Under New York ’s New Rent Control Law Nobody Wins

Earlier this month New York Stateenacted a new rent regulation bill. The bill applies to the entire state but has a significant impact on New York City where 2.4 million people live in close to a million regulated apartments. The City ’s two regulatory frameworks, rent control and rent stabilization, differ on which units qualify and the rules that govern rent increases, but in general they both cap the amount that a landlord can increase rents each year leading to rents that are much lower than the market rate. The new law cre ates permanent regulations thatseverely limit the ability of landlords to raise rents in special circumstances (for example, after tenants move out or landlords invest in building improvements) and to deregulate units.As my colleagues have arguedtimeand timeagain, rent regulations are counterproductive. Though the rules aim to address a lack of affordable housing, setting the rent below market rates creates a supply shortage that exacerbates the problem. Traditionally, economists have understood rent control to benefit current tenants, who pay lower rents, at the expense of future tenants, who have more difficulty finding affordable apartments.This view accurately captures the future supply shortages created by rent controls but misses the negative impact the rules have on current tenants. In the winter 2018-2019issue ofRegulation,Richard McKenzie and Dwight Leeexplain how current renters are made worse off by the strategies landlords use to respond ...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs