Rent regulation: Difference between revisions

== Overview ==

*standards by which a landlord may terminate a tenancy (an equivalent of [https://en.wikipedia.org/wiki/Unfair_dismissal unfair dismissal] from employment in tenancies)

*obligations on the landlord or tenant regarding adequate maintenance of the property

The classic objective is to limit the price that would result from the market, where an&nbsp;[https://en.wikipedia.org/wiki/Inequality_of_bargaining_power inequality of bargaining power]&nbsp;between&nbsp;[https://en.wikipedia.org/wiki/Landlord landlords]&nbsp;and&nbsp;[https://en.wikipedia.org/wiki/Leasehold_estate tenants]&nbsp;produces continually escalating prices without any stable&nbsp;[https://en.wikipedia.org/wiki/Market_equilibrium market equilibrium]."<br/> - Wikipedia, "Rent regulation."&nbsp;

== <br/> Price regulation variant forms ==

##change based on political/regulatory decision, e.g. municipal Rent Board decision.<br/> ''[when permitted rent change is adjustable this way, and/or it is unregulated upon vacancy, the system is sometimes called 'modern' or 'second-generation' rent controls.]''

##possibly (and typically), other changes are permitted by landlord petition or e.g. to "pass through" expenses such as tax increase or renovation costs.

#Control of permitted rent change during change of tenant

##same as within a tenant's tenure, in one of the ways above.<br/> ''&nbsp;[sometimes referred to as 'strong' rent control].&nbsp;''

##unregulated, i.e. "resets to market rate," aka there is&nbsp;''vacancy decontrol.&nbsp;''

#Regulation of which and when units may fall under or exist price regulation. Price regulation may apply:&nbsp;

####conversion to "Tenancy in Common" (TIC) unit, i.e. shared ownership.&nbsp;&nbsp;

###when unit rent increases above a certain point. (called "luxury decontrol" in NYC rent stablization law).&nbsp;

###landlord buy-out of tenant.

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Key total benefit/loss figures from this paper seem to have changed by large factors across the three versions of this working paper so far released, which are linked and excerpted below.&nbsp;

We reviewed the paper versions he cites from September 26 and November 29, and also one from October 11. It appears to me, that the change results from a recalculation of both the estimated welfare benefits and welfare losses into the same Present Discounted Value terms. (Whereas before people were e.g. taking a figure of $423M/yr benefit and multiplying by 17 years of study period to get $7.19B in benefit).&nbsp;

*29 November 2017 version. [https://drive.google.com/open?id=13pzS8XOAHXgvWdT6ddeoFy123Y_hoJ4y PDF].&nbsp;<br/> Abstract:<br/> "In this paper, we exploit quasi-experimental variation in the assignment of rent control in San Francisco to study its impacts on tenants, landlords, and the rental market as a whole. Leveraging new micro data which tracks an individual's migration over time, we fi􏰁nd that rent control increased the probability a renter stayed at their address by close to 20 percent. At the same time, we 􏰁find that landlords whose properties were exogenously covered by rent control reduced their supply of available rental housing by 15%, by either converting to condos/TICs, selling to owner occupied, or redeveloping buildings. This led to a city-wide rent increase of 5.1% and caused $2.9 billion of total loss to renters. We develop a dynamic, structural model of neighborhood choice to evaluate the welfare impacts of our reduced form eff􏰀ects. We 􏰁nd that rent control o􏰀ffered large bene􏰁fits to impacted tenants during the 1995-2012 period, averaging between $2300 and $6600 per person each year, with the present discounted value of aggregate benefi􏰁ts totaling $2.9 billion. The substantial welfare losses due to decreased housing supply could be mitigated if insurance against large rent increases was provided as a form of government social insurance, instead of a regulated mandate on landlords."<br/> <br/> "We fi􏰁nd that rent control off􏰀ered large bene􏰁fits to impacted tenants during the 1995-2012 period, averaging between $2300 and $6600 per person each year, with aggregate bene􏰁fits totaling over $214 million annually, with present discounted value of $2.9 billion. These e􏰀ffects are counterbalanced by landlords reducing supply in response to the introduction of the law. We conclude that this led to a city-wide rent increase of 5.1%. At a discount rate of 5%, this has a present discounted value of $2.9 billion dollars lost by tenents."

== California 'Costa-Hawkins' law repeal initiative ==