California Approves Statewide Rent Control • Hacker News Board

Re: California Approves Statewide Rent Control

#831

Post by rdtwo » Thu, Sep 12, 2019, 2:33 PM UTC

m463 wrote: post #448

throwaway5752 wrote: post #202

Earlier quoted context omitted.

This should be the top comment. The upshot is that if you are a family that is renting, you won't be forced out of your home on short notice. Try - for a moment - to imagine you are living close to your maximum expenses and your landlord increases your rent by 20% next year.

This happened to a family I know, except it was 50%. The building was purchased, "refurbished" and the rent was reset to a very high number.

A lot of units require seismic retrofitting and that’s super expensive. If you can’t pass that cost on a lot of these buildings won’t be retrofitted

Re: California Approves Statewide Rent Control

#832

Post by Fjolsvith » Thu, Sep 12, 2019, 2:33 PM UTC

mratzloff wrote: post #669

yojo wrote: post #595

Earlier quoted context omitted.

I am a CA landlord of a single house. Keeping track of “market rate” is an annoying exercise and I tend to just leave the rate unchanged for multiple years (3-5) then bring it up in one go. The last time I did this the rent increased ~12%. Before, the tenant was happy because they got below market rent for 4 years, and I was happy because I could defer pricing work without long term penalty or risking a move-out duri…

Was the tenant happy when you increased it? Increasing rent 12% in one go effectively kicks out most tenants. A smaller annual increase will give them time to adjust to market conditions and choose over a longer period whether or not to move and to save up to do so. You are doing no one any favors except short-term renters who never get an increase. In other words, your so-called benefit is actually a detriment to lo…

> Was the tenant happy when you increased it? Increasing rent 12% in one go effectively kicks out most tenants.

No, the market kicked out most tenants. The tenant should be expected to also monitor market prices for their rental and know automatically when they're getting a deal or when to expect an increase.

Re: California Approves Statewide Rent Control

#833

Post by andrewla » Thu, Sep 12, 2019, 2:40 PM UTC

bhauer wrote: post #21

I am a landlord in Oregon, but not California. The curious, although ultimately predictable, outcome of the new rent control measure in Oregon is that while I have historically had an arrangement with my property management to be restrained in annual rent increases, they are now advising a default annual increase of the maximum allowed (7 percent before inflation). This is because larger adjustments cannot be made if…

It is the case in New York City, and also in this California Bill (I don't know the case in Oregon) that you can charge a tenant less than the "legal" rent by offering incentives and discounts.

In other words, it is totally permissible to increase the legal rent by the officially allowed 7%, but increase the effective rent paid by your tenants by only 2% (or whatever you want). There does not appear to be any restrictions about removing such incentives/concessions/discounts in the future.

It also appears that the California law resets as soon as the tenancy changes hands; so as soon as there is a vacancy the landlord is free to increase the rent by as much as they want. This is not the case for NYC rent stabilization; there the increase in the legal rent is a property of the unit, not of the tenancy.

Re: California Approves Statewide Rent Control

#834

Post by verelo » Thu, Sep 12, 2019, 2:40 PM UTC

bhauer wrote: post #21

I am a landlord in Oregon, but not California. The curious, although ultimately predictable, outcome of the new rent control measure in Oregon is that while I have historically had an arrangement with my property management to be restrained in annual rent increases, they are now advising a default annual increase of the maximum allowed (7 percent before inflation). This is because larger adjustments cannot be made if…

In Ontario the rent control is even worse. It’s set by the landlord tenant board at a number near inflation, this year it’s 2.2%, the last few it’s been 1.8%.

Similarly, i tell my tenants that they should expect the minimum increase yearly as i cannot make up for any lost increases nor can i make larger increases if something about the economics of the house changes.

The real issue here is the cost to provide housing, and the limited amount that exists. I wanted to finish a basement in one of my places, to do this legally, i owe the city $140k in fees alone. This is around 5-6years of rent. You can probably imagine why i opted to put this money in a bunch of index funds and do nothing instead...

Re: California Approves Statewide Rent Control

#835

Post by rdtwo » Thu, Sep 12, 2019, 2:40 PM UTC

azernik wrote: post #818

adamsb6 wrote: post #662

Earlier quoted context omitted.

What if the market clearing price increases at greater than 5% plus inflation? This isn’t a free lunch, the tradeoff of a price cap is under provision of a good.

