By Adam Frisch, Managing Principal, Lee & Associates Residential NYC
The numerous cities and states throughout the United States that have enacted stringent rent reform over the past few years is quite staggering and helps to illustrate the difference in economic education that has been offered to millennials versus those who lived through the 1970s. Those young people who believe that rent regulation is so benevolent should know that these policies are actually increasing costs for all free market tenants. Furthermore, they may soon lead to a reversal of the decrease in criminal activity that has been occurring in places such as Harlem and Oakland.
In the 1970s, rent regulations had been so harsh that certain neighborhoods were abandoned by investors and it wasn’t long before criminal activity rose dramatically. Governments spent years attempting to rectify these policies but if strict rent reform continues to be passed, owners will not be financially motivated to maintain their buildings and we could once again find ourselves in a predicament much like that of the 1970s. Years ago, many investors put money into buildings with the thinking that they would eventually be able to move rent-stabilized tenants out when the residents passed away. The latest round of rent reform means that these same investors will be forced to cash out their assets and will likely receive only about half of what they first paid.
The original goal, and one on which both political parties agreed, was that rent regulation would be phased out gradually and that the government would protect rent-stabilized tenants from harassment by owners. Unfortunately, rent regulation has now been made permanent in many places rather than phased out. To be quite honest, I am afraid that we will soon see an increase in criminal activity in neighborhoods that have just recently been revitalized and are now thriving, safe communities. However, I do hold out hope that the younger generations will soon determine that complete rent regulation isn’t the answer to improving residential housing in the United States.