Columbia University Libraries Digital Collections: The Real Estate Record

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686 RECORD AND GUIDE May 24, 1919 Relation of Landlords' Profits to the Laying of Bricks If Bentals Are Arbitrarily Fixed at an Unprofitable Scale Housing Shortage Will Increase in Proportion By FREDERICK C. ZOBEL THE real issue before th-e public is not "What shall be done to curb a few rent profiteers?" but "What shall be done to relieve real estate from the excessive bur¬ dens which make rents high?" The present rent investigations are a smoke screen to hide the failure of the Legislature to pass a single measure for the relief of the taxpayer. I predicted this failure. These rent profiteering agitations are a bold attempt to seize the initiative and put real estate on the defensive. Don't let them sidetrack the issue! The facts are these: Fact No. 1.—The housing shortage is not solely the result of war conditions, but rather the culmination of a decade of outrageous taxation, harassing building laws, socialistic agi¬ tation and general injustice and indignities to property owners. , These persecutions have driven many builders and investors into lines of business unhampered by laws. Fact No. 2.—The hostile attitude towards the landlord on the part of the public in general and the tenants in particu¬ lar, has disgusted self-respecting property owners so that they shunned contact with their tenants and either got rid of their properties or leased them to so-called "leasters," the latter being men of type able to hold their own against a tricky tenantry. The tenants brought this evil upon them¬ selves. Fact No. 3.—Rents in New York City have been 15 to 20 per cent, below actual values for the past ten years. These low rents are caused by the necessity of the land¬ lord who must pay full taxes whether his building is ten¬ anted or vacant. This creates competition among the land¬ lords to keep their buildings filled and the tenant gets the financial benefit. The first question the tenant usually asked was not, "How much is the rent?" but "How much free rent do I get?" Now when the graft has ceased, he howls. Fact No. 4.—The present tax system is vicious because it hides from the rent-payer the fact that he must bear the burden of Government expenses. The tax money which the landlord pays into the public treasury pays for the education of all the tenants' children. It pays for the police, fire and health protection of all his tenants. It pays for the mainten¬ ance of all departments of justice, charity, and correction and city and state governments. All of these are 90 per cent, for the benefit of persons and personal property, not for real property. Fact No. 5.—The laws of the state and municipality are relentless in the collection of taxes. There can be no eva¬ sion. There is no appeal. There is no mercy shown to the landlord by the legal machinery designed to collect the tax. Yet when the landlord comes to court to ask re-possession of his premises, he is urged to show mercy, and if he is un¬ willing he is treated as if he were a robber. I have yet to hear of a judge saying to the delinquent ten¬ ant: "Your landlord is a merchant who deals in shelter plus service. Pay him with the same promptness and good grace as you pay your butcher and your baker. Remember that the City holds the landlord responsible for the taxes, most of which are spent for the benefits of yourself and your family." Fact No. 6.—Exacting demands of tenants, declining rents and mounting costs of maintenance and repairs coupled with the rapacity of mortgage money lenders have discouraged property ownership so that today only 5 per cent, of the popu¬ lations own real estate. Many of the reported sales of prop¬ erty are really foreclosures of mortgages, because these prop¬ erties do not earn enough to support themselves in spite of high rents. No amount of agitation against profiteering in rents, no investigation, public hearings nor threats against landlords will have any practical results. On the contrary every addi¬ tional menacing gesture or disparaging word against land¬ lords tends to frighten off the investors and builders. Many who were ready to go ahead with housing con¬ struction abandoned the projects on account of the "Rent- Profiteering" agitation and the threats to limit by law the profits from real estate. When the Federal Government fixed the price of coal in the summer of 1917 the miners stopped all mining of coal. Result: the most dangerous coal shortage in the history of our country. Fix the profit of the landlord and not a brick will be laid in New York City. In January of 1918 I predicted that no new construction would begin until rents had risen to meet the increased cost of construction and that this would take two years, but that before that time there would be bread lines of tenants and that public buildings would be used to house those unable to obtain living quarters. It is coming to pass. Not even high rents are an inducement to build, because the real estate owner knows that his property is not secure, but that next year or the year after some outrageous legis¬ lation may rob him of the fruit of his labor. A statute must be enacted that every building built in con¬ formity with existing laws shall be immune from legislative interference for a period of at least ten years. The only way to encourage building construction is the recognition of the builder, real estate owner and landlord as business men entitled to the same fair treatment that is ac¬ corded to other business men. Stop threatening property with confiscatory taxation; stop passing laws affecting existing buildings; stop waste of pub¬ lic funds by legislative fiat; help your landlord keep down repair bills by being careful of his property; be decent, treat your landlord as you would want to be treated. There can be no immediate relief from the present hous¬ ing shortage. We went on beef rations, coal, sugar and wheat rations and we will now have to go on housing ra¬ tions. Each individual will have to get along with less space for the next three or four years until construction has caught up with normal requirements. In the meantime: let the law of supply and demand work out the rent problems. I hope that the present housing crisis will be a wholesome object lesson to all those reformers who for years have cried out against the property owning class. I hope it will be brought home to a dull-witted public, to our truckling poli¬ ticians and to our visionless financiers that the building in¬ dustry is not only an important part of our social and eco¬ nomic system, but that it is absolutely indispensable to the health, prosperity and internal peace of the nation. All honor to those who have built uo our cities! May 23, 1919. Editor of the Record and Guide: A dollar is worth only half what it was before the war, practically all commodities have accordingly advanced forty per cent, or more. Wages have also largely advanced. New York realty alone has not felt the rise. But it will. Buildings are labor products and as products are worth more today in terms of dollars. Is it not reasonable to ex¬ pect that within three years New York real estate will be valued in money at double its present figures? BOLTON HALL.