Housing plan sparks arguments on rent control, just cause evictions

 

 

By Wendi Jonassen

After several hours of confusion and bickering, last week the Richmond City Council approved a housing element—a part of the general plan that will address land use and housing development throughout the city—just in time to meet a deadline to be eligible for a state-issued $44 million grant.

But although the entire housing element contains more than fifty sub-sections, there are still four sections of the plan the council left undecided, which could affect rent control, eviction laws and low-income housing requirements in Richmond. Those four subsections cover enforcing stricter just cause eviction protections, establishing rent stabilization and a rent control board, creating a community land trust, and restricting the circumstances in which a developer can pay “in-lieu” fees instead of building low-income housing.

All of these subsections are either controversial or are only in beginning stages of research. At last Tuesday’s meeting, after two and half hours of discussion and over 20 speakers from the community, the council did not actually vote to implement any of these items. Instead, they spent several hours arguing before voting to allow the Planning Division to spend the rest of the year doing research on them.

“The only thing we will have to do now and between the end of the year is come back to the city council with studies,” said Hector Rojas, a senior planner in the Richmond Planning Division.

As rent soars throughout the Bay Area, the population in Richmond is expected to grow by 10,380 households between 2010 and 2030 according to the Planning Department. With the Lawrence Berkeley Nation Lab coming to Richmond, many expect that to add to the population boom, in addition to adding jobs. That’s raised concerns about gentrification—that low-income residents will be pushed out of Richmond.

Today, Richmond is a Bay Area leader in low-income housing. Neighboring cities average meeting 32 percent of their affordable housing needs while Richmond sails above with 300 percent of its affordable housing options met, according to a 2002 report done by the Non-Profit Housing Association of Northern California.

However, homelessness continues to be one of Richmond’s biggest issues. Richmond has the largest homeless population in Contra Costa County, with 2,266 homeless people or families according to the Planning Department.

No one, not even experts in the Planning Department, yet knows how the four controversial elements could affect Richmond as the city braces for the population boom. The planning department will spend the year talking to other cities about their policies on similar matters, looking over statistics, and talking to elected officials to try to get a better idea of what Richmond needs to do to attract developers and money, while still providing for the low-income population. For example, when Councilmember Nat Bates asked for solid data on eviction problems, Rojas said that that was an area that needs more study.

“We do need a year’s time to look over this and that is not including outreach to the community, talking to stakeholders, and making our own recommendations on each and every one of these programs,” Rojas said. “There are a lot of questions.”

The answers to those questions will affect housing development, land-use, rent, tenants’ rights and low-income housing in Richmond for many years.

Rent Control

At the last council meeting, the rent control element of the plan easily took over much of the debate between councilmembers, residents and property owners who were ready to cite statistics and voice concerns.

If implemented, this clause would enact rent controls, which are limits on how much and how often landlords can raise the rent. In order to do this, Richmond would need to establish a rent control board that would oversee new developments and manage landlords. The board would only allow landlords to raise rent by a certain percentage every few years to keep rent affordable, but that percentage and the time period for how often landlords could raise rents is not specified in the clause. The Planning Board will spend the year researching to work out these details, Rojas said, unless, of course, they decide rent control won’t help Richmond.

Renting is a key issue since over half of Richmond residents rent instead of owning property. Additionally, 82.4 percent of low-income renter households overpay, meaning that they spend more than 30 percent of their income on housing, according to the Planning Department.

But not all properties will be affected by rent control, no matter what the Planning Department finds in their study. Under state legislation called the Costa-Hawkins Rental Housing Act of 1995, single-family homes and condos occupied after 1996 and any housing built after 1995 are exempt from rent control. The Costa-Hawkins Act also allows landlords to re-set the rent after a tenant moves out.

That exempts close to half of the housing in Richmond from rent control, said Theresa Karr, regional development director of the California Apartment Association, a statewide association for managers or owners of rental properties.

“Take all of those out and what you have left is a huge housing stock in Richmond that was built during World War II,” Karr said. “These are owned by working people, retired now, people who worked hard to have their own piece of America, who are relying on that rent as a part of their retirement income.”

At last week’s meeting, landlords and other rental property owners backed Karr, like Jeffrey Wright, chief executive of the West Contra Costa County Association of Realtors, who stood to speak out against rent control ordinances, saying that it will make Richmond unattractive to new development.

“The facts do not support rent control,” said Wright. “We are not plagued with the situation whereby rents are exorbitant. We often times can get caught up with the emotionalism of a topic.”

As Wright was leaving the public speaking podium, Councilmember Corky Booze said that he agreed with Wright. At the meeting, both Booze and Councilmember Jim Rogers cited problems the city of Berkeley encountered several decades ago. Rent control was established there in 1980, and afterward developers slowed their building of rental units. The total number of rental units dropped by 14 percent between 1978 and 1990, according to the National Multi-Housing Council, while rental units in neighboring cities without rent control rose.

In 2008, backers of Proposition 98, a statewide ballot initiative, sought to ban local rent control measures, but the measure failed.

“I am not convinced at this point that it is appropriate to go forward with rent control,” Rogers said. “I think that there is evidence that there is a movement away from rental units into condominiums purchasing for single-family homes” in the event of rent control.

But groups like the Alliance of Californians for Community Empowerment (ACCE) and Richmond Equitable Development Initiative (REDI) are proponents of rent control, saying that it will protect tenants against unfair rent hikes and protect the community from gentrification. “Landlords are still going to make their money” even with a rent control clause, said Melvin Willis, a member of ACCE, which works with low-income residents, immigrants and working families across California. “Let’s just try to make it more fair for the community.”

Proponents argue that landlords can take advantage of low-income residents if there is no control over rent increases. “We don’t want this city gentrified, as the city grows. We don’t want to put low-income people out,” said Councilmember Jovanka Beckles. And with over half the population paying over half their income on rent, Beckles asks, “If rent stabilization is not the answer, what is? It just makes me wonder, what can we do?”

Mayor Gayle McLaughlin also supports rent control. If more Richmond residents can save some money on rent each month, more will be able to afford to buy homes, she said. “Rent stabilization offers these possibilities … and that offers a better economic development situation for the city,” McLaughlin said.“It is a positive to put roots down.”

Aside from being controversial, funding a rent control board is also costly. Several Richmond councilmembers, as well as Rojas, said that board in Richmond is not financially feasible, arguing that paying board members and keeping records could cost the city half a million dollars a year.

“Some of the cities that do have rent control ordinances spend resources in the millions to run that program,” Rojas said. “We don’t have budget surpluses to create new programs. What we want to do is to see what resources we do have.”

Just Cause

Another controversial item in the housing element concerns the establishment of “just cause” eviction protections, which mean that a landlord cannot evict a tenant without legal proof of wrongdoing such as using the property for drug dealing or prostitution. This appeals to some because just cause ordinances protect renters from being evicted if they complain or simply don’t get along with the landlord. However, a landlord also can’t evict a tenant whom they suspect of illegal activities—such as drug dealing—without getting definite proof from the police, which can be time-consuming and ineffective.

Right now, Richmond’s just cause eviction ordinance only applies to tenants in foreclosed homes. However, the Planning Department is now looking into expanding the just-cause ordinance to include all rental properties and will spend the next year doing research.

Proponents of just cause protections believe they give renters more rights and keep landlords honest. Under just cause provisions, landlords can’t evict a tenant with ulterior motives in mind, such as raising the rent on current tenants, and they must follow legal protocols for eviction.

“I am for just cause eviction ordinances because through knocking on doors and talking to community members, I have found that there are good and bad landlords,” said Willis of the ACCE. For example, Willis said, he has heard stories about tenants moving into buildings that aren’t up to code. The landlord pushes the tenants to get repairs made, and when the tenants complain about the extra work, the landlord threatens to kick them out.

