Then a better policy would be to price these negative externalities into a single metric that is a multiple of the rent. Want to raise rent by more than max(inflation, 3%)? Offer the renter 2.5x the months rent to leave instead. My cofounder lives in a place that is only $900 / mo with his girlfriend in Toronto because she's been renting there for forever. They are essentially trapped there because their rent would easily double if they moved somewhere else. Meanwhile the landlord doesn't take care of the place at all because there is absolutely no incentive to until they move out. Market warping practices should be eliminated.
A reasonable notice period plus lump-sum fee would be an interesting angle to overcome the transaction-cost issue. Wonder if that's been tried anywhere?
I'm not familiar with the history of SF's rent-control laws, but in Copenhagen another motivation is stability, though. Beyond simply the hassle of moving, there was a decision some decades ago (probably about a century at this point) that it should be possible for people to choose to live somewhere long-term, organize their life around that assumption, customize the space within reason, etc., and not worry that they will be forced to move constantly because of fickle landlords and markets. Rent-control laws and anti-eviction laws (which aren't quite the same, since a landlord might want to evict for reasons unrelated to rental prices) aimed at that stability, so a tenant who has lived in a place for at least 3 years generally has something like "tenure" in the place, protected against both rent increases and eviction.
Now you might say: if you want that kind of stability, you should buy rather than rent. But at least here, the concept of individually owned condos didn't exist until recently. Real-estate was a system of land ownership, along with any improvements on the land. So you could own some land with a house on it, or some land with a 5-story apartment building on it, but you couldn't own only the left half of the 4th floor of a building. You could rent use of that portion of the building, but you couldn't own a floating piece of the building. (Condo ownership now exists, but it really is an odd kind of real estate, since it comes with no land, and your unit is so heavily structurally coupled to neighboring units, that normal decisions regarding real estate, like choosing to build or demolish structures, can't really be exercised.)
Obviously your average worker couldn't buy an entire apartment building, so almost all of the urban working class rented. This system of rental stability was then developed to provide housing stability for them. (There are alternatives also in use, which arguably work better. The two main ones are cooperatively-structured housing, where residents jointly own their own building through a system of shares; and association-owned housing, where an organization such as a union or philanthropic society owns housing and rents it to their members, or to the public, on generally favorable terms.)
> A reasonable notice period plus lump-sum fee would be an interesting angle to overcome the transaction-cost issue. Wonder if that's been tried anywhere?
In California, this exists for certain kinds of evictions. The Ellis Act is much-loathed anyway.
The basic problem in SF is that many decades of very, very strong rent control and building restrictions are colliding with an economic boom.
I couldn't agree more. Rent control originally proposed for these on fixed salary growth (teachers, firemen, etc.) is turned upside down when the inhabitants are not constrained by these caps. That being said the rules of the game are clear and defined on signing of the lease ( by both parties), and property owners are constrained (and game) these rules as much as the tenants. Having an updated provision that allows both parties to win from a conversion makes for amicable relations. I love my rent controlled apartment,but let's face the facts the contract and governance is clear and I could end up with the same situation. I would be more inclined to be bought out of my position giving up my under market rent giving the landlord the option to try for greater revenue. Win win
