The Soviets would have understood this. I don't

[aerosolben]

3) Landlords are discouraged from doing maintenance or improvements on their properties as they cannot pass on the costs to their tenants.

You make some good points, but I must disagree with this one:

1. In most areas, landlords are forced by law to perform maintenance on their properties.

2. Allowing the landlord to make improvements on the property and charge tenants for it is an awful idea. Improvements to the property benefit the landlord far more than they benefit the tenant, because they increase the property value. If you took rent controls out of the picture, it becomes even worse (Hey, we're putting on a new addition. Give us $10,000, and if you want to be here to make use of it, you'll need to pay double your rent next year).

 

[shuize]

2. Allowing the landlord to make improvements on the property and charge tenants for it is an awful idea. Improvements to the property benefit the landlord far more than they benefit the tenant, because they increase the property value. If you took rent controls out of the picture, it becomes even worse (Hey, we're putting on a new addition. Give us $10,000, and if you want to be here to make use of it, you'll need to pay double your rent next year).

Do the people here live in the real world or are they just a figment of my internet imagination? The wild slant given to aspects of normal economic life make me wonder. See, it's called a lease. If the tenant doesn't want to pay higher rent, he moves when it's up. Until then, he gets to use the property at the agreed rate.

Improvements to rental property will normally allow the owner to charge more in rent. With rent control, however, the owner will have little incentive to make improvements since (as RichardR noted):

1) He can't charge higher rent to offset the cost of the improvements, and

2) The improvements don't really add any value to the property as far as the owner is concerned since any future purchaser will be stuck with the same rent cap. (In other words, as a later purchaser, why would you pay any more for the property with or without improvements if you can't charge higher rent to offset your purchase price?)

 

[RichardR]

You make some good points, but I must disagree with this one:

1. In most areas, landlords are forced by law to perform maintenance on their properties.

To a minimal level, yes. No laws force property owners to improve their buildings, though.

Rent control laws, however, may cause some property owners from putting off some essential repairs. That's wrong, of course, but it is a possible consequence or rent control.

2. Allowing the landlord to make improvements on the property and charge tenants for it is an awful idea. Improvements to the property benefit the landlord far more than they benefit the tenant, because they increase the property value. If you took rent controls out of the picture, it becomes even worse (Hey, we're putting on a new addition. Give us $10,000, and if you want to be here to make use of it, you'll need to pay double your rent next year).

Capital improvements benefit individual tenants who then live in the improved property. Even many proponents of rent control realize that not allowing property owners to pass on these costs, is a bad idea. There was once a proposed provision to allow these pass-ons. Not sure what happened to it.

Interestingly, all housing built after 1979 was exempted from SF rent controls. This exemption was designed to prevent discouragement of the construction of new rental housing, because new units could still be leased at market rates. This provision was put in the legislation that (in other ways) tightened up rent control. Pretty funny: in the actual rent control legislation, there is a provision that specifically admits that rent control discourages construction of new rental housing (which would tend to increase rents). Nuts!

 

[RichardR]

Do the people here live in the real world or are they just a figment of my internet imagination? The wild slant given to aspects of normal economic life make me wonder.

If you think this is mad you should actually come to San Francisco. There are ordnances limiting the building of much new residential property, on the principle that if you reduce the amount of housing available, fewer people will move here. That is, build new houses and people will come, driving up rents. So don't build and rents will go down. This is clearly a special case of the law of supply and demand, unique to SF, where reducing the supply will reduce the cost.

Things have been getting a little better, and fortunately the far left Gonzales didn't get to be Mayor. The guy who did – the "establishment's" Gavin Newsom – still says he supports rent control. I have to assume he said that because he knew he'd never get elected if he opposed it, not because he really believes in it.

I love living here, apart from these things. Nowhere is perfect.

 

[aerosolben]

Do the people here live in the real world or are they just a figment of my internet imagination? The wild slant given to aspects of normal economic life make me wonder. See, it's called a lease. If the tenant doesn't want to pay higher rent, he moves when it's up. Until then, he gets to use the property at the agreed rate.

Did you read my post? I'm not judging the concept of rent controls; I'm judging the concept of charging tenants for improvements. Consider this example:

I live in a $500/month apartment.

Landlord wants to make apartment worth $1,000 month by making a $10,000 improvement.

If the landlord can charge me for improvements:

I pay $10,000, then if I wish to renew my contract, I must now pay $1,000 month. Assuming I don't want to live in an apartment this expensive, I move out without signing a new lease and without benefitting from the improvement. I am charged $10,000 and gain nothing.

The landlord now has an extra $500 coming in a month from the new tenant. Getting this extra $500 cost him nothing.

Is this reasonable?

 

[RichardR]

I live in a $500/month apartment.

Landlord wants to make apartment worth $1,000 month by making a $10,000 improvement.

If the landlord can charge me for improvements:

I pay $10,000, then if I wish to renew my contract, I must now pay $1,000 month. Assuming I don't want to live in an apartment this expensive, I move out without signing a new lease and without benefitting from the improvement. I am charged $10,000 and gain nothing.

The landlord now has an extra $500 coming in a month from the new tenant. Getting this extra $500 cost him nothing.

Is this reasonable?

No, that would not be reasonable.