But some of those opposed to just cause call it a “drug dealer protection act” since such ordinances can make it harder to kick out a tenant whom the landlord suspects—but cannot prove through police reports—is engaged in criminal activity.

“As much as they would like you to believe, landlords don’t evict good tenants,” said Karr, whose group opposes just cause. “There is not reason to evict a good tenant. Just cause ordinances are developed to where you have to give multiple notices and you have to give them over and over again. It’s just not as cut and dried as it appears.”

Planning Department officials say they will now take the year to gather input from community organizations, legal aid groups, renters, landlord and property owner groups, and study ordinances from other jurisdictions in California to find the most effective regulations for Richmond.

Inclusionary fees

One portion of the housing element that the council discussed without much bickering was an item regarding inclusionary fees. Inclusionary housing ordinances require that developers set aside a certain number of units for low-income residents. If they choose not to, developers must instead pay an “in-lieu fee.”

Richmond and neighboring cities already have inclusionary housing ordinances on the books with in-lieu fees built in. In Richmond, any complex with ten or more units is subject to the inclusionary ordinance. Other cities in the Bay Area charge a fixed in-lieu fee, but Richmond does it based on a percentage of the construction costs, “which I think is more reasonable,” Rojas said.

Money garnered from the in-lieu fees go back into the city’s housing trust fund, which is used to fund more low-income housing projects. “We will get that pool of money together and build our own project,” Rojas said.

Right now, a majority of developers in Richmond pay the in-lieu fee. As a result, that is leaving fewer units available to low-income residents, Rojas said. What he would like to see is to find ways to encourage developers to include the units, creating a more balanced housing environment.

Since the housing element was passed, Rojas will spend the next year talking to developers and neighboring communities to consider changes to the current fee policy. One option would be to require that developers set aside a certain number of units for low-income buyers, regardless of whether they have paid the in-lieu fee. Another would be to raise the fee, which would make it more economically attractive to developers to include low-income units.

At the last meeting, Councilmember Jim Rogers asked Rojas where Richmond stands in terms of in-lieu fees compared to neighboring cities. Rojas replied, “It’s staff’s opinion that we are pretty much in the middle of the pack in terms of in-lieu fees.”

Rogers responded by asking the Planning Department to push Richmond to a higher bracket—to charge higher in-lieu fees compared to the rest of the Bay Area. “I think that it is appropriate for us to have a policy that puts us on the higher end of the pack,” Rogers said.

But if in-lieu fees get too high, it might scare developers away, leading them to build in neighboring cities. With the expected upswing in Richmond’s population in mind, finding the right balance is crucial. “We want to tweak the ordinance to make it more attractive for developers,” Rojas said, “but if we tweak the ordinance, it might have unintended consequences.”

Land Trust

The last element, and the seemingly least contentious at the last council meeting, was a land trust concept. Community land trusts (CLTs) exist all over California, including in Oakland and San Francisco. They are community-based nonprofit corporations that buy land with the intent of providing permanent low-income housing. “Basically it is a way of subsidizing affordable housing for individuals and families,” said Rojas.

Though Rojas thinks it is a great program to help protect the low-income population, it is very expensive. “The idea would be that now that properties are pretty much every where because of the recession, we would be able to afford more properties,” Rojas said. “But the problem with the program is that we don’t have millions and millions of dollars to search for properties.”

Buying the land isn’t the only expense either. The city would need to pay people to operate the program—file paperwork, organize structures and ordinances—and that can get expensive, especially in an already cash-strapped city.

Rojas said the department is still in the initial planning stages, and that while CLTs are a good idea, Richmond would not be able to fund the project without finding a surplus in their budget next year or cutting some funding from somewhere.

The Planning Department will spend a year studying existing Community Land Trusts in California and nationally, gather input from the community, and determine the most feasibility of a possible Richmond Land Trust, as well as the most effective way to structure the corporation.

