Tuesday, February 8, 2011
This weekend the N.Y. Times ran a story on the murky world of developers who buy rent-controlled buildings and then attempt to buy-out the tenants:
A whole industry is built around paying tenants to move, and it is cloaked in mystery. Developers, seeking to spend as little as possible, make offers quietly and individually. Neighbors, wary of spoiling a deal, don’t talk to one another about those offers. There are no guidelines to help people figure out what an apartment is worth, and no easy ways to calculate the emotional toll that comes with moving from a home, sometimes after decades.
This article might be useful for some PropertyProfs - it subtly but clearly points out a lot of the problems with rent control. First, the piece shows how rent-controlled apartments randomly assign windfalls to some members of the community. Second, the author choose to interview a really unsympathetic tenant - the tenant isn't a long-time resident looking for protection from gentrification, but an artist who moved to New York and found the apartment through "the friend of a friend" of her mother. Third, it discusses how landlords may neglect tenants in rent-controlled units. Finally, the piece demonstrates how rent control creates distortive pressures for tenants to remain in specific units, even when economic opportunities pop-up in other geographic areas. Even though I'm not in the pro-rent control faction, this seems like a bit of a hatchet job. Check out New York magazine's much shorter and more value-neutral piece as a comparison.
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