In New York, rent control works
Housing prices in New York City are astonishingly high. In Manhattan, it is easy to find a one-bedroom apartment that goes for over $3,000 a month. So many tenants share an apartment, one using the bedroom and the other the living room to share the burden.But some of the apartments in exclusive neighborhoods in Manhattan are rented for far less than the market value. They are the “rent stabilization” units. According to a special law made in 1969, landlords cannot raise the rent as they wish. The NYC Rent Guidelines Board, consisting of tenant and landlord representatives and housing specialists, meets every year to determine the rate of increase. As a result, some apartment units are rented for less than $1,000 after being under rent stabilization for a long time. And many units are affected by this law, about one million out of 22 million units in New York City.
At the end of June, a historic precedent was set after 46 years of rent stabilization history. The board froze one-year leases for the first time and limited two-year leases to a 2 percent increase. Landlords protested that costs are rising, but millions of tenants rejoiced. Freezing the rent was one of New York Mayor Bill de Blasio’s campaign promises. This year, all nine positions of the Rent Guidelines Board were filled with de Blasio appointees, making his pledge into a reality.
In the heart of global capitalism, the rent freeze is especially meaningful. In mainstream economics, a regulation artificially controlling a price is generally seen negatively as it distorts the market and leads to various adverse effects. New York’s rent stabilization also has side effects: Old facilities are often left unfixed. As soon as the rent freeze was approved, landlords threatened that various services would be compromised, and that tenants would suffer as well.
But the authorities don’t regulate the rent arbitrarily. The rent increase is determined based on price, real estate tax, water and sewage charges and maintenance costs. Apartment developers and landlords are offered tax abatement for 10 to 20 years. This tax incentive attracts many newly constructed and reconstructed apartments to the program.
New York is active about rent regulation regarding housing stability for the working class, based on an understanding that a society that neglects the working class has no future. How about Korea? Tenants who cannot afford the rising rent are pushed out of the city, a tragedy that must not be ignored. Politicians and the government have failed to come up with working plans, and they are either incompetent or delinquent in their duties.
The author is a New York correspondent of the JoongAng Ilbo.
JoongAng Ilbo, July 14, Page 30
by LEE SANG-RYEOL
with the Korea JoongAng Daily
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