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theodore M I R A L D I mpa ... editor, publisher, writer
Saturday, November 23, 2019
Beware The ‘UNIVERSAL RENT CONTROL’ Drive To DESTROY New York’s Housing Markets
Shutterstock Jay Martin
Look out, New York tenants: So-called activists are pushing an agenda, backed by the Democratic Socialists of America, for next year’s state legislative session that is guaranteed to destroy much of the state’s housing market.
A cornerstone of their package is the agreeable-sounding “Good Cause Eviction” bill. It’s virtually sure to pass in the Assembly and has 25 sponsors in the state Senate.
Among other things, the bill would expand rent control to almost every apartment in the entire state of New York, unlike in the city, where new development is exempt. The only exceptions would be two- and three-family homes where the owner lives in the building.
Even conservative upstate communities won’t be able to duck these regulations. It’s a sweeping form of universal rent control that is far worse, for both tenants and property owners, than even the disastrous rent reforms Albany passed this year.
As written, the bill would cap an owner’s ability to raise rents at 1½ times the Consumer Price Index. That works out to about $22 on a $1,000 apartment for next year. Supporters will deny that calculation; but they know ambiguous language in text will be interpreted just that way when challenged in court.
Let’s face it: Property owners aren’t dumb. They are going to flee New York in droves if this passes.
And the consequences for New York City will be especially severe. While rent-control and -stabilization laws have wreaked havoc on Gotham’s housing market for more than 50 years, they’ve only applied to about half the rental market, leaving the rest of the industry to operate generally free of overregulation. Under the new law, all of the city’s rental units — no matter how old or new — would be regulated.
The upshot: No more free market. No more ability for landlords to see a fair return on investment. And no reason to pour money into existing buildings or new development projects. The supply of decent housing will fall so precipitously, people will look back fondly on these days as a time when you actually had a chance to find a good, affordable apartment.
The key to making the city affordable is to make it easier and less expensive to build more housing. This bill would have the opposite effect.
Sure, socialists will say the city should just build more public housing. We all know how that works out. Plus, there will be no tax revenue to fund these projects.
If “Good Cause Eviction” is passed with these insane caps on rents, property owners will no longer be able to collect enough revenue to maintain their buildings. Some won’t be able to pay their property taxes. Eventually, they’ll be forced to sell their buildings to massive hedge funds and conglomerates, which can sit on the properties for decades waiting for better times.
Less desirable buildings will be seized by the city, putting Gotham’s worst landlord in charge of more units.
Decline won’t happen overnight, but it’s inevitable. And it will take a generation to recover. Rent control’s long history of damage to the city’s housing market is proof.
Moderate Democrats may be backing the DSA-backed legislation because it includes Home Stability Support, which provides vouchers to families in need. HSS is a fine bill. Yet coupling it to universal rent control is taking one step forward and six steps back.
To have a progressive city, you need a prosperous city. New Yorkers should see through socialists’ simplistic, doomed, soak-the-rich “solutions.”
By removing red tape and restrictions that discourage new housing and boost costs, we can put thousands of people to work in well-paying jobs, drive down the price of rent and ensure that New York retains the space and resources to welcome hundreds of thousands of immigrants and young people.
We’re at a crossroads. Will we resort to sure-to-fail socialist policies or build for the future? No system of rent control has ever solved New York’s housing challenges. This one won’t either.
Jay Martin is the executive director of the Community Housing Improvement Program.