I wasn't saying that the property owner should be able to charge the tenant the whole costs of the improvements ($10,000 in your example). I believe they should be able to increase the rent afterwards if they have made the property a more desirable place to rent.

 

[shuize]

... Is this reasonable?

When does that happen in the real world? I'm not trying to give you a hard time, but why in the world would a tenant ever agree to pay for improvements on property he doesn't own? And how is the landlord ever going to force him to if he refuses?

As a tenant, our conversation would go something like this:

Landlord: I want rent my apartment $1,000 per month. You pay the $10,000 improvements and the higher rent.

Me: No thanks. But I'll be happy to keep paying the $500 agreed upon in the lease or I'll see you in court.

Or, as a prospective tenant:

Landlord: I've just spent $10,000 in improvements. As the new tenant (my last one moved out at the end of his lease when I tried to get him to pay), you should pay for those improvements.

Me: You're obviously on crack. But I might consider renting it for $1,000 per month now that it has those nice improvements.

 

[aerosolben]

No, that would not be reasonable.

I wasn't saying that the property owner should be able to charge the tenant the whole costs of the improvements ($10,000 in your example). I believe they should be able to increase the rent afterwards if they have made the property a more desirable place to rent.

Fair enough, then.

 

[Rob Lister]

An honest way to help the poor would be in welfare – rent subsidies and the like.

That's rich. Stealing a lesser amount from many people makes it honest.

An HONEST way would be to ask for donations.

 

[Dancing David]

It will be a fine day when education is fully funded and the army has to have a bake sale...

 

[Grammatron]

It will be a fine day when education is fully funded and the army has to have a bake sale...

It will be the day when someone can finally tell me what the heck fully funded means in dollars.

 

[Rob Lister]

It will be the day when someone can finally tell me what the heck fully funded means in dollars.

Tally your net worth. That's you're contribution.

 

[gnome]

It will be the day when someone can finally tell me what the heck fully funded means in dollars.

Well, I don't know if a dollar amount can be given, but a good baseline would be sufficient teachers, classrooms, and textbooks for all students.

 

[Rob Lister]

Well, I don't know if a dollar amount can be given, but a good baseline would be sufficient teachers, classrooms, and textbooks for all students.

Fine. Define "sufficient"

 

[WildCat]

Did you read my post? I'm not judging the concept of rent controls; I'm judging the concept of charging tenants for improvements. Consider this example:

I live in a $500/month apartment.

Landlord wants to make apartment worth $1,000 month by making a $10,000 improvement.

If the landlord can charge me for improvements:

I pay $10,000, then if I wish to renew my contract, I must now pay $1,000 month. Assuming I don't want to live in an apartment this expensive, I move out without signing a new lease and without benefitting from the improvement. I am charged $10,000 and gain nothing.

The landlord now has an extra $500 coming in a month from the new tenant. Getting this extra $500 cost him nothing.

Is this reasonable?

This isn't how it works at all. The landlord should get the market rate for rent. The market rate can go up w/o the landlord doing anything - for example, a shopping center opens nearby. This raises the property value, which in turn increases the property taxes. The landlords expenses go way up, and he has no recourse to recoup them w/ rent control in place. In effect, the gov't forces the landlord to subsidize the housing market. This leads to less housing, cuts back repairs or improvements to existing property, and reduces the rental housing stock.

AFAIK, only San Francisco and New York (where many buildings were simply abandoned by the owners unable to afford repairs given the rental income) have this insane system in place. When I took economics in college, rent control was in the textbooks as an example of how price controls inevitably lead to shortages, no matter what the commodity. (the other example given were Nixon's ill-advised wage and price controls)

 

[gnome]

Fine. Define "sufficient"

Sufficient... well one can argue about the ideal teacher-to-student ratio... what would you propose is best, for example?

Regarding textbooks--sufficient = the student actually has the textbook for each class.

Regarding classrooms--sufficient = they have a place to seat all the students during the day without adding on "temporary" portable rooms that become permanent.

 

[WildCat]

Sufficient... well one can argue about the ideal teacher-to-student ratio... what would you propose is best, for example?

Regarding textbooks--sufficient = the student actually has the textbook for each class.

Regarding classrooms--sufficient = they have a place to seat all the students during the day without adding on "temporary" portable rooms that become permanent.

Doesn't whether or not the kids actually learn anything count?

 

[Tony]

It will be a fine day when education is fully funded and the army has to have a bake sale...

In other words, you want the government to violate the constitution even more. Don't come crying here when Patriot Act XII is passed and you have to get an anal probe everytime you get on a bus.

 

[Art Vandelay]

In an equilibrium, rent control doesn't actually decrease the amount of rent paid. Basic economics tells us that the market rate is the one that maximizes social gain. Any other rate is non-optimal. With rent control, landowners will anticipate loss, and they will increase initial rents to compensate. The result is that renters end up paying the same amount, but with a large portion shifted to the beginning of the lease, and with short term renters subsidising long term renters.

"It will be a fine day when education is fully funded and the army has to have a bake sale... "
Defense is funded by the federal government, while education funds come mostly from local sources. Interesting comment on grass-roots democracy, isn't it? Schools have bake sales because people like them better than taxes. If we got rid of what people like, how would that make it a fine day?

 

[Tony]

The difference is that California is a democracy. The majority have voted for people who implement that policy.

If the majority voted to make slaves out of the minority, would that be ok?