What Makes Rent ‘Fair’
February 28, 2025 Source: Harvard Joint Venture – Shelterforce Date Published: 02/28/2025 Link: What Makes Rent ‘Fair’ Housing experts Susanne Schindler and Samuel Stein critique America’s binary rent-setting approach, which is either income-based or market-rate pricing, proposing Zurich’s century-old cost-rent model as an alternative. This Kostenmiete formula calculates the maximum allowable rent by multiplying capital costs by benchmark interest rates, plus operational expenses, thereby eliminating profit motives in cooperative housing while maintaining buildings without subsidies. Even cost-based pricing may exceed affordability for median-income households in New York, as median two-bedroom rent reaches $3,750, while median income remains $70,000. Exploring limited-equity cooperatives, such as HDFCs and Mitchell-Lama programs, as middle-ground solutions, a suggestion was made that housing be treated like public education, funded through general taxation rather than individual payments. The fundamental challenge they mentioned, decommodifying housing within a commodified economy, faces inherent limitations when land, labor, and materials remain market-driven.