Why Rent Control Does Not Work

The Supreme Court of the United States last week rejected landlords’ challenge to rent stabilization and in effect has endorsed this affordability strategy. It allowed the state to continue capping rents in old apartment buildings, the properties most in need of upkeep.

The demise of landlords’ lawsuit raises the question of where to go from here. Not to supporters of rent stabilization, however: They don’t want to go anywhere. Their celebration of the court’s decision did not even hint that any changes were needed. They should think again. New York’s 2019 rent law is a ticking time bomb because it does not allow owners to recoup enough repair costs through rent increases. Over time, this lack of maintenance will cause some buildings to fall apart.

Why hasn’t this resonated with politicians? Mostly because they had other things on their plate that took precedence. Such items as trying to rid exhaust-spewing trucks from the roadways, opening more bike lanes, adopting congestion pricing, providing more open space, and a whole list of items their constituents wanted. In the 1980s and 1990s, such efforts to improve living conditions consumed the city’s elected officials. Then, as conditions did improve in some areas, their priorities changed. Their focus became controlling rents, which were climbing because economic and quality-of-life gains sparked demand for housing. Their tactic was to stop any improvements that might trigger gentrification.

The rent law changes in 2019 were a huge part of that. Rent hikes to pay for individual apartment improvements or major capital improvements were limited on average to $83 per month. Lousy units would remain lousy, and other units would become lousy over time. Since then, the effects of the law have been permeating through the city’s rent-stabilized housing stock — about a million units. Over time, the changes will be dramatic. But day to day, week to week, they are incremental and overlooked. A slow leak causes mold to spread. Deferred repointing erodes facades. A balky boiler lingers for years.

I am a property owner and know intimately what maintenance goes into any rental building. But the 1 situation that comes to mind is the Hoboken 8-unit condo building where my daughter first lived after college. Even with low turnover and high-income residents, the building has needed constant work, and far more than I ever imagined. A front facade overhaul. Rear facade repointing. Dormer repairs. Replacement of bricks destroyed by clogged downspouts. New boiler. New boiler ignition. New boiler wiring. Many new thermocouples. Skylight glass replacement. Sewage lateral straightened. A burst pipe repaired. Sewer drain line unclogged many times. Three new water heaters. Constant roof repairs. New sidewalk sections. Iron gate fixed. Stoop steps, stanchions and balusters repaired. Stairwell recarpeted and painted. New LED lighting. Wood spindles fabricated and installed. Front door stripped and refinished a few times. New concrete under the stoop to seal out rats. New bell/intercom system. Chimney cleaning. Dryer vent cleaning. Numerous permits, yearly filings, and constant trash fines are always in the pile of mail for the property.

All that work was just to the common areas, not individual units. Most of the jobs cost thousands of dollars, some costs tens of thousands and one cost more than $100,000. There is no way these costs could have ever been funded with $83 monthly fees from 8 apartments.

The expenses would have been far greater had the research, paperwork, and some actual work not been provided for free by the buildings resident board members who donate their time to the building where they live. Through YouTube and trial-and-error, board members become a locksmith, electrician,

plumber, painter, landscaper, exterminator, lawyer, and expeditor. The president wrote letters to get water fees reduced and summonses dismissed, cleaned waste traps so they could be re-used, swept the front curb of trash to save additional summons, go in late to work to let the repairmen and contractors in. Meet up with contractors after hours to discuss repairs needs and field estimates etc.

All of this will sound very familiar to landlords. Maintaining an eight-unit, white- collar condo is child’s play, though, compared with operating a rental building with dozens of rent-stabilized tenants. Some buildings will remain sustainable because they have enough market-rate units to subsidize the regulated ones. But in the poorest neighborhoods, the market was not strong enough for landlords to deregulate units before the 2019 law made that legally impossible anyway.

With the Supreme Court turning a blind eye, those low rents are now locked in. And while the city requires landlords to maintain properties, building codes are no match for math. Owners cannot spend more than they take in, so buildings will break down, just like they did in the 1970s and 1980s.

Crappiness as an affordable housing strategy. It’s a New York tradition.