The Off Topic Topic

[The Brain]

The Swedish government has lost a vote of no confidence. Their proposed phasing out of destructive rent control laws for at least new-build homes did not appeal to the Communists.

[Grey Fox]

With what were they aiming to replace it with?

[celedhring]

The invisible hand, I presume.

Rent control is also becoming a hot topic around here.

[Grey Fox]

If you don't replace it by massive state ownership of affordable housing, you will have fix nothing & pissed off voters.

[The Brain]

You will have begun to fix the problem that it is impossible to get a first-hand contract for an apartment in Stockholm, with people queuing for years or indeed decades.

[Duque de Bragança]

You will have begun to fix the problem that it is impossible to get a first-hand contract for an apartment in Stockholm, with people queuing for years or indeed decades.

Both for private and social housing ?

[The Brain]

You will have begun to fix the problem that it is impossible to get a first-hand contract for an apartment in Stockholm, with people queuing for years or indeed decades.

Both for private and social housing ?

Yes.

[Syt]

In Vienna there's a rent limit for old buildings (pre-1960s I think?) depending on size, features and location, but it's often ignored in practice. There's a lot of publically funded or subsidized housing, but waiting lists can be long. About 80% of people in Vienna rent, 20% own. Additionally, the majority of rentals are fixed term (usually 4-5 years). Those apartments are slightly cheaper, but you have to search a new place every couple years.

[Duque de Bragança]

You will have begun to fix the problem that it is impossible to get a first-hand contract for an apartment in Stockholm, with people queuing for years or indeed decades.

Both for private and social housing ?

Yes.

As in Paris (unless you can pay up some disproportionate amounts) where they tried a rent control of sorts, but there are rent subsidies which sometimes keep rents high, as if they were not already high enough.

[garbon]

https://www.brookings.edu/research/what-does-economic-evidence-tell-us-about-the-effects-of-rent-control/

What does economic evidence tell us about the effects of rent control?

...

To examine rent control's effects on tenant migration and neighborhood choices, DMQ examine panel data that provides address-level migration decisions and housing characteristics for the majority of adults living in San Francisco in the early 1990s. This allows them to define a treatment group of renters who lived in small multi-family apartment buildings built prior to 1980 and a control group of renters living in small multi-family housing built between 1980 and 1990. Their data allows them to follow each of these groups over time up until the present, regardless of where they migrate.

Between five and ten years after the law change, the beneficiaries of rent control are 19 percent less likely to have moved to a new address, relative to the control group's migration rate. Further, impact on the likelihood of remaining in San Francisco as whole was the same, indicating a large share of the renters that rent control caused to remain at their 1994 address would have left San Francisco had they not been covered by rent control.

These effects are significantly stronger among older households and among households that have already spent a number of years at their address prior to treatment. This is consistent with the fact that both of these populations are likely to be less mobile. Renters who don't need to move very often are more likely to find it worthwhile to remain in their rent controlled apartment for a long time, enabling them to accrue larger rent savings. Finally, DMQ find these effects are especially large for racial minorities, likely indicating that minorities faced greater displacement pressures in San Francisco than whites.

While expansion of rent control did prevent some displacement among tenants living in San Francisco in 1994, the landlords of these properties responded to mitigate their rental losses in a number of ways. In practice, landlords have a few possible ways of removing tenants. First, landlords could move into the property themselves, known as move-in eviction. Second, the Ellis Act allows landlords to evict tenants if they intend to remove the property from the rental market, for instance, in order to convert the units to condos. Finally, landlords are legally allowed to offer their tenants monetary compensation for leaving. In practice, these transfer payments from landlords are common and can be quite large.

DMQ find that rent-controlled buildings were 8 percentage points more likely to convert to a condo than buildings in the control group. Consistent with these findings, they find that rent control led to a 15 percentage point decline in the number of renters living in treated buildings and a 25 percentage point reduction in the number of renters living in rent-controlled units, relative to 1994 levels. This large reduction in rental housing supply was driven by converting existing structures to owner-occupied condominium housing and by replacing existing structures with new construction.

