There is no denying it. Here in California, we have been facing a persistent and widespread housing shortage.
However, rent control measures, including the Rent Stabilization Ordinance concocted by our City Council in Beverly Hills, only reduces available housing. It’s a simple supply and demand thing – less available housing together with demand for fewer available units is what drives pricing. Ironically, failed policies like rent control and ill-conceived housing and building codes have put us in this current situation. We need more housing supply.
Apartment owners, many of whom in our city are passive investors and are characterized as “mom and pops” have, like me, chosen to make an investment in rental property to support and provide housing within neighborhoods they live in or near, rather than invest their money in Wall Street (e.g., stocks and bonds). Some owners depend upon the income derived from owning an apartment to supplement their current income or in many cases in our city, retirement income and ever-increasing costs of healthcare and assisted living. Under the current city ordinance, sadly, many of these retirees will not be able to keep up with constantly rising healthcare and retirement costs in the face of limited, CPI increases allotted to them by our City Council.
In my case, I live in one of the four-units that I own, and each of my three tenant families are now protected by the city’s rent stabilization ordinance. However, each of my three tenant families have higher household incomes than do my wife and me. How is this fair? Shouldn’t we “means test” tenants so that only those that need it can benefit from rent control?
Along with rent control that dictates how much I can charge my tenants and negatively impacts my income and ability to maintain my building, the worse “crime” of it all is that my investment, the value of my property, is also negatively impacted. While our City Council lives in their castles and enjoys the booming real estate economy and double-digit gains on their investment in property, I lose for becoming a housing provider rather than living in a single-family home or investing in stocks and bonds. Why is our government asking private citizens like me to subsidize the tenants in Beverly Hills? Why won’t our city step in and help those in need?
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