Saturday, July 7, 2012

Nine Years Free Rent in New York City

Mario Rizzo explains:
By now most of you know of the latest Mayor Bloomberg stupidity, that is, the proposed banning of sugary sodas in cups too big for his taste.

But you may not know of the latest in New York State housing law. If the loft you live in has not been brought up to various housing codes, you can live there free. The New York State Court of Appeals (our highest and wisest) court has said that a landlord cannot evict a tenant for nine years of nonpayment of rent because the landlord had not yet brought the property up to the safety and fire residential code. ( I am unaware of any evidence that these lofts have, in fact, experienced more fires or injuries than up-to-code apartments....

I am no expert on New York State housing law so it may be the case that the court was simply applying the clear law (although the lower courts did not think it was so obvious). So either the court is exhibiting its limited intellectual powers or the authors of the 1982 Loft Law were totally misguided.

It is, however, typical of the “New York” economics mentality. First, there is no perceived relevance to the fact that the rent most probably reflected the sub-code attributes of the loft. Second, by agreeing to live there and by staying there the loft was definitely worth something to the tenant. But she need not pay anything. Third, ” [t]hirty years after the passage of the law…almost one-third of the total number [of lofts] under the Loft Board’s purview” have still not received residential certification. How much is this is due to the fact that people are not willing to pay the additional rent necessary to make such changes profitable for landlords? Fourth, New York City is continually (and forever?) experiencing the post World War II housing “shortage.” Maybe there is something wrong with housing policy?

Some day I should give a course on the “Economic Fallacies Believed by New Yorkers.”
Who exactly would want to be a landlord in New York City?


  1. Not to mention the obvious:

    By government logic, if the property were unsafe, the tenants should be evicted because they're in an unsafe environment.

  2. It´s not exactly the same situation, but there´s this new campaign going on in Europe. Basically this group of morons are saying that clean water and sanitation are now human rights. That all the people in the EU (or in the world, to be precise) must have access to clean water and sanitation. It´s quite likely that a series of new nonsense laws will be proposed soon. What are these guys thinking? If somebody can´t afford a house that has sanitation and access to clean water, he will then afford to move to a Monaco-like villa with excellent conditions? What will happen is that those people in not-so-good houses will soon be spending their nights looking at the stars. Well done, folks! Well done.

  3. NYC landlords will do anything to get a below market rate tenant out of a building. One way to achieve this is by neglecting building maintenance and repairs, hoping by this to create living conditions so squalid that a tenant moves out. Most tenants don't have the savvy - or tenacity - to take the landlord to court for code violations, but a successful challenge can result in a rent abatement of up to 100% for the period that violations were outstanding. And if a tenant can prove that the landlord's neglect is willful, many times the court will award additional punitive damages of 200% - 300% of the rent withheld.

    However, the voting bloc that supports rent controls is shrinking as more and more rent-stabilized apartments become deregulated.

    1. I can't say I blame the landlords.

  4. I don't think the benefits of living in large metropolitan cities are outweighing the negatives. It will probably get worse too. As Ron Paul has said, the government tears down more housing than it builds. Now it has ruined the housing market, so people who otherwise would have rented lost their homes, and there will probably be increasing demand for apartments which the government is intervening in as well.

    Someone should glue Bloomberg's hands together and his mouth shut. Oh, and nearly everyone in government while they're at it. I'll help.