This 15 percentage point reduction in the rental supply of small multi-family housing likely led to rent increases in the long-run, consistent with standard economic theory. In this sense, rent control operated as a transfer between the future renters of San Francisco (who would pay these higher rents due to lower supply) to the renters living in San Francisco in 1994 (who benefited directly from lower rents). Furthermore, since many of the existing rental properties were converted to higher-end, owner-occupied condominium housing and new construction rentals, the passage of rent control ultimately led to a housing stock that caters to higher income individuals. DMQ find that this high-end housing, developed in response to rent control, attracted residents with at least 18 percent higher income. Taking all of these points together, it appears rent control has actually contributed to the gentrification of San Francisco, the exact opposite of the policy's intended goal. Indeed, by simultaneously bringing in higher income residents and preventing displacement of minorities, rent control has contributed to widening income inequality of the city.

It may seem surprising that the expansion of rent control in San Francisco led to an upgraded housing stock, catering to high-income tastes, while the removal of rent control in Cambridge also lead to upgrading and value appreciation. To reconcile these effects, it is useful to think about which types of landlords would respond to a rent control expansion versus a rent control removal. In the case of rent control expansion, some landlords will choose to recoup some of their losses by converting to condo or redeveloping their building to exempt it from rent control. However, other landlords may choose to accept the rent control regulation, and no longer perform maintenance on the building and allow it to decay. In the rent control expansion case, one would see an increase in condo conversions and upgrades, driven by the landlords that chose to respond in this way. However, when rent control is removed, the landlords who own the rent controlled buildings are the ones who didn't choose to convert to condo or redevelop in response to the initial passage of rent control. Indeed, one would expect this subset of landlords to choose to upgrade and invest in their properties once the rent control regulation is removed.

Rent control appears to help affordability in the short run for current tenants, but in the long-run decreases affordability, fuels gentrification, and creates negative externalities on the surrounding neighborhood. These results highlight that forcing landlords to provide insurance to tenants against rent increases can ultimately be counterproductive. If society desires to provide social insurance against rent increases, it may be less distortionary to offer this subsidy in the form of a government subsidy or tax credit. This would remove landlords' incentives to decrease the housing supply and could provide households with the insurance they desire. A point of future research would be to design an optimal social insurance program to insure renters against large rent increases.

[Josquius]

Today on linkedin I received two curious messages from Indian guys claiming to be recruiters but which seem very off. Poor grammar in the messages and the profiles just look wrong.
I smell a scam.
But I wonder what the scam is. How do they intend to get my money from a fake job advert. Fishing for personal details to open dodgy accounts/trick the bank into letting them access my funds?

[The Brain]

Today on linkedin I received two curious messages from Indian guys claiming to be recruiters but which seem very off. Poor grammar in the messages and the profiles just look wrong.
I smell a scam.
But I wonder what the scam is. How do they intend to get my money from a fake job advert. Fishing for personal details to open dodgy accounts/trick the bank into letting them access my funds?

Have you asked them?

[The Brain]

On rent control and similar: it seems to me to be unsound to distort an entire market instead of helping those who actually need the help to function in a properly working market.

[Josquius]

Today on linkedin I received two curious messages from Indian guys claiming to be recruiters but which seem very off. Poor grammar in the messages and the profiles just look wrong.
I smell a scam.
But I wonder what the scam is. How do they intend to get my money from a fake job advert. Fishing for personal details to open dodgy accounts/trick the bank into letting them access my funds?

Have you asked them?

I was tempted to ask 'should I just send you my bank details now or do you have something else planned?'
But there's always the chance I'm just being paranoid and there's no benefit to doing this.

[The Brain]

Today on linkedin I received two curious messages from Indian guys claiming to be recruiters but which seem very off. Poor grammar in the messages and the profiles just look wrong.
I smell a scam.
But I wonder what the scam is. How do they intend to get my money from a fake job advert. Fishing for personal details to open dodgy accounts/trick the bank into letting them access my funds?

Have you asked them?

I was tempted to ask 'should I just send you my bank details now or do you have something else planned?'
But there's always the chance I'm just being paranoid and there's no benefit to doing this.

I agree. Minimizing risk is key.