Tuesday, June 28, 2005

The Bizarre World of NYC Real Estate Laws

I read a story this morning on the New York Times website about the wacky world of "rent stabilized" apartments in New York City. The article, "Everybody Out" (published 6/26/05), chronicles the struggle of an owner of a building to take over the entire property to turn it into a 60 room residence for his family. And no, his family is not large, it is himself, his wife, and their infant son. (Maybe he is a large infant. Or maybe he is just loud.)

I personally have no squabble with how much space he thinks he needs for his family. If he can afford 60 rooms, it's his choice. But it is highly unlikely that this decision is driven by a desire for family space. The bizarre system created for rent-stabilized property may leave him no other practical choice if he wishes to extricate himself from tenants with below-market rents. Taking over the property for one's own family may be the only effective way, or at least a less expensive option than providing economic inducements for tenants to leave. By living in it for three years, he could apparently then be free of rent restrictions.

This system is expensive and wasteful. Rather than creating incentives for more housing, it effectively creates an incentive for less. For a Midwesterner like me, this system seems a lot more outrageous than any kind of taking under a government economic development plan. At least when eminent domain powers are exercised, you get compensated for the taking.


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