What’s next?

The rest of the city’s general plan, with elements addressing schools, land use, and health and wellness, easily passed in April, Rojas said. The less contentious parts of the housing element, including clauses addressing Section 8 vouchers and increasing second-dwelling units (backyard in-law apartments), also passed in April. The Planning Division held off until this January on asking the council to approve the four most divisive components of the housing element. “Because there were controversial issues,” Rojas said, “we wanted to fast-track the rest of the plan.”

But until the entire housing element passed, Richmond wasn’t eligible for the grant-One Bay Area Grant. OBAG is a new program funded by federal stimulus money with a goal of funding “streets projects” that enhance the ability to attract development near transit.

The $44 million grant will cover all of Contra Costa County. “But we think that since our general plan and our housing element is so strong,” Rojas said, “we will get a lion’s share of the funding.” Last Tuesday’s meeting fell just two weeks before the deadline to be eligible for the grant money. The council’s agreement that the city will study the four controversial items, rather than of implementing them outright, was enough to ensure the city’s eligibility for the grant.

The Planning Division now has a year to research each item before bringing them back before the council. Rojas said his department wants to work on developing in a sustainable manner, as opposed to just building outward. “We are looking at the growth that is coming to Richmond,” Rojas said. “We want to develop high-density housing, next to employment, that is transit-oriented.”

“In terms of the whole spectrum, we have so much more positive going for us than the negative,” he said.

 

Source: Richmond Confidential 

Challenge to Hoboken Rent Control Initiative Gets Court Date

 

By Daniel Reyes/The Jersey Journal

Arguments by a group of property owners to overturn the Election Day vote that rejected their rent-control ballot initiative will be heard in Superior Court in Hudson County.

The initiative, which was voted down, 8,248-to-8,196, in November, would have exempted buildings with four or fewer units, as well as all condo units, from rent control guidelines. The group of 15 property owners, represented by attorneys Charles Gormally and Sean Smith of Brach Eichler, filed a challenge to the Nov. 6 election result in early December. The court will hear their challenge on Jan. 22.

Arguments by a group of property owners to overturn the Election Day vote that rejected their rent-control ballot initiative will be heard in Superior Court in Hudson County.

Cheryl Fallic, a spokeswoman for the rent control advocacy group Hoboken Fair Housing Association, appeared at a hearing Friday with two motions aimed at quashing the property owners’ request to allow votes that weren’t counted in the election. Both motions were denied.

The votes which Gormally and Smith claim were wrongfully rejected include 92 absentee ballots that would be more than enough to change the outcome of the ballot initiative, which was decided by 52 votes.

“I can’t believe they denied (the two motions),” said Fallic after the hearing.

Fallic described the plaintiff’s case as “flimsy” adding that while she and her supporters were still digesting the news, an appeal of Friday’s ruling wasn’t out of the question.

Gormally understood Fallic’s concern, but felt that due to situations surrounding the election, specifically Superstorm Sandy, taking another look at votes that weren’t counted is “common sense.”

Gormally pointed out that a group of ballots postmarked before Election Day weren’t counted, even though the deadline to vote had been extended to Nov. 9 due to the storm.

He also cited hundreds of people who did not receive absentee ballots until Nov. 9 due to the storm.

“The confusion surrounding the whole process merits consideration,” said Gormally.

 

Source: NJ.com

Rent Control Across the Globe: Hong Kong CE Says No to Rent Control

01-17 16:03

Rent control will not help to solve the housing problems in Hong Kong, said Chief Executive Leung Chun-ying.

Speaking in the question-and-answer session in the Legislative Council, Leung said rent control will only discourage people from becoming landlords, making those who cannot afford their own flats more difficult to look for homes. He reiterated that he would not want to touch on the issue.

Leung was asked by Civic Party’s Alan Leong Kah-kit, who criticized the Chief Executive for his policies failed to lower home prices.

