Rent Control Creates Ghost Apartments

Adam Lehodey writing at City Journal:

In New York City, making a profit on real estate has become increasingly difficult. Rent-stabilization laws built on the mantra that “housing is a human right,” a dysfunctional housing court, and myriad other interventions have driven thousands of units off the market, giving rise to the phenomenon of New York’s “ghost apartments.”

The city now has nearly 50,000 empty units, absent from the market either because their operating costs exceed legal rents or because they require considerable renovations.

…Take a building on East 6th Street as an example. A mere five-minute walk from Tompkins Square, the building is a convenient home for students and young professionals.

One-bedroom units in the building average $3,500— except two of them, subject to the city’s rent-stabilization laws, which hold rents below $900 per month.

As a result, both units have been allowed to fall into disrepair, because the cost of restoring them to habitability is greater than what they’d generate in rent.

…Much of the predicament at the East 6th Street building and the apartments on Valentine Avenue can be traced back to one piece of legislation: the 2019 Housing Stability and Tenant Protection Act (HSTPA). Passed by a Democratic majority in the state legislature, HSTPA eliminated landlords’ abilities to raise rents after units were vacated, or when they exceeded $2,775 per month. In doing so, it also eliminated their ability to make improvements profitably and reset the stabilized rent.

Recall from the recent review by Kholodilin that “the published studies are almost unanimous with respect to the impact of rent control on the quality of housing….[namely] that rent control leads to a deterioration in the quality of those dwellings subject to regulations.”