San Francisco Rent Control Madness

SF CHronicle's C.W. Nevius explains:

Well-to-do people are taking advantage of the [San Francisco's] long-protected practice of limiting rent increases to preserve affordable housing by using their cheap apartments as weekend getaways.

Attorney Andrew Zacks represents landlords who work with the city to push out these cheaters. He says these tenants are cynically playing the system.

"You have this class of very rich, elite people benefiting from rent control," he said. "They have a good deal on a $500 or $800 place on Nob Hill and they use it as a pied-a-terre when they come into the city."

Delene Wolf, executive director of the San Francisco Rent Board, is still fuming over a group from the South Bay that formed its own little housing cooperative.

"It drove me nuts," she said. "It was four doctors and their wives. They traded off on the weekends and used it to go to the Symphony."...

[Landlord attorney Andrew] Zacks has a case that involves a couple who own a condominium in Hawaii and have enrolled their children in school there, but wanted rent protection for a single-family residence in the Richmond District that they have rented since 1987. The landlord, who felt he had evidence the two were living full-time in Hawaii, wanted to increase the rent by $1,500 a month to $3,600.

Zacks' client won the case, but only after two appeals, $50,000 in legal costs and four years of wrangling...

"People are hoarding the units," he said. "You have these beautiful homes being used for storage."

Or to turn a profit. As documented in a Chronicle story on Sunday, the recent influx of travel sites like Airbnb, which allow people to rent out units for short periods of time, can allow these renters to both get a place at a bargain rate and make money.

New says the experience can be surreal for rental property owners.

"We have had cases where our owners go on the sites and see their own buildings, renting for more than they are getting," she said. "They are gaming the system and getting away with it."

That's aggravating. But, Zacks says, imagine what it is like to be giving tenants a break on the rent and then finding out they are renting the place out for a profit.

The situation is so out of whack it has accomplished the nearly impossible - some people are actually feeling sorry for landlords.

Bottom line: Rent controls distort markets, provide disincentives for new construction---which result in overall higher prices--which increases the desire for those who have rent controlled apartments to keep them,costing the landlords dearly.