 

Source: The Standard Hong Kong

Lawmakers Say Rent Subsidy Should Go Directly to Landlords

By Johnny Destino

After all, they get their subsidies based on the sworn statement that they are paying rent.

Now someone is finally addressing the injustice that occurs when welfare recipients choose to take the subsidy, but fail to pay the rent that was a condition of them getting benefits in the first place.

Fair is fair.

They’re gone and forgot nothing but to pay their landlord. But, at least, they left some tokens of their stay as mementos in lieu of rent.

Niagara County Legislative Minority Leader Dennis Virtuoso is sponsoring legislation to curb this widespread problem and he thinks it will go a long way toward helping landlords maintain their properties while alleviating housing insecurity for many families in Niagara County.

Legislators Owen Steed and Jason Zona are joining Virtuoso in offering three proposals at tonight’s (January 15th) Legislative meeting to change the way Temporary Assistance (“TA”) payments are made in Niagara County for those receiving rent assistance. The goal of the reform package is to increase accountability for individuals receiving public assistance and to help property owners maintain and improve the Niagara Falls housing stock.

“Our caucus views temporary state assistance as a grant with specific costs. The Niagara County Legislature needs to ensure that temporary assistance pays the bills it is intended to, just like in our own household budgets,” said Virtuoso. Under the current system, a tenant can unilaterally redirect the money used to pay rent to themselves instead of their landlord. While there may be legitimate reasons to do so, the resulting shortfall often has harsh consequences for tenants who fail to pay or catch up on their rent.

More often than not, the unpaid rent leaves overburdened property owners with no alternative but to begin costly and time consuming eviction proceedings or risk losing months’ worth of income.

“Temporary assistance is meant to help local families create a safe and stable living environment,” said Bob Pascoal, president of the Landlord Association of Greater Niagara. “Our members want to provide safe, clean and affordable housing to people of all income levels. Unfortunately, if the monthly rent is not paid, the purpose of the grant is defeated, and both the landlord and tenant suffer financial and emotional consequences.”

For property owners in Niagara Falls, the choice to evict isn’t made lightly, but the risk in delaying a decision could compound their losses while waiting for their day in court. Court costs and attorney fees alone can run property owners upwards of $500 to remove a tenant. These lost costs and rents are among the factors making it difficult to preserve the integrity of a neighborhood as a result of a reciprocal lack of reinvestment in the property.

“There is a trickle-down effect that starts with an unpaid rent that can end with families on the street and blighted buildings. We see the results on the streets of Niagara Falls every day, and the issue must be addressed,” said Legislator Zona.

The Minority Caucus’ proposal calls for the TA shelter allowance to be paid directly to the property owner and not the dependent tenant. This change would eliminate many of the problems at the source by making sure the rent is being paid each month and greatly reduce eviction, relocation, and home repair costs.

Additionally, the new legislation would require tenants to sign an affidavit indicating that they will utilize their shelter allowance for the payment of housing costs and would, for the first time, impose civil and criminal penalties for those who do not adhere to the restrictions.

Lou Rizzo, a local landlord and member of the Landlord Association, has been working for years to highlight and remedy the injustices perpetuated by this “loophole.”

“About two years ago, as a member of the Landlord Association, I went to Social Services to ask this question: If a tenant is allotted a housing shelter of $400 for rent and they take that money and spend it on their drug habit, why is that not considered a misappropriation of government funds and treated as a crime?”

According to Rizzo, the answer from Social Services was “shocking.” “Social Services, a government agency, said that they only need to show an obligation to pay rent. What they do with that money is their business.”

Since learning that there was no remedy under current law to prevent misuse of shelter allowances, Rizzo and other members of the Landlord Association have been working with county and state officials to have this resolution drawn up and hopefully make its way through to the governor’s desk to correct this grave injustice.

