Original article by Howard Husock<\/p>\n\n\n\n
Here\u2019s a version of American free enterprise with which you may not be\u00a0familiar. It\u2019s one in which the owner of a business is free to choose between\u00a0two options: operate at a loss or don\u2019t operate at all. This \u201cheads I lose, tails I\u00a0lose\u201d business model is not, to be sure, one any business owner would\u00a0voluntarily choose. Yet it\u2019s the reality of the New York City housing market for\u00a0hundreds of small, residential property owners.\u00a0<\/p>\n\n\n\n
At a time when housing \u201caffordability\u201d helped send an avowed socialist to the\u00a0New York City mayor\u2019s office, the city\u2019s complex and intrusive system of rent\u00a0price regulation, or \u201cstabilization,\u201d governing nearly 1 million apartments is\u00a0leading building owners to keep at least 26,000 units vacant and off the\u00a0market\u2014because their potential rent revenue would be such that their owners\u00a0would run in the red. They\u2019d lose money on each apartment.\u00a0<\/p>\n\n\n\n
Call it capitalism with New York characteristics \u2014 which turns out not to be\u00a0capitalism at all. And it\u2019s facing a legal challenge which could be the first blow\u00a0against a system that lets affluent tenants avail themselves of artificially cheap\u00a0apartments and even lets their children inherit them, at the same time putting\u00a0a tourniquet on the income of immigrant owners of property they\u2019d hoped\u00a0would allow them to realize the American dream.\u00a0<\/p>\n\n\n\n
A lawsuit asserting the right of owners to set a market rent on a vacant\u00a0apartment\u2014common sense in most of America\u2014-puts it this way. Attorneys\u00a0for the Institute for Justice, the Washington-based libertarian public interest\u00a0nonprofit law firm, argue that vacant apartments \u201ctypically require repairs and\u00a0renovations after long-term tenancies before they can be rented again.\u00a0Indeed, regulations mandate updates.\u201d\u00a0<\/p>\n\n\n\n
Yet, the attorneys add, \u201cafter over fifty years of rent stabilization, the regulated\u00a0rents on some apartments have become so low (in some cases, just\u00a0hundreds of dollars per month) that it makes no economic sense to incur the\u00a0expense associated with putting units on the market.\u201d<\/p>\n\n\n\n
They\u2019ve been, per the Institute for Justice, \u201cregulated off the market\u201d, even as\u00a0New York struggles with an alleged housing shortage. Because the property\u00a0can\u2019t bring in revenue \u2014 even as owners face tax, mortgage and insurance\u00a0bills \u2014 it\u2019s been effectively and unconstitutionally been legally \u201ctaken.\u201d\u00a0<\/p>\n\n\n\n
It\u2019s important to note that this lawsuit, brought on behalf of the members of the\u00a0Small Property Owners of New York, is not challenging rent controls broadly.\u00a0As recently as November, 2024, the United States Supreme Court refused to\u00a0hear such a challenge. The Small Property Owners hope this time is different\u00a0\u2014 by focusing narrowly on vacant apartments they hope to start restoring the\u00a0idea of property rights to the New York housing market.\u00a0<\/p>\n\n\n\n
Those challenging the rent regulations are not big time landlords. They\u00a0include two Albanian immigrant brothers, Pashko and Tony Lulgjuraj, who\u00a0own a 60-unit prewar building not far from the George Washington Bridge.\u00a0The former has worked as a building doorman, the latter as a building\u00a0superintendent. They bought the building with their late father.<\/p>\n\n\n\n
The lawsuit brought on their behalf notes that the legal rent for the two, twobedroom units they are leaving vacant are $710 and $860 respectively \u2014 and\u00a0would cost more than $100,000 each to bring up to code to be legally rented.\u00a0There was a period in which owners could raise rents based on such capital\u00a0repairs \u2014but a 2019 state law turning the screws even more tightly on rentstabilized units sharply limited such increases, to just 6 percent.\u00a0<\/p>\n\n\n\n
The vagaries of the system are difficult to exaggerate. Some of the Lulgjurats\u2019\u00a0apartments have much higher rents thanks to the fact that at times, since\u00a0passage of the 1974 rent law, some units were allowed to set market rents\u00a0when vacant. What\u2019s more, the law applies mainly to pre-1974 buildings,\u00a0exactly the older structures lower-income owners have been likely, and able,\u00a0to buy.\u00a0<\/p>\n\n\n\n
Of course, the owners are not the only victims. As the Institute of Justice puts\u00a0it: \u201cThe (rent stabilization law) doesn\u2019t just hurt Tony and Pashko. It hurts\u00a0anyone who might want to rent these vacant apartments.\u201d\u00a0That\u2019s generally true of the rent law \u2014 which creates a sort of musical chairs\u00a0version of a housing market. Those lucky enough to land a good deal have\u00a0every incentive to stay put \u2014 and pass their unit on to family members. The\u00a0unlucky, including the young voters who elected Zohran Mamdani, are left\u00a0standing, bitter about \u201caffordability.\u201d The mayor-elect\u2019s promised rent freeze\u00a0would drive even more owners to take apartments off the market to avoid\u00a0losing money.\u00a0<\/p>\n\n\n\n
New York desperately needs a housing market undistorted by regulation. The\u00a0simple expedient of allowing owners to charge enough to bring vacant\u00a0apartments back on the market would be a small but significant step.<\/p>\n","protected":false},"excerpt":{"rendered":"
Original article by Howard Husock Here\u2019s a version of American free enterprise with which you may not be\u00a0familiar. It\u2019s one in which the owner of a business is free to choose between\u00a0two options: operate at a loss or don\u2019t operate at all. This \u201cheads I lose, tails I\u00a0lose\u201d business model is not, to be sure,… Memo to Mamdani: To Improve Housing Affordability, Rein In Rent Control\u00a0<\/span><\/a><\/p>\n","protected":false},"author":5,"featured_media":1022,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"","neve_meta_content_width":0,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","footnotes":""},"categories":[16],"tags":[],"class_list":["post-2197","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-housing-crisis"],"_links":{"self":[{"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/posts\/2197","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/comments?post=2197"}],"version-history":[{"count":1,"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/posts\/2197\/revisions"}],"predecessor-version":[{"id":2198,"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/posts\/2197\/revisions\/2198"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/media\/1022"}],"wp:attachment":[{"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/media?parent=2197"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/categories?post=2197"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cmpa.us\/index.php\/wp-json\/wp\/v2\/tags?post=2197"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}