I’m not sure what you’re trying to suggest about hypothetical rent control in London, but it should be clear that London was geographically exhausted long ago and they’ve been debating architectural preservation and building height control ever since.
You can’t simply buy a property in London, knock it down, and build a 50-story skyscraper. Using it for your case study on rent control doesn’t make any sense.
> Seems to me it's the landlords that really "suffer".
This is the fantasy: Stick it to those evil developers and landlords, amirite?
The fallacy is assuming that you get the exact same apartment under rent control, but cheaper. You don’t.
The truth is that being a rent-controlled landlord is easy mode. You have very little competition, by law, and the waiting list to get into your apartment can be years or decades long. As a result, you don’t have to compete on anything. Who’s going to turn your apartment down when it’s their only shot at housing and no one’s building new construction to compete at artificially depressed prices?
Now you don’t have to worry about installing good appliances or even nice carpet. The air condition doesn’t work well? Too bad, as long as it meets regulations (if any) then that’s good enough. Why would you if your tenants aren’t choosing based on competition? The tenants suffer, too.
And you’re still ignoring all of the people locked out of the system by the ensuing decade-long wait lines, as is the case in this article.
I'm stating that the extreme lack of supply ascribed to rent control also exists in similar cities without rent control.
So maybe rent control's effect on supply is vastly overblown as you can see by looking at the large amount of house-building in NYC before 1974 in the graph above, which is when rent control laws started getting really watered down.
>It should be clear that London was geographically exhausted long ago
Thats kind of absurd. It only recently caught up to prewar population levels. Property prices skyrocketed way before that.
>The truth is that being a rent-controlled landlord is easy mode.
If they like it so much why do they try to trick/bully tenants into leaving or offer large sums of money to tenants to leave if that fails?
>And you’re still ignoring all of the people locked out of the system by the ensuing decade-long wait
Give leveraged landlords market rent in restricted supply environments like SF and the FIRST thing they will try to do is to inhibit further development with NIMBYism that might bring down their rents and damage their investment.
Detractors of rent control tend to feign support for new residents but theyre perfectly happy for them to be priced out alongside the long term residents of the city.
More social housing fixes the underlying supply issue. Higher property taxes fixes the underlying supply issue. Wanting to kill rent control before or instead of fixing these things means being concerned with profit, not people.
Rent control is a band aid while that happens to keep long term (especially elderly/vulnerable) renters housed.
And landlords loathe it.
Just because rent control negatively affects supply doesn't mean bad supply is only caused by rent control.
I live in London too and I'm baffled by the lack of tall buildings in pretty central parts of the city. The real solution is more supply.
> Rent control is a band aid while that happens to keep long term (especially elderly/vulnerable) renters housed.
At the expense of people who don't currently live in London but could, such as immigrants or people from poorer parts of the country finding a good paying job here.
Kicking grandma out of her rented apartment and on to the street isn't going to suddenly mean that Romanian cleaners won't be living 7 to a house in zone 5.
This housing crisis was deliberately engineered in London as a result of the 1980s war between Thatcher and local government. Council housing was privatized as a result (& some of those gains were capitalized by existing residents through right-to-buy).
Councils were starved of tax funding through the UK's comically low council tax rates. This meant that not only was owning property a much better deal but also that councils lacked the funds to increase the supply of housing. Hence prices taking off like a rocket.
There's your supply issue. Rent control would be a drop in the bucket compared to that.
Well, in cambridge, i got kicked out of 2 flats in6 years because they wanted to raise rents, each time, i had to move further out, get a smaller place and still had to pay more money each time, i wasn’t getting pay rise in line with this and i think that’s still the reality across much of the uk, house prices and rents are rising higher than wages.
I also noted across this time that younger people apparently like staying in more and the selfish gits are spending less money on other things and somehow that’s their failing.
I didn’t have my rent raised in ten years here, in fact, as interest rates went down, i would have been well within my rights to demand a decrease. Also, bars, restaurant and clubs seem much more vibrant here than when i was in the uk, as if younger people had a bit more disposable income that flows in the local economy
It would create problems for poor companies that will have to make room for more effective entrepreneurs. At the same time it would create new opportunities in areas normally not considered.
If she's retired, she can move somewhere cheaper so someone who actually needs to live there for their job can move in.
The rest of what you've written is completely unsubstantiated.