“We want to make sure that if that obligation [for welfare recipients who receive subsidies that is based on them paying rent] is not fulfilled that it will now be treated as a crime. This affects our local economy in so many ways and increases the number of abandoned homes and neighborhood blight,” said Rizzo.

For many people, Rizzo included, this issue goes beyond simply making sure landlords are receiving their rent each month. “More importantly, eliminating this loophole will positively affect the lifestyle of the children whose parents are in the system,” said Rizzo. “We are literally funding drug use for some of these recipients and these children grow up in a lifestyle of moving from property to property, destroying everything in their path.”

This instability is not healthy for children and imposes additional costs upon local school districts that must continually track and register them throughout the district. “It’s creating the next generation of welfare recipients, not to mention the type of students these children become in our school system. Many drop out before their 16th birthday and take to the streets because of the unstable home life you and I are helping to subsidize,” said Rizzo.

Correcting this policy by passing this legislation will have wide-ranging implications beyond merely making sure landlords receive their rent money according to Rizzo. The alternative has proven to be a failure, according to Rizzo. “Let’s look what our tax dollars have bought us: we are the third poorest city in the country, the highest taxed county per capita, the 51st worst crime rate per capita in the country, and we have 20 percent of our housing stock abandoned.”

The City of Niagara Falls certainly has its challenges but local officials are hoping that this package of reforms being presented to the County Legislature will result in strengthening its ability to revitalize neighborhoods.

“We need tools that help stabilize households and neighborhoods. In this case, stability starts with personal accountability, a roof over head, and keeping landlords and tenants out of eviction court,” said Seth Piccirillo, director of Niagara Falls Community Development. “It is important that the city’s county legislators are working hand in hand with the Landlords Association and our department. Improving Niagara Falls’ housing stock is a top priority for everyone involved.”

Virtuoso is requesting, as part of this legislative package, passage of a home rule message from the State of New York, allowing Niagara County to make these changes on a local level without revising the state law. A home rule message must be passed by both the State Senate and Assembly and signed into effect by the governor.

 

Source: Niagara Falls Reporter

Landlords Question the Efficacy of Pending City Council Bill

 

By Al Barbarino

City landlords are questioning the efficacy and enforceability of a proposed City Council bill that would land building owners in housing court for failing to make necessary repairs on properties.

If the bill passes, the city’s Department of Housing Preservation and Development would target landlords who make cosmetic repairs in lieu of underlying structural problems, hoping to turn properties over for a profit without addressing major issues.

Many landlords reacted favorably to the bill, though most believed the bill could be difficult to enforce.

“I think this is a good idea,” said Adam Mermelstein of Treetop Developers, which owns and manages nearly 4,000 units in buildings across New York and New Jersey.  “I think the long-term goal is to put these buildings in the hands of quality, well-capitalized landlords who care about improving their asset as well as creating better living conditions for residents.  Perhaps it will create opportunities for us to purchase neglected buildings at favorable prices.”

But, he added, “I am unclear about the penalties and enforceability of it.”

A main focus of the bill, first proposed by City Council Speaker Christine Quinn in her State of the City address, would address the common problem of landlords plastering over water leaks without seeking the source, which can cause mold and lead to structural problems, according to the Wall Street Journal, which first reported on the proposed bill.  About 50 building would be targeted per year.

“Not sure how that would be enforced,” another city landlord told The Commercial Observer, refusing to be identified, but adding that repairs of that magnitude require units to be vacant.  “It will take a lot more than an HPD inspector to resolve an underlying problem at the property.”

“This is similar to the top 200 worst building list that Bill DeBlasio had – and I was on that list,” he added.  “What a coincidence – both (Mr. DeBlasio and Speaker Quinn) are running for mayor in a city with millions of tenants.”

Tenant advocates conceded that while the bill is well-intentioned, it’s just part of the solution.

“We have a wait-and-see attitude,” Frank Ricci, director of government affairs for the Rent Stabilization Association, told the Journal.  “We want to see how it’s implemented.”

