One of the policies I loathe most is rent control and rent stabilization. Like Ed Glaeser, I think U.S. cities should immediately end rent control and stabilization policies while simultaneously loosening density and height-limit requirements to encourage an increase in housing supply. Greg Mankiw has highlighted a particularly perverse aspect of rent control laws in New York city, namely the process through which major research universities have gamed the system:
In the end, the goal of the rent control laws is thwarted (the low rents are enjoyed by well-paid tenured faculty rather than the needy), the income tax laws are thwarted (a sizable part of compensation is untaxed), and all this is done by a nonprofit institution (the university) whose ostensible purpose is to serve the public interest.
But there is a small problem. The New York Times guide to rent stabilization and control includes the following:
The board notes that there are many exceptions to these general categories. For example, if the legal rent exceeded $2,000 after a vacancy the unit may be deregulated. Or, if the unit was in a building converted to a co-op it may be deregulated upon vacancy. And a tenant living in a rent-stabilized apartment with a rent higher than $2,000 a month whose family income exceeds $175,000 a year for two consecutive years is no longer entitled to rent stabilization, and the apartment may be deregulated.
Many if not most of the households Mankiw has in mind are presumably earning more than $175,000, though this is not generally true of unattached junior faculty members in the humanities. In this particular case, the landlord has no incentive to enforce the law. But the law is there all the same, which suggests that there might be room for some rent control vigilantism.
Note, by the way, the irrationality of New York city’s approach to vacancy decontrol. What if the apartment is worth more than $2,000 a month yet the rent is $1,999? You’re apparently in the clear.
I can’t imagine that anyone will want to waste hours, or even minutes, of their life on this particular crusade. But this could be a job for one of those super-gadflies.