WSJ sadly sees better times for tenants. Translation. Less $$$ for Landlords

“New York Goes Wild.”

The return of rent control to New York and other acts of insanity.

That is the headline in the Wall Street Journal editorial bemoaning the pending passage of serious tenant rights legislation in New York State. The WSJ op ed bemoaning this state of affairs is printed in its entirety.  

Wall Street Journal 6.13.2019

There’s a lot of ruin in New York, but progressives who control the state and city governments are intent on showing how much. Law by law, Gov. Andrew Cuomo and Democrats are chipping away at the policies that made New York City livable after decades of decline and returning to the bad old days.

Democrats this week are ramming through rent-control bills that will drive away real-estate investment that they purportedly want to attract millennials and tech jobs. The legislation effectively dictates rents for one million or so rent-regulated apartments and restricts landlords’ ability to evict tenants who don’t pay.

New York Rent Control III 6.11.2019

Former Governor George Pataki in the 1990s signed legislation that began to phase out rent regulation. Landlords were allowed to charge market rates on vacant apartments once rents hit $2,700. As rents gradually rose with inflation, the stock of rent-controlled units would shrink. About 155,000 units have been liberated from regulation, though rents remain restricted on 45% of units.

Democrats plan to end this market glide path. Once a tenant moves out—which doesn’t happen often since folks can pass on the entitlement to friends and relatives—landlords would be required to offer the unit to another tenant at restricted rates. Landlords also couldn’t raise rents by 20% if a tenant moves as allowed under current law.

Nor could they raise rates by more than 2% annually to pay for improvements or evict a nonpaying tenant who “cannot find a similar suitable dwelling in the same neighborhood.” Since landlords would have less incentive to make fixes, more apartments will deteriorate and come to resemble New York City’s squalid public housing.

New York Rent Control IV 6.11.2019.jpg

Democrats typically have renewed state rent-control laws every few years as part of a deal to extend property tax breaks for housing developers. But they now aim to make their rent regulations permanent. The only things certain in New York are high taxes and rent control.

One result will be less housing investment since developers receive tax breaks for building rent-regulated units, which they will now be less inclined to do. Rates will also rise faster on apartments whose rents aren’t restricted—assuming the city keeps adding people and jobs. This is no guarantee as New York City has lost population for two years.

More restaurants are closing and jobs in food services have declined since the state raised the minimum wage to $15 per hour. Vagrancy and public drug use have increased even in the more affluent areas of Manhattan as the city’s progressives have reversed the policies of Michael Bloomberg and Rudy Giuliani.

In other news, state Democrats are trying to drive away more businesses by amending the state’s consumer protection laws that prohibit business conduct that is intentionally “deceptive.” Democrats want to broaden this standard of conduct to “unfair, deceptive or abusive”—however lawyers and courts choose to define it—and to raise statutory damages to $2,000 from $50 per violation.

Progressives are vindicating CEO Jeff Bezos’s decision to pull Amazon’s second headquarters out of New York. Don’t be surprised if other businesses follow.

Appeared in the June 14, 2019, print edition.

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