Apartment hunting is not most people’s favorite activity, but in most cities, it’s not too hard. You make a list of places you can afford, tour your favorites, and then fill out a short, rubber-stamped application to prove that you can pay the rent and won’t be a problem tenant. In cities with high vacancy rates, landlords may even compete over you, offering discounts such as a free first month.
It’s different in New York, as a recent viral tweet thread shows. In the thread, Brandon Taylor, a novelist, describes the mountain of paperwork that Gotham landlords demand from applicants. “I need: 3 personal letters of reference,” he writes, “a financial statement WITH supporting docs including my bank and investment portfolio, a credit report, 2 financial letters of reference, tax returns from the last 2 years, and a letter of reference from my employer.” Taylor, a black man from Alabama, chalks landlords’ demands up to prejudice: “I am always a little alarmed,” he writes, “that in real estate, classism and its shadow-self racism are . . . features, not bugs.”
But there’s another, more likely cause of Taylor’s difficulties: rent control.
In 2000, New York Times columnist Paul Krugman commented on a story about apartment seekers in San Francisco who spent months making apartment searches a full-time job, dressing up in suits and ties and bringing resumes to open houses where landlords expected them to act enthusiastic. As Krugman pointed out, “Landlords don’t want groveling—they would rather have money. In uncontrolled markets the question of who gets an apartment is settled quickly by the question of who is able and willing to pay the most.” Sure enough, San Francisco was not an uncontrolled market, but rather one where “a technology-fueled housing boom has collided with a draconian rent-control law.” In rent-controlled markets, landlords can repel most prospective tenants by making absurd demands—or by being prejudiced—and still have plenty of prospects willing to pay the maximum legal rent.
Economists almost all agree on the evils of rent control. It discourages housing maintenance, spurs black markets, reduces supply and increases prices on the open market, and removes the incentive for people who don’t need to live near job centers, such as retirees, to move and make way for active workers who need the economic opportunity more. My old professor Edward Glaeser likes telling the story of a corporate executive, who, when asked whether it was unfair that he paid so little for a rent-controlled apartment in Manhattan, said that it was perfectly fair because he almost never lived there. Without rent control, he might have decided that keeping a desirable apartment empty wasn’t a good use of his money.
New York is one of the few American cities that still has rent control. One can’t be certain that the apartment that triggered Brandon Taylor’s viral horror story was rent-controlled—or, to use the technical New York City term, “rent-stabilized”—but it’s a decent bet that it was: About half the city’s rental housing is rent-stabilized. (A stricter policy actually called “rent control” applies to about 16,400 apartments that have been occupied by the same families since 1971.)
The city’s Rent Guidelines Board decides allowable rent increases in rent-stabilized apartments every year. These limits keep stabilized rents far below market rents. Last month, for instance, the board proposed rate increases of 2 percent to 4 percent for new one-year leases signed in the next fiscal year, significantly below inflation, let alone market demand. Unlike many other rent-control policies, New York’s rent-stabilization system does not allow for “vacancy decontrol,” under which a unit returns to the open market once the current tenant leaves: New York State abolished a vacancy-decontrol process for expensive apartments in 2019.
New York landlords have another reason to make applicants jump through hoops. It’s common wisdom in real estate that evicting a bad tenant in New York City is harder and more time-consuming than in most other cities, making it risky to rent to someone with a less than impeccable past. Rent stabilization makes this risk worse, as tenants in rent-stabilized apartments have a legal right to renew their leases.
Market rents in New York are so high that it’s easy to understand demands for rent control. But rent control imposes severe costs, and one underappreciated cost is that it makes moving an ordeal that wastes massive amounts of time that apartment-seekers could spend on productive work. This is just one of the reasons that New York should join the rest of the nation and scrap rent stabilization.
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