“The bill on its own is not going to do it,” added Gregory Lobo Jost, deputy director of a Bronx housing group, University Neighborhood Housing Program.

The City Council is scheduled to vote later this week.

 

Source: Commercial Observer

Beware the Comeback of Rent Control

The U.S. rental housing market has come under increasing strain recently. As homeowners with unsustainable mortgages have to leave their homes and fewer home buyers are able to qualify for new mortgages, more people are looking for places to rent. As a result, rental vacancy rates have fallen from 11.1 percent in the third quarter of 2009 to 8.6 percent in the third quarter of 2012. With affordable housing already in short supply, there is growing concern that stronger protections are needed to prevent rents from rising too fast, pricing more low-income and vulnerable renters out of the market.

One idea to protect renters that may be getting renewed interest is rent control. Rent control policies have been tried in a number of cities, first during World War II and later again in the 1960s and 1970s. Relatively few places have rent control today though and most states have laws prohibiting the practice. Given the challenges in today’s rental market, does rent control deserve a second look?

 

A scan of the research literature revealed very little evidence that rent control is a good policy. Arguments against rent control go back as far as the 1970s and the RAND housing allowance experiments in New York City. More recently, a MIT study of the 1995 repeal of rent control in Cambridge, Massachusetts, found that investment in housing increased after rent control ended, leading to “major gains in housing quality.” A National Bureau of Economic Research paper also examined the Cambridge experience and concluded that “elimination of rent control added about $1.8 billion to the value of Cambridge’s housing stock between 1994 and 2004, equal to nearly a quarter of total Cambridge residential price appreciation in this period.” These findings have been used to argue for removal of rent control in New York and other places.

In a comprehensive overview of the research literature, Blair Jenkins examined studies of different aspects of first-generation rent control (strict price ceilings) and second-generation (limits on increases, also referred to as rent stabilization). The upshot is that, at best, rent control does little harm but probably not much good and, at worst, it has negative impacts on landlords and tenants. There is near universal agreement that strict price ceilings, such as the kind imposed in New York City in the 1940s, are always bad because they severely inhibit housing production and investment. Even those most sympathetic to rent control seem to agree with this.

 

 

 

 

That leaves the softer, rent stabilization policies, like those currently in place in New York City and Washington, D.C. These regulations place limits on how much landlords can raise rents on sitting tenants, but generally allow much larger rent increases for new tenants. They also often allow exceptions for landlords to pass along certain costs to tenants, such as capital improvement costs or utility charges.

On rent stabilization, the strongest finding in Jenkins’s overview appears to be that tenants in noncontrolled units pay higher rents than they would without the presence of rent control; one reason being that landlords need to make up the difference for lower rents in controlled units. Interestingly, one study found that New York City tenants in controlled units also had higher rents initially, because they were willing to pay more to get into a rent-controlled unit with the understanding that they would have smaller rent increases in the future. The net effect, however, is that tenants don’t save much in the long run—they simply trade higher rents now for lower rents later.

The conclusion seems to be that rent stabilization doesn’t do a good job of protecting its intended beneficiaries—poor or vulnerable renters—because the targeting of the benefits is very haphazard. A study of rent stabilization in Cambridge, for example, concluded that “the poor, the elderly, and families—the three major groups targeted for benefits of rent control—were no more likely to be found in controlled than uncontrolled units.” And, as noted earlier, those in uncontrolled units tend to pay higher rents, so they are actually hurt by rent control.

Given the current research, there seems to be little one can say in favor of rent control. What, then, should be done to help renters obtain affordable, decent housing? A better approach may be adopting policies that encourage the production of more diverse types of housing (different densities, tenure types, unit sizes, etc.), implementing strong regulations and practices to ensure housing quality and to protect tenants from abuses; and providing targeted, direct subsidies to people who need help paying their rents.

 

Source: The Atlantic Cities