OR rent control will destroy rental housing in that state
Posted by John T. Reed on
No state has statewide rent control. OR is about to become the first.
Rent control destroys the apartment buildings it applies to—slowly but surely. Very simply, it lowers the net income of the buildings by restraining rents but not expenses. As net income declines, the landlords sell or become sullen, “fix it yourself” slumlords.
What is the rent-controlled tenant gonna do when he is treated badly? Move out? Never. Their rent controlled apartment is to good of a deal. Move-outs per year become more and more rare as the deal each tenant has become better and better. Although it’s illegal, those who control a rare vacancy can demand and get bribes called “key money” in NY.
Eventually, the net income goes negative. You cannot sell such buildings. So the landlords abandon them—30,000 a year at the peak in NYC. Then they make that a criminal offense until the courts say you cannot get blood out of a stone.
Each decrease in net income lowers the building value. That means the owners will apply for and get lower tax assessments which in turn means property tax revenues will go down and the city will need to raise the tax rate to make up. that will lower the value of the rent-controlled buildings even more. So the tax burden of the community will shift from the apartment buildings and tenants to he homeowners and non-residential properties. That is not a theory. It is well documented to have happened in NYC and MA.
New construction is always exempt—otherwise there would not be any—but NYC reneged on that three times if I recall correctly. The tenants of the uncontrolled buildings always scream until they, too, get rent control. The CA tenants in buildings built after February 1995 are screaming now because our state control law bans controls on them.
Because OR is Marxist, they blame landlords for rent increases. In fact, they come from increasing restrictions on land use like zoning and awarding permits to build. It is suicidal for any city or state to do this. But such considerations never deter Marxists.
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