This is a perfect example of why rent control is a terrible system that leads to market inefficiencies and worse outcomes for a community. The law has made it more profitable for this landlord to remove housing stock and charge market rate for the remaining unit than to rent out both units in the building under rent control laws. Cities with low vacancy rates like SF need to rethink their approach to housing if they want to remain attractive places to live.
Completely agree with you. However, I think SF has already ceased to be an attractive place to live.
I don't live there, so maybe it's not a fair comment, but I would not want to live there for the same reason I don't like flushing money down the toilet.
Many people think they should be able to live in a place they can afford with the reasonable expectation that it will be their home for the foreseeable future. Many benefits, to both the economy and society at large, come from ensuring the populace in general is able to find stable housing. While San Francisco's rent control may be too stringent for its own good, there are many reasons to support a more reasonable rent stabilization policy in a jurisdiction with unstable rental prices.
Rent control increases the pressure on the housing market by increasing the price of rent for non-rent controlled properties and reducing incentives to create more supply.
That's when you purchase property and stop being a renter. As a renter you should have no expectations of being able to live somewhere beyond the length of your lease.
The problem is San Francisco and many other cities haven't encouraged developers enough to build housing to make ownership an affordable option.
You are correct that removing rent control would not completely solve the problem. The underlying reason for the increase in rent prices (and thus the need for rent control) is that there is a fixed supply of housing. The city has strict zoning laws that have limited the ability to build up[1]. Without a way to increase the supply of housing the only way for the market to reach equilibrium is for prices to rise.
So to make prices reasonable, both zoning laws and rent control will have to be reworked.
Rent control in San Francisco only applies to buildings built before June 1979. Landlords of buildings built after that are free to increase rent as they wish. If anything, it should promote more construction.
Unfortunately tenant unions and some politicians have been threatening to expand the definition of rent control for quite some time. This increases the risk that buildings built after that period are going to get locked down into rent control after the fact.
Do you believe that that's a contributing factor to the lack of new construction in San Francisco?
If so, is it a larger factor than the insane city-wide height restrictions and strong anti-development lobby?
(If you'd like to point a finger at the folks who obstruct demolition of rent-controlled units to construct new units, I point you to this: https://news.ycombinator.com/item?id=9210429 ) :)
It's definitely a factor in new construction in San Francisco. I wouldn't say it's a larger factor than the anti-development lobby but I think the anti-development lobby and the rent control lobby are closely aligned.
Height restrictions are another factor, as is the requirements around affordable housing.
San Francisco's Sangiacomo ("AKA 'The Father of Rent Control'") and his tenants came up with a really great solution for this:
1) Buy a rent-controlled building.
1a) If there's no room for the first phase of your building plan, destroy some of it it and displace the affected tenants.
2) Build the first phase of construction as quickly as humanly possible.
3) Move the displaced tenants back in at the rate that they were paying when they were displaced. These tenants also retain their rent control privileges for as long as they stay in that unit.
4) Build the remainder of the building and rent it out at "market rate".
This works, and works well, as Trinity Place (1190 Mission) has shown us.