Market-wide price increases of 5%+inflation are rare; sustained market-wide price increases of 5%+inflation are very rare. This forces landlords to do two things: * When there is a sustained rise in fair market rent, they will need to implement that increase over time instead of falling behind, and then raising it all at once 5 years later when they realize they're leaving 20% on the table. This allows people being p…

This will still affect new units as it changes the forecasted rates over the lifetime of the loan (usually 10 year balloon) so instead of being able to forecast market rate increases the max value is now 7%. And maybe less if all units aren’t filled right away and you miss a year of increases. It’s not a huge impact but it does put a cap on the upside profits against potential huge losses

Re: California Approves Statewide Rent Control

#836

Post by _gi12 » Thu, Sep 12, 2019, 2:44 PM UTC

Jweb_Guru wrote: post #694

bhauer wrote: post #21

I am a landlord in Oregon, but not California. The curious, although ultimately predictable, outcome of the new rent control measure in Oregon is that while I have historically had an arrangement with my property management to be restrained in annual rent increases, they are now advising a default annual increase of the maximum allowed (7 percent before inflation). This is because larger adjustments cannot be made if…

Yes, the real solution is to make life as easy as possible for real estate developers and strip tenants of their rights. That is definitely good for tenants, according to landlords such as yourself. For the rest of us, I hope you understand why this sounds fairly nonsensical. "More housing" does not automatically translate to "affordable housing" and many regulations are there for a reason--including regulations prot…

> "More housing" does not automatically translate to "affordable housing"

Imagine two hypothetical cites, each with one million residents. The first one has half a million apartments, while the second one has ten million apartments.

Which city would have cheaper apartments?

Re: California Approves Statewide Rent Control

#837

Post by woah » Thu, Sep 12, 2019, 2:44 PM UTC

eru wrote: post #739

Jweb_Guru wrote: post #694

Earlier quoted context omitted.

Yes, the real solution is to make life as easy as possible for real estate developers and strip tenants of their rights. That is definitely good for tenants, according to landlords such as yourself. For the rest of us, I hope you understand why this sounds fairly nonsensical. "More housing" does not automatically translate to "affordable housing" and many regulations are there for a reason--including regulations prot…

How does more housing not translate to more affordable housing? Do rich people to afford that extra housing get created out of thin air?

As amazing as it seems, a lot of far left people in the Bay Area who engage in the housing debate actually don’t believe in supply and demand. Hard to have any kind of discussion on that basis.

Re: California Approves Statewide Rent Control

#838

Post by tathougies » Thu, Sep 12, 2019, 2:45 PM UTC

FussyZeus wrote: post #779

34679 wrote: post #764

Earlier quoted context omitted.

The lack of affordable housing always has been and always will be a supply problem. When demand for homes outpaces the number of homes being built, prices go up. Plain and simple. Homes that are built for renting (mainly apartments and condos, but some houses, too) are built for profit. If you make it less profitable to build, fewer will be built. If fewer homes are built, the problem is compounded, not rectified. If…

> Homes that are built for renting (mainly apartments and condos, but some houses, too) are built for profit. If you make it less profitable to build, fewer will be built. If fewer homes are built, the problem is compounded, not rectified. Arguments like this continue to be made for more and more aspects of our market: pharmaceuticals, heathcare services, elder care services, and now housing. Everywhere you look the…

Right instead of a society in which everyone behaves accorsing to their own free choices, and incentivized to make a socially helpful choice via some kind of personal reward (profit), we should instead have a society in which people are incentivized to work for others because of what? Force?

Re: California Approves Statewide Rent Control

#839

Post by thatfrenchguy » Thu, Sep 12, 2019, 2:50 PM UTC

pmikesell wrote: post #140

gregs1986 wrote: post #68

Earlier quoted context omitted.

Landlords who choose to increase rents at the maximum rate permitted each year do so at the risk that they will be undercut by competing property owners who do not do so. Given this, I think that your property management company is offering you bad advice. Most landlords already increase rents at the maximum rate that the market will bear. Capping annual increases at 7% just ensures that in a year when the market wou…

>>> If you made a viable investment in a property and are currently renting it out, wouldn't rent increases just need to equal inflation in order for you to maintain the same level of profitability? Not necessarily - taxes on property owners don't follow inflation. They may go up greatly compared with inflation. >>> I hardly see why maximizing profits should be seen as a necessity---especially when it comes at the co…

> Not necessarily - taxes on property owners don't follow inflation. They may go up greatly compared with inflation.

Except in Cal where they go up much lower than inflation...

Re: California Approves Statewide Rent Control

#840

Post by tathougies » Thu, Sep 12, 2019, 2:51 PM UTC

Jweb_Guru wrote: post #693

icebraining wrote: post #657

Earlier quoted context omitted.

Because landlords start being unable to afford repairs, and you get a bunch of decrepit buildings falling apart all over the city (with all the dangers that implies, not just to occupants, but to nearby buildings as well). It happened in my home town, and it wasn't pretty. Landlords are not social security. It's probably better for the city to forcefully buy them out and create a new management model of the buildings…

Rents are growing insanely fast in SF compare to anything else. The idea that landlords can't afford to make repairs because they aren't extracting maximum rent from the property is completely ludicrous on the face of it. Do you actually believe these arguments?

Do you think contractor costs and material costs are going down?