Rent Control for the Rich, From NYC to Hanoi
Rent control is an idea that has, thankfully, mostly fallen out of favor in America. The crumbling buildings and raging fires in the South Bronx and throughout New York City in the '70s went a long way in convincing people that perhaps landlords should be allowed to collect enough rent to cover maintenance costs, and it's one of the few issues on which economists of all stripes largely agree.
But there's at least one person who remains utterly unconvinced: New York State Assembly Speaker Sheldon Silver (D-Manhattan). For years Silver and his friends in the NYC-dominated Assembly have tried to limit landlords' ability to decontrol units occupied by wealthy renters, but the state Senate, which is controlled by suburban and upstate interests, has kept the Assembly's statist impulses in check.
That is, until now. Gov. Andrew Cuomo (D) is trying to make good on his campaign promise to cap property tax increases, and the New York Daily News reports that Silver has moved to hold the proposed legislation hostage by linking it to strengthened rent control laws—a tactic the pols are scrambling to deny.
The New York Times explains what the proposed rent control law would mean in practical terms:
About one million apartments in the city's five boroughs, roughly half of all rental units, are covered by the existing laws, which sharply limit landlords' ability to raise rents and keep many apartments, particularly in Manhattan, renting at well below market value. Currently, apartments become deregulated when the rent reaches $2,000 and total household income of the tenants is at least $175,000 annually for two years.
Mr. Silver said he would like not only to preserve those protections, but also to expand them, by raising the income and rent thresholds.
"You want to preserve people making $210,000, $225,000 a year, living where they're living," Mr. Silver said.
Perhaps Shelly could take some advice from Nguy?n C? Th?ch, former foreign minister of the Socialist Republic of Vietnam, who saw the perils of rent control in his own country as early as 1989:
Addressing a crowded news conference in the Indian capital, Mr. Thach admitted that controls…had artificially encouraged demand and discouraged supply…so all the houses in Hanoi had fallen into disrepair.
"The Americans couldn't destroy Hanoi, but we have destroyed our city by very low rents. We realized it was stupid and that we must change policy," he said.
More Reason on rent control here.