Monday, 15 June 2015

We own land! Give us money!

From the BBC:

"Our problem is rent regulation creates a subsidy regardless of whether they even need it," said Jimmy Silber, co-president of the trade group Small Property Owners of New York, and himself a landlord in Greenwich Village. "There's no assessment from government."

The "subsidy" is also paid for by one group, landlords, rather than society at large, he says.

"You have people living in the finest parts of the Upper East Side and the Upper West Side who are professionals and in finance who have rent-stabilised apartments. They don't deserve it. It's unjust," he says.

Nobody forced him to be a landlord and he's not actually adding any value, so what's his problem?

I do like the quip about "rich professionals in mansions" though.


Bayard said...

"and in finance who have rent-stabilised apartments"

I wonder how many of those "rent-stabilised apartments" were bought by their landlords with the rent-stabilisation already in place.

Random said...

" creates a subsidy regardless of whether they even need it,"
Sounds like lefties moaning about the rich. Hmm, like tax breaks or farm subsidies? It's almost like rent is almost... a tax.

mombers said...

1.How much did he buy it for? Rent controls have been in place for ages so he paid accordingly no doubt.
2.How about owner occupier rich professionals with no mortgage? Do they need the 'subsidy' of tax free imputed rent?

The only problem with rent controls is the disincentive to maintain the property properly. Can be kind of sorted by regulation but far better to just tax the land of course so the landlord can keep 100% of any increase in rent due to providing better digs for their tenants...

Bayard said...

"The only problem with rent controls is the disincentive to maintain the property properly."

AFAICR from the days of controlled rents in the UK, you could appeal to the council if you thought that your rent was too high and they would send round someone who would assess a "fair rent" for the property, which, presumably, took into account its condition. The problem with the rent act was more that it was almost impossible to evict a bad tenent and that left-wing councils would be able to indulge in landlord-bashing. However, needless to say, abuse of tenants by landlords still continued throughout the time the Rent Act was in force, in fact the Rent Act probably made things worse, as a lot of the better landlords sold up.

Lola said...

There is evidence from NY that 'rent controls' did cause properties to be abandoned. The dystopian scenes in most episodes of Kojak spring to mind.

I am not really in favour of price controls on anything. It just provides more lobbying fodder for interest groups on both sides of the argument. And the prices set by bureaucrats are pretty well always completely wrong. However in the case of land rents monopoly clearly some 'adjustment' is needed, hence my support for LVT.

LVT would not stop rents rising for 'rich professionals in mansions' and helpfully they and their landlords would be properly taxed.

Random said...

L, yes LVT is the best solution. But we knew that already.
Rent controls may reduce accommodation quality of rented housing but turns people into owner occupiers.
"And the prices set by bureaucrats are pretty well always completely wrong."
What makes you think LVT is any different? In reality it is reasonably accurate. This is a varient of the "hundreds of surveyor s" KLN.

Lola said...

R. Market rents and tax rates are not the same thing, nor are they governed by the same rules. Bureaucrats always lack the information to set prices. What they can access easily is the information provided by the market of prices, not how they are set. Hence it is very easy, as you say, to set a tax rate that will collect the revenue that they think is needed.

Indeed, rent controls did exactly drive growth in owner occupation in the UK up to when the Thatcher government abolished them. Which would have been fine in itself, if Thatcher had gone on to square the circle and introduced LVT and scrapped most other taxes (and not introduced financial regulationism, related topic not for discussion here).

mombers said...

Out of interest, I wonder how the means testing of rent controls works?

"Apartments can be deregulated under rent stabilisation if they are vacated at a monthly rent of $2,500 (£1,600) or if they reach that rate and the occupant's income reaches $200,000."

So does your landlord get access to your private financial data? And do they really get to keep a portion of your income above $200k for doing precisely nothing, or does that money somehow end up going to the public purse?