Report Confirms Obvious: Rent Control Works

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Now that the new legislative session has opened in Albany, the Housing Justice for All campaign has ratcheted up its fight for Universal Rent Control, a platform of bills that strengthen and expand tenants’ rights across the state. Even with united Democratic control for the first time in decades, there are a lot of structural obstacles in place that could derail the campaign over the next few months.

Half of all renters in New York City and the vast majority in the state don’t have any protections and aren’t typically activated in the fight for tenants’ rights. The real estate industry has millions of dollars to spend on lobbying and media influencing. And many legislators, just like the average person, have a lot of outdated misconceptions about rent control.

Changing the popular narrative of rent control is one of the most important, and hardest, challenges facing the Housing Justice for All campaign for Universal Rent Control. We only need to look to California, where the real estate lobby spent $80 million exploiting the same misconceptions to help defeat a rent control initiative called Prop 10.

This week, help came in a big way from Oksana Mironov of Community Service Society of New York who published a timely report on rent control in New York City that should help every activist fighting for Universal Rent Control frame their arguments for the general public.

It’s no secret that housing policy is a vast and confusing assortment of policies, agencies, acronyms, and formulas that scares off most people. Rent control (broadly used here to incorporate all rent regulations) is one of the most confusing aspects of this larger very confusing space.

That makes it hard to step back and understand the bigger picture of rent control, which is really quite simple and positive. This report shows why that is the case. It makes three important points that deserve quick focus:

Rent Control is the best affordable housing policy

As the report points out, there is an inherent power imbalance between landlords and tenants. Landlords will always have more information, more control, more political access, and more money than a tenant, particularly in a stressed market (which NYC has always been and most cities have become). The marxist critique would go further and highlight the absurdity of tenants providing the capital that gives the landlord power over them.

Rent control is the best way to offset this dynamic by securing real protections and power for tenants. One of the biggest achievements of the report is how clearly it explains how rent regulations do this and why it matters. Put simply, it shows that rent control is the best affordable housing policy we have (aside from expanding public housing).

Rent control is a legal structure that helps cities and towns stay affordable without massive direct public subsidies. They restrict a landlord’s ability to raise rents, they guarantee a tenant’s right to a lease renewal, and they provide legal resources to combat abusive behavior. These tools together give tenants the power to negotiate with a landlord that they simply don’t have when they can’t easily move to a cheaper or better apartment or fear getting kicked out.

It also has a larger impact on the health of a city. Rent control provides tenants and communities of color long-term protections against displacement in rapidly gentrifying neighborhoods. It offers more housing security for seniors, lower-income workers, and formerly homeless families than market rate housing. It also scares off speculators like private equity firms that raise property values, which gives non-profits, community land trusts, and other local ownership models the opportunity to own buildings.

The report also goes through a brief but widely unknown history of rent control laws in the US and in New York particularly, showing how widespread it used to be and why it was so necessary as a policy. It’s worth reading, but the gist is simple: we’ve always been in a housing crisis because housing doesn’t function like a normal market.

If the market was even somewhat designed to incentivize affordable housing, we’d have more affordable housing. But it isn’t and we don’t and never will by relying on it. Our solution now is to give billions of public dollars to private developers to subsidize “affordable housing units” that aren’t affordable, aren’t permanent, and aren’t built enough.

The report makes the overwhelming argument that rent control is a much sounder policy for private affordable housing policy.

Current laws suck, Universal Rent Control is the fix

Even though rent control works, it doesn’t take a housing nerd to see that current laws…don’t. They don’t “work” in a number of ways that the report covers well. It also shows how Universal Rent Control fixes them.

First, rent control doesn’t protect enough tenants. Of 8 million renters in New York state, only 2.5 million have any type of protections. The vast majority of those folks live in NYC, but still less than half of all rental units are regulated. That doesn’t leave a lot of tenants protected or interested in fighting for them.

Second, the current laws basically undermine the entire point of rent control. This is largely because the real estate lobby has effectively written these laws from the beginning. Their biggest problem is called vacancy decontrol, which allows units to exit the system and return to market rate when they reach $2733. This gives landlords a powerful motive to find ways to raise rents to that threshold. They have means through a series of loopholes that allow landlords to raise rents on existing tenants or in between leases.

Throw in the fact that oversight is flimsy at the state and city level (one issue that URC needs to address better) and you’re left with a system that does not protect tenants as much as it suggests it would. Since 1994, almost 300,000 units have been deregulated. That offsets all of the units protected under Mayor de Blasio’s housing plan.

The problem isn’t rent control as a concept, it’s rent control that is designed to fail slowly. Given this analysis, it’s no surprise that the report endorses the full platform of Universal Rent Control because it fixes these problems (ending vacancy decontrol, eliminating every loophole, expanding legal rights.) Most importantly, URC extends new protections to all renters, including market rate tenants, across the state.

Rent control critics are wrong either on purpose or by accident

The final part of the report is the most important for housing activists because it debunks the lazy talking points against rent control. These will absolutely be used by the real estate lobby and will likely be repeated uncritically by the media. Much like the emerging debate over marginal tax rates, this is either because critics don’t actually understand how housing works or they are operating in bad faith.

I encourage you to read the full section, but I’ll highlight one of the most important myths debunked in the report: rent control limits the supply of new construction, which raises rents for everybody.

Ignore for a moment that new construction isn’t even covered under rent regulations (unless they receive tax subsidies) and focus on the logic. If rent control magically vanished, would rents go down and would construction boom?

Well, no. We can look at examples like Cambridge, MA, where rent control vanished in 1994. Property values went up dramatically, and rents doubled in just three years. But there was and remains no construction boom that lowered rents. Rents continue to rise and displacement of low-income residents has increased, especially over the last five years, sparking housing protests from the Movement for Black Lives.

Rents are going up in Cambridge and plenty of other places without rent control and construction isn’t keeping pace. So what is driving that? Scarcity of land, speculation, and zoning restrictions. Even without rent control, these factors still exist. You can debate solutions to those problems, but rent control doesn’t impact them and it’s absurd to suggest that it does.

The only obvious way to protect tenants right now is capping rents. The only way to make it an effective policy is to have strong protections that reach all tenants.

Now that Governor Cuomo has announced his intention to address “aggressive rent regulations reforms” during the budget process over the next few months, it is crunch time to make the case for strengthening and expanding rent protections. There are many obstacles ahead, including the governor. Every member of Housing Justice for All and every housing activist should read and share this report to make sure people know why we must pass Universal Rent Control.