On Tuesday, a panel in New York City that regulates the rents for approximately one million rent-stabilized apartments approved the largest increases in almost a decade. This came after property owners complained that taxes and rising expenses were putting a strain on their ability to cover living expenses.
The Rent Guidelines Board had its meeting at Cooper Union in Manhattan, where they voted 5 to 4 to increase the rates on rent-stabilized residences by 3.25 percent for one-year leases and by 5 percent for two-year leases. The discussion was quite contentious.
At a meeting that took place a month ago, the panel made it clear that it intends to support a strategy that is more in line with the middle ground. Many renters called for a rent freeze or rollback, while landlords were seeking even bigger rises. Roughly two million residents of New York are impacted by the price hikes.
The recovery from the worst of the epidemic has led to an increase in the cost of living in New York City, which was already one of the most expensive places to live in the United States. The skyrocketing cost of living has had a negative impact not just on property owners but also on renters, and the capacity of landlords to maintain their properties was one of the primary considerations that the board had. However, this result also increased the level of anxiety over the insufficient supply of affordable housing and the long-term viability of the city’s recovery.
On Tuesday, the auditorium was packed with dozens of individuals who were all wearing T-shirts with various tenant groups’ logos printed on them in vivid orange and yellow colours. Their loud whistles, slamming on chairs, yells, and slogans of “housing is a human right” resonated all over the room, and at times they totally drowned out the words of the board members.
As the board chair, David Reiss, was explaining the rationale for the price hikes, scores of individuals rose to their feet, turned their backs on him, and began chanting, effectively silencing him.
The vote takes place once a year and is often contentious. Tenants’ rights supporters and landlords’ rights advocates engage in heated rallies and lobbying. However, this year’s gathering took place after the epidemic caused tens of thousands of tenants to lose their jobs and struggle to fulfil their financial obligations.
It was also the first vote to take place under Mayor Eric Adams’ administration, and the board decided to adopt a different strategy than it had when it was led by his predecessor, Bill de Blasio. The mayor has the power to effectively manage the panel since he is the one who selects all nine members. Five of the members represent the general public, while two members each represent landlords and renters. On Tuesday evening, representatives of both the landlord and the tenants voted against the motion.
In spite of the fact that Mr. Adams has said that he encouraged the board to impose lesser increases, he has also voiced his compassion for small property owners who need rental revenue in order to compensate for growing expenditures.
Mr. de Blasio should have placed a more emphasis on tenants’ expenses. During his time on the board, the largest yearly increases that could be granted were 1.5% for leases that were for one year, and 2.75 for leases that were for two years. During his rule, inflation remained at a manageable level as well.
When Michael R. Bloomberg was mayor of New York City in 2013, there was a major rise in rent of 4.0% for one-year leases and 7.75% for two-year leases. This was the last time a significant increase occurred.
The capacity of landlords to increase rates when an apartment became unoccupied or was improved was limited by stringent new regulations that were implemented in 2019, and landlords have complained that these restrictions are putting them in a difficult financial position.
It is unclear how many of the owners of rent-stabilized homes are actually smaller property owners because the laws that are currently in place make it difficult to determine who actually owns any given building. Landlords who have much larger and more diversified portfolios are more likely to be the owners of rent-stabilized homes.
According to a preliminary investigation that was carried out by the board’s staff in June of 2020, it was hypothesised that more than 61 percent of rent-stabilized apartments were held by landlords who had ten properties or less.
On the other hand, a separate analysis of property records that was published the same week by the organisation JustFix.nyc, which is a technology company that monitors property ownership, suggested exactly the opposite: that more than sixty percent of rent-stabilized homes are owned by landlords who have portfolios that include more than one thousand units in total. On the other hand, just roughly one percent of rent-stabilized apartments are held by landlords who together have ten or fewer rental properties.