A landlord is to housing what a scalper is to tickets (or for the nerds, graphics cards). Only one of them leaves you fucking homeless.
OTOH that is extremely cruel. Older people, assuming they have lived there most of their life, are the hardest hit by having to change. All their lifelong friends are near, their trusted doctors are nearby, it's all they know.
I just spent 5 days in London and was shocked at how many tall buildings there were that weren't there 20 years ago, and indeed how many are being constructed - not just in the centre and docklands, but in battersea and vauxhall too
How could social housing fix the issue? The underlying issue is too many obstructions to building new houses, which restrict supply. If commercially motivated developers cannot build enough houses due to bureaucracy and obstructions by NIMBY groups, then municipality would likely fail too.
I imagine the collective mind could greatly benefit if everyone had to spend a few (education focused) months in construction (and/or say farming etc) Its not boring if its just a short period. In construction you can learn the basics of a discipline (and make yourself useful) in just a few days.
But I agree it is the obstruction that prevents cheap housing. Its probably intentional (to some extend) simply to drive up prices.
I'm totally against rent control, but London's rogue landlords and its very low quality housing are world famous and people coming from all over the world spend the first 6 month adapting to crazy stuff like carpet, old carpet, 10 year old carpet, fucking carpet, windowless toilets, wooden walls, decaying electrical systems, holes in the walls, carpet (I can't get my head around the idea of having carpet in a flat), etc... and carpet (unless they are in the top 5% of the income distribution and can afford to pay 2-3K£ per month in rent). Air conditioning and half-decent insulation are for the top 1%.
Said that, I don't think London's problem is lack of rent control, but rather it is lack of development of the rest of the country and the government artificially inflating the housing market.
It's clear that there are over 30,000 empty homes in London, while most flats built are way out of the range of ordinary families.
Many people are locked out of the system now, we have "affordable housing" that you need to earning about £80k to buy, the current system is utterly failing.
So? According to wikipedia london has anywhere between 10.0 million and 14.3 million people (depending on whether you're counting "urban" or "metro"). 30,000 empty homes translates to 80k people[1]. As egregious as that might sound, is a drop in the bucket relative to the overall population. The 30k number also fails to differentiate between long term emptiness (eg. billionaires hoarding houses) and short term emptiness (eg. units undergoing renovation, units looking for a new tenant). The latter is necessary for a functioning rental market, otherwise it's impossible for people to move into/around the city because all the housing units are locked up.
[1] https://www.statista.com/statistics/295548/average-household...
Who can afford to keep homes empty at such great expense, and for what purpose?
Sounds like a step is missing...
Seattle so far has not imposed rent control, but they've done everything else they can to create benefits for renters at the expense of landlords.
And so the smaller landlords exit the business, and the larger ones raise rent to cover these new "free" goodies.
One of the freebies is the city will provide a free lawyer to any tenant with a dispute with the landlord, but the landlord gets to pay for his own lawyer.
With a firehose of money sloshing around, of course rents are going to rise. You can be damn sure that I'm going to outbid any of the locals for my apartment. Rent is barely a blip on my budget.
The housing inventory doesn't change, regardless of whether landlords are 'exiting'. Like any conscious class, they are just complaining because they, like the rest of us, want more money.
Which, in terms of the rental market, is the exact same thing as that person long-term renting the unit.
> Underperforming buildings also get razed by developers.
... And in this town, when that happens, they get replaced by buildings containing more units. You may have seen a few cranes here and there on the city skyline.
Rent control discourages building more units. The more you can make from rental, the more companies will invest in new construction projects.
Rent control can decrease efficiency of living situations. You can imagine an old woman living alone in a 3 bedroom unit with rent control because it would be more expensive for her to move to a smaller unit. Or someone who gets a new job far from their current rent-controlled apartment but won't move out because the rent is so much cheaper.
Yet the strictest rent controls went hand in hand with the fastest homebuilding spree in 1950s NYC.
It clearly didnt discourage that much. Maybe it didnt discourage it at all?
Or maybe it does a bit but is eclipsed by the effect of, say, NIMBY landlords inhibiting development, hellbent on staying above water on their eyewatering SF mortgage.
>Rent control can decrease efficiency of living situations. You can imagine an old woman living alone in a 3 bedroom unit with rent control because it would be more expensive for her to move to a smaller unit.
I can imagine. She could get priced out of the city entirely I suppose.
