In 26 days the laws governing rent regulation in New York City will lapse. Four days later the legislative session is scheduled to end. At that point, it seems certain, the system—which has spurred the construction and rehabilitation of housing and led to significant rent increases and greedy exploitation by too many landlords—will be fundamentally overhauled.
If it weren’t for President Donald Trump, Albany would be debating how to fix the laws to limit rent increases and deter abuses. But Trump so inflamed most New Yorkers that they decided to punish anyone linked to the Republican Party—which in the state Senate means friends of real estate.
First, in the Democratic primary voters ousted key members of the Independent Democratic Conference, a splinter group that had helped Republicans maintain control of the state Senate. The insurgents they elected are virtually all progressives with little patience for the economics of real estate. Then, in November, voters ousted so many Republican senators that Democrats were handed a sizable majority.
The political earthquake also flipped Albany dynamics in another way: The Senate is now the source of the more radical reforms including extending rent regulation statewide (as Oregon recently did). The Assembly’s position appears to be more moderate—at least if Speaker Carl Heastie’s statements are to be believed. Gov. Andrew Cuomo backs big changes to favor tenants, but it’s always hard to know what his bottom line really is.
Here’s a guide to what’s on the table and what it could mean.
VACANCY PROVISIONS. Pending legislation would end landlords’ ability to move an apartment to the free market when a tenant leaves and the regulated rent exceeds $2,775 per month, and end their ability to increase regulated rents by 20% when a vacancy occurs.
That clearly would restrain rents in the regulated market. As the gap widens between regulated and market-rate rents, expect a black market to re-emerge as tenants scramble to land regulated apartments. Ending vacancy benefits also is likely to disincentivize landlords from using disruptive renovations and other methods to harass tenants so they leave.
CAPITAL EXPENDITURES. Reducing landlords’ ability to recoup the cost of upgrades would curb such abuses as property owners ordering unnecessary or overly expensive work that raises rents. It also could deter reinvestment in rent- regulated buildings, however.
PREFERENTIAL RENTS. Landlords often rent units below the legal maximum because of weak market conditions. They can then raise the rents to the legal limit when the lease expires. The Independent Budget Office estimates 266,000 units have such preferential rents. Albany might declare those lower rents to be the official regulated rent. But this issue is a red herring: Only 8% of apartments are raised to the legal rent annually, the IBO says. If the state locked in preferential rents, landlords would leave apartments vacant when rents fall (as they surely will in the next economic downturn).
UNIVERSAL RENT CONTROL. It is hard to believe such a radical plan will pass. If it does, the political earthquake it triggers outside the city could endanger Democrats all over the state as homeowners—who pay big property taxes outside the city—react to lawmakers giving renters such protections.
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