Cuomo’s rent regulation will destroy NYC’s housing market

The Strand Bookstore on 828 Broadway

In promising to sign a dumb and destructive bill to immortalize rent regulation — a step that will keep tenants who pay artificially low rents in over 1 million apartments from ever giving them up — Gov. Andrew Cuomo has basically told everyone else in New York City to go to hell.

It makes it likely that no new apartment buildings will rise. It guarantees that existing ones will decay. It will make repairs and upgrades prohibitively expensive for landlords who must eke out puny profits from properties that require major reinvestment, but where they can’t charge enough rent to pay for it.

The $15,000 cap on capital improvements that a landlord can do based on rent hikes over 15 years in a stabilized apartment is ruinous for older projects like Stuyvesant Town, which will need much more extra dough to keep buildings as old as 70 years from falling into ­NYCHA-like disrepair.

The “progressives” in Albany and City Hall are 100% anti-progress. They have no grasp of how housing (or any) markets work. Or, if they have an ink­ling, they disregard it in favor of adhering to a socialistic concept of “affordable housing for all,” which worked so well in the Union of Soviet Socialist Republics.

The law that Cuomo vows he’ll sign — which proponents absurdly call “reform” — will make the Big Apple’s superheated residential scene even more expensive than it is.

Rent stabilization benefits only one group of citizens: mostly middle-class residents fortunate enough to be insulated from free-market economics with which most others must cope. But its proponents would happily embalm the city’s demographics in aspic — just as “preservation” zealots would do with its physical state. Witness the runaway Landmarks Preservation Commission’s designation of the blah building that houses the Strand Bookstore, in a Manhattan where nearly 40% of buildings south of 110th Street can’t be replaced or changed because they’re individual landmarks or part of historic districts.

Rent regulation, which generally governs buildings that went up before 1974, effectively takes much of the New York City housing supply off the market. How much? Of our total 3.2 million housing units, 68% are rentals. Those which fall under rent regulation and far more rare, even cheaper rent control, handily outnumber unregulated ones — by 1.246 million to 937,000.

The people who live in those 1.246 million apartments hardly ever move unless they’re having simultaneous, multiple babies or are headed out of town. Why give up a $2,000-a-month rental in a nice, middle-class building (where most stabilized apartments are) if the same apartment in a condo or co-op building might cost $2 million to buy?

Anyone with half a brain can understand that when you shrink the number of available units, their value — i.e., price — goes up. Free-market apartments are so expensive because there aren’t nearly enough to satisfy demand in a city with a booming economy. It’s called supply and demand, a principle taught in every business school classroom but heresy to the mostly Democratic, loony lefties who recently took over the previously Republican state Senate.

Since 1993, slow but steady erosion of half-century-old rent rules helped to free up around 155,000 apartments. Landlords could convert stabilized units to market rate if certain income thresholds were breached and/or if the regulated rent rose to a certain point.

Profits that landlords made from slightly loosening the straitjacket drove the reclamation of neighborhoods that were left for dead. New construction and investment in existing buildings from the north Bronx to Coney Island brought middle- and working-class families, both local and from around the world, to streets that were once abandoned and dangerous.

That’s over. Far from expanding “affordable” housing, the indefinite extension of stabilization will drive rents up in buildings that aren’t regulated.

The blow to developers’ profits, and reasonable fears that even new buildings will be forced into stabilization, will make them think twice about building more of them.

The new law even makes it impossible to freely raise rents on stabilized apartments in the rare instances when tenants move out. Why is it the business of legislators how much a property owner can charge for an empty apartment?

A scary sea change in state and city government has cast into power ideologues who regard landlords as evil exploiters of the people. Some in the City Council are even trying to impose forms of commercial rent control, a notion so stupid that even Mayor Bill de Blasio has declined to endorse it so far.

If the new breed of legislators gets their way, every landlord will be obliged to wear a scarlet “L.”

Rent regulation began as an “emergency” postwar measure in 1950 — a city, a time and a housing market that have no bearing on today. It seems that in New York City, the emergency never ends.

https://nypost.com/2019/06/12/cuomos-rent-regulation-will-destroy-nycs-housing-market/