Thoughts on new New York rent control laws?
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[{"id": "eqxmrg8", "text": "Like a suckerpunch to the face", "replies": [], "depth": 1}, {"id": "eqxmxt0", "text": "I'm hearing a lot of concern that this has basically put a freeze on all sale activity in the NYC metro until people can get this figured out. It's probably also going to result in a lot of rent controlled buildings being capital starved, since you can't really do much except run your in place P&amp;L if rent growth is capped at sub 3%", "replies": [], "depth": 1}, {"id": "eqxr6vh", "text": "Sales drop for sure as the shock sets in. After a while, back to business as usual.", "replies": [], "depth": 1}, {"id": "eqxx4ks", "text": "I pity you.", "replies": [], "depth": 1}, {"id": "eqxxosx", "text": "The law is counter productive to the intent of the laws. The politicians who enact it unfortunately don\u2019t understand that or basic economics (ultra left). By allowing free rent, you\u2019re giving the opportunity for developers to develop more units and increase the supply, thus applying downward pressure on rents. If you cap rent growth people are less incentivized to build and thus insufficient supply becomes a problem. \n\n\nBy requiring a certain % of units to be affordable is perfect fine and hasn\u2019t cause any issues but capping rent growth is a massive issue.", "replies": [{"id": "eqyl0sd", "text": "This is exactly what\u2019s already began in Oregon even prior to 608 being passed. Low income housing requirements for new projects and the threat of 608 immediately halted most commercial residential projects in the Portland area.", "replies": [], "depth": 2}, {"id": "eqz9fg6", "text": "Yup \"free market\" at work... that's why all goods, services, and real estate markets are so inexpensive! It's not like there's any collusion going on.\n\nIf the \"free rent\" really helped [this chart](https://www.rentjungle.com/average-rent-in-new-york-rent-trends/) wouldn't be a thing. But rent just keeps going up, wages are stagnant, and people are being priced out of their homes.\n\nTo Real Estate Moguls, these properties are a line on a paper but to the tenants, they are their **homes** where they stay safe, form memories, and have a semblance of stability.\n\nIt's good these laws are going to be passed, hopefully they match Canadian laws one day.", "replies": [{"id": "er0p7my", "text": "Rent control is awful, I wouldn't wish it on anyone.", "replies": [], "depth": 3}, {"id": "er0tuk2", "text": "If rent control existed, there would be a massive housing crisis. I\u2019m not saying rents would be cheaper but there would be less places to live because no one would be developing and thus home prices would be astronomical. Rent control has a direct correlation to home prices in the respective city.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "eqxyzcj", "text": "MD already sent out an email this morning, changing how we will look at deals in NYC for sure.\n\n&amp;#x200B;\n\n&gt;*Encouraged by the Democratic takeover, a statewide coalition of tenants had been pressuring lawmakers for months* [*to pass nine bills*](https://www.nytimes.com/2019/04/17/nyregion/ny-rent-laws-regulation.html?module=inline) *collectively known as \u201cuniversal rent control.\u201d*  \n&gt;  \n&gt;*The deal reached on Tuesday included several of those proposals or modified versions of them.*  \n&gt;  \n&gt;*Lawmakers agreed to abolish so-called vacancy decontrol, a provision that allows landlords to lift apartments out of regulation when their rents pass a certain threshold. The rule has* [*led to the deregulation*](https://www1.nyc.gov/assets/rentguidelinesboard/pdf/changes18.pdf) *of more than 155,000 units since it was enacted in the 1990s.*  \n&gt;  \n&gt;*They also agreed to repeal the so-called vacancy bonus, which allows landlords to raise rents by up to 20 percent whenever a tenant moves out of a rent-stabilized apartment.*  \n&gt;  \n&gt;*And they pledged to rein in provisions that allow landlords to raise the rents of rent-regulated apartments when they renovate units or fix up buildings \u2014 perhaps the most hotly debated proposal of the package.*  \n&gt;  \n&gt;*Housing advocates have long argued that building owners routinely abuse those provisions,* [*inflating construction costs to jack up rents*](https://www.nytimes.com/2019/05/30/nyregion/rent-stabilized-apartments-ny.html?module=inline) *and push out tenants.*", "replies": [], "depth": 1}, {"id": "eqy87wl", "text": "Politicians don\u2019t understand business. Huge blow to NYC housing stock.", "replies": [], "depth": 1}, {"id": "eqyz9ys", "text": "Broker here. Investment sales will slow, and RS buildings will trade at cap rates of at least 6%. But sales will continue, and landlords with RS buildings either have to sell now at ~25% less or hold long term with the hopes that these laws get repealed.", "replies": [{"id": "eqzohjs", "text": "Agreed", "replies": [], "depth": 2}], "depth": 1}, {"id": "eqz0w5j", "text": "disastrous.unamerican.theft.", "replies": [], "depth": 1}, {"id": "eqz8305", "text": "Little to no impact.  Landlords have colluded for years to support zoning that limits construction.  Rent stabilization laws still allow for a reasonable return on an investment, particularly in a city that is effectively a bond.", "replies": [{"id": "erbbeya", "text": "The bond point is interesting. But I just have a hard time seeing it not having a large impact. Many business models just got toasted", "replies": [], "depth": 2}], "depth": 1}, {"id": "eqzon61", "text": "Prices will drop, some people will be losing lots of money if they night stabilized in the past year or two", "replies": [], "depth": 1}, {"id": "er1mzd3", "text": "Elect socialist politicians, get socialist laws. Amazing how America's business capital can be so anti-business.", "replies": [], "depth": 1}, {"id": "erbbc3x", "text": "I'm a data scientist in NYC CRE so my perspective is going to be from a different angle.\n\nIn the 1980s the city lost around 250,000 units to coop conversions. Roughly a quarter of existing stock. We only caught back up in 2014. Obviously changes in financial markets played a part in it but I have a different theory. \n\nThe overwhelming majority of units were heavily stabilized. The only ways to make money were running them cheaply to where affluent tenant wanted better. Or through conversions. The financial markets then enabled the conversions. The effect was the city lost over a quarter of rental supply.\n\nThe new law is basically attempting to make it impossible to make money. And people will always find a way. Just that whenever they find it, the results could be unpredictable.\n\nI absolutely agree with stabilization as a concept, but the new law is way over reaching and poorly thought out. Personally, I'd offer very serious tax breaks for new patial stabilized buildings. Allow increases for Capex. Higher bar for high rent deregulation in existing buildings. Vacancy bonus lower that 20%\n\nUltimately the issue is supply", "replies": [], "depth": 1}]