Here's Why NYC's Rent Is Still Too Damn High

With New York City's rent laws set to expire June 15, "tenant" activists are decrying the catastrophic consequences should Albany's Republican-controlled Senate fail to renew them. But these laws actually harm most tenants: By protecting long-term residents at the expense of newer (not wealthier) ones, they've caused huge increases in the City's overall rents.

Given over 8 million people call the Big Apple home - only a million of whom are fortunate enough to live in rent-regulated apartments - the wild popularity of the rent stabilization laws among New York Democrats only proves that a cohesive voting bloc has enabled a tyranny of the minority, and the perpetuation of common-sense defying and grossly unjust laws.

The complex labyrinth of State and City rent laws imposes price controls on buildings built before 1974 (and some newer ones where the owners have sought special property tax breaks). Protected tenants (including their children if they remain in the apartment after their parents die) must be given a never-ending series of lease renewals at the "legal" rents.

That means as these older buildings obsolesce, they can't be demolished and replaced with modern high rises containing far more apartments because there's no way to evict the protected tenants.

That's why New York City's streetscape is still littered with thousands of old tenements - low-rise "walk ups" with outdoor fire escapes I wouldn't want to put to the test. In a free-market, developers would assemble several adjacent tenements, raze them and build a modern high-rise containing hundreds of apartments to replace the handful lost.

But, because of the rent laws, even a single protected tenant, can block a major development; either that, or the "hold-outs" end up with massive pay-offs to vacate.

The laws also encourage protected tenants to hoard apartments too large for their needs: As they grow older and their children move out, or spouses die off or divorce, it doesn't pay for them to scale down to a smaller apartment because then the tenant would be forced to enter the free market and pay more for the appropriately sized apartment.

The result: Rent stabilization laws have been effective in limiting the supply of New York City's housing stock, but have had the opposite effect on the City's overall rent levels.

Because they've blocked needed demolition and new construction, and promoted hoarding, the rent laws have caused a housing shortage, and in turn overall rents to skyrocket: in Manhattan (which includes lower rent neighborhoods like Washington Heights and Harlem), the vacancy rate is under 1 percent, and the average studio now rents for nearly $2,000 while a three-bedroom rents for nearly $5,000.

Rent stabilization is not means tested. The system simply punishes newcomers, regardless of their income levels: their far higher market rents subsidize the price-fixed rents paid by the protected tenants.

Though some of the free-market tenants occupy modern luxury buildings, and are no doubt wealthier than the protected tenants, that is not the norm. Often, the free-market newcomers and protected long-term tenants are neighbors in the same "rent stabilized" building.

That's because the rent laws allow regulated apartments to be "de-controlled" once "legal rents" go above $2,000. Landlords are allowed rent increases upon a vacancy and as well from renovations, so it's easy to meet that threshold.

If the legal rent goes above $2,000, the apartment is de-controlled when it turns over, or even if it doesn't, if the tenant's household income exceeds $175,000; but in the case of a turnover, the apartment is deregulated no matter how low the income of the new tenant. Thus, "rent stabilized" buildings have rent-regulated and fair market tenants living side-by-side, often the latter being younger people with lower incomes.

The far higher rents paid by the newcomers enable landlords to renovate lobbies, elevators and hallways for the benefit of all tenants.

Condo and homeowners are also subsidizing the protected tenants: Because an apartment building's property taxes are based on its rents, the tax burden on owner-occupied housing has to be greater to accommodate the lower taxes paid by rent-regulated buildings.

The system is grossly unjust: Actors Mia Farrow and Dick Cavett held rent-controlled apartments, while many in free-market apartments are young people of modest means who, to pay the higher rent, are forced to live with one, two or even three roommates, even though they are renting in "rent stabilized" buildings.

The rent laws also encourage cronyism: take Congressman Charles Rangel's four rent-stabilized apartments in Harlem. In a free market, a "public servant" could never afford to hoard four apartments in a city with the greatest housing shortage in the country.

Then there's the black market: entrenched tenants who outgrow their rent-regulated apartments often illegally sublet them at market rents for years.

If New York's lawmakers would just allow the rent laws to lapse, dilapidated low rise buildings containing few apartments would gradually get replaced with modern high rises containing many, and that would drive overall rents down.

Regrettably, that's not likely to happen until the "oppressed majority" (many of whom are minorities) wise up. I agree with New York's "Rent is Too Damn High" party leader Jimmy McMillan. Albany should allow the rent laws to lapse as scheduled:

Then, thousands of new apartments would get added to the City's housing stock over time; over-housed rent stabilized tenants would stop hoarding; and an end would come to the crushing inequity of having newcomers, often minorities of modest means, live in overcrowded conditions, and, along with condo and homeowners, subsidize the rents paid by tenants whose sole claim to entitlement is not that they're poorer, but simply that they (or worse their parents) were there first.