Here's an interesting article authored by C.W. Nevius (ht Craig Newmark) on rent controls in San Francisco. The gist of the article is that "the rich" still end up getting apartments and sometimes end up profiting from them because of the way the rent control laws are structured.
Well-to-do people are taking advantage of the city's long-protected practice of limiting rent increases to preserve affordable housing by using their cheap apartments as weekend getaways.
Attorney Andrew Zacks represents landlords who work with the city to push out these cheaters. He says these tenants are cynically playing the system.
"You have this class of very rich, elite people benefiting from rent control," he said. "They have a good deal on a $500 or $800 place on Nob Hill and they use it as a pied-a-terre when they come into the city."
In cases where landlords believe that renters don't use their apartments as permanent residences...
"The burden of proof is on the landlord," said Zacks. "We almost always hire a private investigator, which costs several thousand dollars."
Since the legal system is tilted against landlords, and assuming that the equilibrium price of apartments is above the rent controlled price, we'd expect smart renters to cash in in one way, shape, or form.
"People are hoarding the units," he said. "You have these beautiful homes being used for storage."
Presumably at rental rates less than the rental rates for storage units. Score 1 for the renters (and -1 for the storage unit owners).
Or to turn a profit. As documented in a Chronicle story on Sunday, the recent influx of travel sites like Airbnb, which allow people to rent out units for short periods of time, can allow these renters to both get a place at a bargain rate and make money.
Renters 2, landlords 0.
New says the experience can be surreal for rental property owners.
Surreal to landlords, but not to economists. It's not surreal to economists because what's being described in this article is something touched on in every Principles of Microeconomics textbook that covers price ceilings and the Coase Theorem (all of them to my knowledge). Effective price ceilings cause shortages and the distribution of property rights determines the distribution of income.