied warranty of habitability, where a landlord must ensure the rental property is safe and fit to live in.

Basic habitability is required in every state and one that all landlords should want to abide by.

…basic housing rights are not the same as habitability.

Basic housing rights is the idea that people have the basic right to be provided rental housing in the area they want and in their budget. Hmmm. Can you imagine if home sales worked that way?

The last time I looked, guaranteed housing was not a right provided by the United States Constitution. Yet it was stated as if it were in a recent story I read in The Nation that was arguing for rent control.

The Landlords Are Evil Theory

vampire

My landlord, the vampire…

The story is one of tenants protesting the practice of (gasp) landlords being allowed to raise the rent on rent controlled units when a tenant moves out, called vacancy decontrol.

Tenants in New York are outraged that landlords should be allowed to charge whatever they “can get away with” and vow to vote out Governor Mario Cuomo for being too landlord-friendly.

Despite landlords paying for extra services for their tenants, like online rent collection and free parking, one New York activist in the story is quoted as calling landlords “vampires”.

What Tenant Activists Don’t Understand

bronx

Charlotte Street, South Bronx, 1980’s

Landlords are the very people who provide available housing for folks who cannot or choose not to buy a house.

Landlords must save their money to put a down payment on a property, often sacrificing other things to do that. Landlords take on certain risks, such as having tenants who don’t pay their rent or who damage the property (or the government implementing rent control). Further, landlords must maintain the property and pay property taxes.

If landlords under rent control don’t make enough revenue to cover the market conditions to maintain the property or to pay rising property taxes, then landlords operate at a deficit.

This is exactly what happened to New York landlords in 14 out of the 18 years between 1997 and 2014. And we don’t want a repeat of recent history. Between 1974 and 1984, about 300,000 landlords abandoned their buildings in New York because they couldn’t afford to be landlords anymore.

The rent they were allowed to receive didn’t cover their costs – causing the rental housing marketing in NYC to collapse.

What Tenant Activists Believe

Tenant activists are against landlords being able to charge what the market will bear. And plenty of them think landlords should not make money at all and should be happy to provide housing to people, even if it means losing money.

But there’s one flaw in that line of thinking … why would anyone do that? Why would anyone start a business knowing that they were, at best, only going to break even and not get paid for their time?

Landlords Shouldn’t Make ‘Too Much’

Most landlord don't get rich

Most landlords don’t get rich (really!)

Here’s another case in point, published in the San Francisco Bay Guardian. The author here also believes that housing is a “basic human right.”

He says that property owners have the “right to a regular, acceptable return on investment,” but (get this) they shouldn’t make “too much”.

… a landlord shouldn’t make ‘too much’.

This writer also says “tenants have the right to live in the same place their entire lives.”

Where are all these made-up “rights” even coming from?

What if I believe I have the right to have one job my whole life, can I sue my employer for going out of business?

Landlords don’t operate because they have a right to what some random person deems as acceptable ROI. They are running a business. And tenants don’t have the right to rent a place for the rest of their lives. It isn’t their call.

Know Rent Control Laws

For good or bad, if you’re a landlord in a rent controlled area, you must know the landlord-tenant laws that you are bound by.

There are areas in California, Maryland, New Jersey, New York and Washington, D.C., which allow this practice. Rent control ordinances are generally controlled by jurisdiction, so you would need to contact the rent control board or your local housing official to get the information you need.

Are you a landlord in a rent-controlled area? Tell us about your experience in the comments below!

photo credit: HOPPIP.TUMBLR.COM and YOUNGMUNCHKIN.TUMBLR.COM
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