It seems to me that if the market rate is intent on 10x'ing her rent maybe it's the market that should be forced to adjust first, not her.
More home building. Higher property taxes. Rent control while the effects kick in.
Weakening them in 1974 if anything seemed to restrict supply.
SF has comically low density housing that is driven by homeowners lobbying to restrict development.
The difference between SF and Seattle is probably property taxes (higher in Seattle). It discourages land from being hoarded and used unproductively.
Then when rent controlled unit can be redeveloped, there's a desire to allocate various percentages to different income levels. This means that some units have less income for the same cost so it's hard to balance meaning fewer projects get off the ground.
Now there's even further issues about development as a right vs requiring a use permit...
So, there's a lot of contributors, but the political impact of the politics of rent control is significant.
[0] https://www.berkeleyside.org/2021/07/28/uc-berkeley-settleme...
and yet to keep up with demand we would've needed to more than 3x what we did, though from what I understand, the infrastructure to build more high density housing even faster just doesn't exist. Seattle was literally building housing as fast as it is possible for a US city to build housing.
If true that, in my opinion, points to a more significant problem in America.
Assuming a family of 4 would live there instead, she's effectively removing 3 people from the city. That can force other old women to move out of nearby homes that aren't rent controlled (since prices become higher than they'd be if more people could fit in existing housing), or it could prevent people from moving in. But either way, less people can live there. The policy isn't without harm.
> I can imagine. She could get priced out of the city entirely I suppose.
kind of an unlikely worst case. There's a gradient of prices as you move further from the city center, and this particular hypothetical woman is moving to a much smaller unit. I haven't heard of a city where the average market price unit was 10x the rent controlled price. It's probably 2x-3x at worst for an equivalent unit.
I think is overrated concern in general. Most popular cities aren't underdeveloped. Rather the problem is concentration of resource. Having less optimized areas are actually a good things as that means more areas are equivalent. Which is really what supply is in housing markets. It's when every one too young, old or poor have to move you get problems because now all the attractive things are in the same area. Which means the demand will be very high.
Also this is happening in the housing market in general but apparently it isn't a problem when it's wealthy people retiring in their forties because of the housing market itself.
> There's a gradient of prices as you move further from the city center, and this particular hypothetical woman is moving to a much smaller unit.
That is mostly true if you are moving voluntarily. Because if you couldn't find something beneficial you wouldn't move in the first place. It isn't as true when you are being forced to move. Often it isn't even about what you are moving to but what you are moving from. Once you can't live close to your family, acquaintances or familiar establishment it doesn't matter as much.
It's sort of curious how so many seem to agree that we are "losing our values" in society (or whatever) but then base everything on assets. If we want people to be able to live close to their grandchildren, know their friends from growing up, involve themselves in organization or otherwise make social connections it isn't going to be free.
> More bread baking. Higher bread taxes. Limit bread prices while the effects of all these magical new baking companies flocking to lower prices and higher taxes kick in.
Also, some will get cheap subsidised bread allotments, others won't get anything. And if you get an allotment of bread to feed 3 people but it's only you, there's no mechanism that redistributes the excess to those who need it most, despite massive scarcity.
And if you get a certain type of bread you like at a certain age, but your preferences change and it becomes bland, there's no mechanism for others who love your type of bread, to be incentivised to exchange your types.
e.g. my dad, who is in a rent-controlled apartment with 3 bedrooms in the capital city and has no mechanism or incentive to move out, despite not using the space, not wanting the space, and not wanting to live in such an in-demand area necessarily. Oh wait, I meant bread.
Rent control has 2nd order effects that can do a lot of harm. If rent-control was mixed with market based incentives and a limited time to the right to an apartment, it wouldn't be as bad. I'm not against rent-control per se, but as with all things, it must be balanced. Just adding more of it isn't a solution. And balancing existing rent-control rules with reasonable additional (market) incentives, would help.
For example, if cities allow an individual to live in a rent-controlled unit for 8 years, after which they must leave, that's better. The unit can then go to someone else, also rent-controlled. Instead, some people get a lifetime right, and others a lifetime waiting list. That's a fundamentally unfair use of public funds. It's not perfect (leaving a home has a chance of making it harder to stay connected to a local labour/social circle), but two people having each 8 years is clearly preferable to one having 16 and the other nothing.
