Since World War II, New York City (NYC) residents have suffered from rent control. The very phrase implies that the city needs to intercede for tenants to ensure that unscrupulous landlords don’t charge too much for the properties they control.
Although the system is Byzantine in its complexity, it remains popular. For years, getting a “rent-controlled” apartment was synonymous with getting a good deal.
A Bureaucratic Fantasy
Manhattan, where slightly less than half of the City’s roughly nine million people live, is home to 66,940 people per square mile, according to the 2020 Census. Virtually none of those people own the land upon which they live. A few residents may own “co-ops” or condominiums, but the overwhelming majority rent. The four “outer boroughs” (Brooklyn, Queens, the Bronx and Staten Island) do have a higher percentage of homeowners than Manhattan. Even so, the NYC Comptroller’s Office stated that “New York is largely a city of renters: 69% of households rent their homes.”
The Comptroller’s Office also notes that roughly half of those renters reside in “rent-regulated” apartments. It then justifies that system.
“Rent regulation creates stability for tenants by requiring landlords to offer renewal leases and limiting annual rent increases. As a result, many New Yorkers who live in rent-regulated apartments do not face rents nearly as high as publicly available listing data on asking rents.”
A Socialist Nightmare
While that last paragraph may seem unremarkable, it should be scrutinized by anyone who believes that private property, particularly the private ownership of land, is vital to public order in particular, and Western civilization generally.
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City bureaucrats are careful to present the occupants’ perspective. The motive may be simple self-preservation since in a city where two-thirds of the population are renters, officials need to promote the interests of tenants to survive in office. Indeed, it is likely that the numbers crunchers in the Comptroller’s office are renters themselves.
However, that paragraph also feeds the leftist worldview. It clearly implies that property owners have no right to receive the market rate for the apartments they lease out. Less obvious, but still present, is the contention that landlords are pariahs who delight in cheating their tenant-victims out of every possible dollar.
Providing an Essential Service
While greedy “slumlords” charging high rents for horrible apartments do exist, most owners do not fit into this category. Like any investors, they rent out properties for financial gain. Factory owners, retailers, restaurateurs and hoteliers all earn profits while contributing to the welfare of others.
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Landlords are no different. The places that they rent out provide shelter for millions of others who cannot afford or do not want to purchase their own homes. In so doing, these men and women take immense financial risks.
A Sobering Case Study
In a recent article, The Wall Street Journal focused on one of these property owners, Mrs. Sharon Cohen. She is a sixty-four-year-old widow who owns a century-old, thirty-five-unit apartment building in the Bronx. It is her sole means of support. According to the City, the building is worth a bit more than a million dollars. However, a local bank holds a $417,000 mortgage against it. Unlike the gorgeous New York penthouses featured in many television shows and magazine articles, Mrs. Cohen’s apartments are strictly low-rent, averaging roughly $1,300 each per month.
Mrs. Cohen nearly lost the whole place in 2017 and 2018. During that time, the City froze all rents by order of Mayor Bill de Blasio, an admitted socialist who supported Bernie Sanders’s 2020 run for the White House. Of course, Mrs. Cohen’s maintenance costs continued to rise. With thirty-five units, replacing plumbing, light fixtures, refrigerators, and ovens is a regular expense. Painting, carpeting, and cleaning are virtually continuous. And, of course, the city tax collector was unsympathetic. During the freeze, her property taxes increased by about $8,000.
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Then, during COVID, the City’s notorious “eviction ban” took its toll. Tenants ran up massive debts and then left without paying once the ban ended. In the post-COVID environment, evictions are still difficult to obtain—taking two years if the apartment is “rent stabilized,” as many of Mrs. Cohen’s are. The habit of not paying rent is hard to break. According to the WSJ, “In the first half of July, she received $14,000 of an expected $46,000.” Her current tenants owe her a total of $158,000. In the last year and a half, several tenants owing a total of $130,000 simply left.
Meanwhile new proposals of rent control are being floated. Tenant’s hardships go conveniently unmentioned.
Will a Sad History Repeat Itself?
Is more rent control the solution in the future? New York’s history during the seventies and eighties says no. During those decades, many buildings in the outer boroughs—especially those in the South Bronx—were simply abandoned by landlords who could no longer maintain them profitably. When the banks foreclosed, they ended up with burned-out shells with no commercial value.
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In other locations, whole neighborhoods were demolished to be replaced by crime-ridden and soul-destroying “projects” where no one wanted to live unless they had no other choice.
Will this pattern repeat itself? No one can say for sure; no two eras of history are ever identical. On the other hand, the history of public housing projects in America’s major cities—as well as in Europe and Asia—does not leave much room for optimism. Like many leftist proposals, rent control and public housing promise much but have no proven record of delivering upon those promises.
Photo Credit: © Larry Gibson – stock.adobe.com
First published on TFP.org.