Formula for Landlords

After a month of rummaging through statistics, Federal Housing Expediter Tighe E. Woods was ready to explain what he thought Congress had in mind for the nation's tenants and landlords. To assure landlords a "fair net operating income" under the new rent-control law, said Woods, his area rent offices will take a look at the books of every house and apartment owner who feels that he should get more rent. Their requests will be screened through a new formula.

Owners of small structures (four dwelling units or less) whose net operating income from rents is less than 25% of their total yearly take will be allowed to boost their return to 30%. Example: A landlord takes in $1,000 a year in rents, spends $800 of it for labor, taxes, fuel, depreciation, etc. His profit is $200, so the Government will let him boost his rent enough to raise his profit from 20 to 30%. He will be allowed to raise his gross rents to $1,143, for a profit of $343. Owners of larger structures will be allowed to bring their return up to 25% if it is now less than 20% of their total yearly income from rents.

How many landlords would win rent increases under the formula and how many tenants would pay bigger rent bills? It was too early to tell, said Woods. It would be several weeks before the first requests for rent hikes could be run through the mill. But one thing, said Woods, was clear: "Both landlords and tenants will be happier."

Tenants and landlords disguised their happiness well. Some tenants and labor groups quickly condemned the formula, but most weren't sure how the plan would affect them. The vocal, well-organized real-estate groups yelped in noisy pain. "It's a phony and a fraud," cried one big Boston apartment owner. Landlords claimed that Woods's formula was based on false mathematics, took no account of the value of their property. According to many landlords, they would be collecting only 2 to 3% on the "fair value" of their properties even if they could wangle an increase.

But landlords played safe anyway. The morning after Woods's announcement they stormed housing offices for application forms, had nearly cleaned out some big city offices before the end of the day. By week's end 500,000 blanks were passed out and thousands of landlords had begun staking claims for more rent money.

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