Another example is if (such as in Germany I believe, if anyone can link an English source that'd be great) you have a system where your rent is controlled based on usage. e.g. suppose market rent is 1500 for a 3 bedroom, rent controlled it's 750 for a family of 3. The moment you live there alone it's no longer 750, but instead say 1000. That creates natural incentives to only renting a place that is necessary to fit your lifestyle. My dad for example would exchange his place with someone who lives with a family of 3 in a 1 or 2 bedroom home, because of this.
https://www.guernicamag.com/the-rise-and-fall-of-public-hous...
Edit: I guess you mean taxes on land, not the houses. But even then, would this not encourage to build high-yield luxury condos instead of high-density cheap space?
Actually, I would think the opposite. If capital-laden landlords aren't getting increased returns from their existing holdings, they would be incentivized to create more supply by funding new developments.
I think your logic is flawed here.
1. There's no reason why making landlords earn less money would make them want to invest in real estate more. If you have $1 million to invest, you'll try to choose the best investment available to you. It doesn't make a difference if your current property is doing well or badly.
2. If landlords make less money, they should have less capital.
3. Even assuming your premise was correct and landlords who make more money from their property want to invest in new properties less, it wouldn't matter. As long as building new units is a good investment, someone else would do it.
Though Berlin is going through interesting times with rent control at the moment.
Interesting times. It'll be fascinating to see this play out. Like a social experiment on rent control.
https://web.stanford.edu/~diamondr/DMQ.pdf
In terms of London, there is also the problem of building restrictions. I don't think we're going to see tall residential towers popping up in say, Mayfair, anytime soon. I understand that this kind of change would completely transform the character of London. But the price of not wanting change is sky high rents.
Turnover in SF is actually quite robust. The vast majority of tenants don't stay in the same apartment for decades. This is especially true during boom periods. IOW, ebbs & flows in turnover actually tend to benefit landlords. But a small number do. The average turnover rate is ~20%, which means the average occupancy is ~5 years. For large buildings what matters is the average. The fewer the number of units (either in a building, or in your portfolio), the riskier things become.
The riskiest of all is a single-family home, whether you rent out an in-law or the whole house. In the face of rent control you're not only risking being stuck with the same person indefinitely, paying an increasingly below market rent, but you're locking up for an indefinite period what is probably your largest and most important asset. It's a potential financial nightmare, and one with realistic odds (e.g. maybe 1 in 10 instead 1 in 10000) of befalling you.
As the building grows larger, the more the risk is spread and you can rely on the average occupancy term. Moreover, the larger the building, the less likely one would want to tear it down to build something larger. IOW, the larger the building, the more closely your expected future investment returns approach non-rent control levels.
Rent control policies should be accompanied by policies that promote densification. All forms of rent control will tend to reduce supply to some extent (at least, that should be the a priori expectation), but rent control also provides important social benefits. IMO, those lines cross, but I would never expect the benefits to be greater than the costs in the context of single-family homes.
The 1994 law encompassed multi-unit buildings of 4 or less, which were previously excluded from rent control. An elderly neighbor of mine owns a classic 1960s-era 3-story, 2-unit apartment building. He lives in one unit and keeps the other vacant so that his children won't have any trouble refurbishing or selling the asset when he dies. This is a nearly identical scenario to someone living in a single-family home with an ADU. There are several such homes on my block, though I don't know the owners so don't know how many are kept unnecessarily vacant.
If you want a £500,000 studio flat 30 minutes away from central london by tube there is a massive amount of supply. If however, you can afford said property, you probably dont want to jam your wife and 2 kids into it.
London permitting just will not allow builders to construct enough housing.
Perhaps for worthy reasons, or perhaps not, but regardless there's no question as to the source of London's housing shortage.
A lot like London without rent control then, but if rent control were implemented it would be the primary culprit for what's happening anyway?
Color me skeptical.
Seems to me it's the landlords that really "suffer". E.g. the SF landlords that paid a tenant hundreds of thousands to get them out ( https://apnews.com/article/lifestyle-business-san-francisco-... ). Rent control just decides whether the "spoils" of restricted supply go to landlords with the most capital or the renters who lived in the city the longest.
Hacker news cries bitterly about nimbyism (especially in SF) that restricts development to keep up property values and rents. Whom do they think is most incentivized to do that? Redirect those spoils to leveraged landlords and find out.