This is a pivotal time for the future of the rental housing market in New York City; the state’s rent stabilization law, which protects about a million households, comes up for renewal in a little over a month.
There are a currently nine bills in the Senate and the Assembly which will not only close the destructive loopholes that have been eroding the rent stabilization system for the last 25 years, but also expand protections to up to 600,000 unregulated tenant households in New York City that are vulnerable to unjust evictions. If the legislature fails to take action on these bills, the city I love will continue to slip away.
New York is rapidly losing its low-rent apartments, creating a housing market where many tenants are squeezed between a rock and a hard place: severe rent burdens at home and no affordable alternatives on the market. In our newly released report, Where Have all the Affordable Rentals Gone? we found that city-wide, the share of unassisted low-rent apartments (those with rents of approximately $900 in 2011 and $990 in 2017) fell from 21 percent to 14 percent between 2011 and 2017, from 445,000 to 300,000 units.
Major losses in low-rent apartments in NYC
Low-rent apartments are disappearing because of the loss of unregulated low-rent units in low-density neighborhoods of Queens, Staten Island, and outer Brooklyn. Unregulated tenants do not have a right to a lease renewal. If a landlord wants to hike up the rent or to kick the tenant out as reprisal for asking for repairs, they can.
The loss of low-rent units is also driven by the destructive impact of rent law loopholes–vacancy bonuses, Major Capital Improvements (MCI), Individual Apartment Improvements (IAIs), preferential rents, and vacancy decontrol–on rental submarkets in the Bronx, upper Manhattan, and central Brooklyn. While they may seem like reasonable provisions for ensuring the maintenance of the city’s housing stock, these loopholes all work in tandem to push out low-income tenants and undermine neighborhood-level stability.
Rent law loopholes work in tandem
Here’s an example: the chart above shows a real rental history for a one-bedroom apartment in Pelham Parkway in the Bronx. It illustrates how vacancy bonuses and preferential rents work together to functionally destroy renter protections. Since 2007, the landlord was able to claim four vacancy bonuses in a row, creating a $1,111 gap between the preferential and legal rent. Because the preferential rent is revocable, the tenant is effectively not protected by rent stabilization laws. If the landlord decides they want the tenant out, they can hike the rent by $1,111 when the lease is up (see more rental histories in CSS’s new report, Closing the Loopholes: What six rental histories tell us about fixing rent regulation).
Where the share of high-rent apartments grew
At the same time, New York City’s high-priced rental market is expanding from the Manhattan core, Northern Brooklyn, and Northwestern Queens further into the outer boroughs. The share of high-rent units (more than $2260 in 2011 and $2470 in 2017) grew from 8 percent to 13 percent between 2011 and 2017, increasing from 170,000 to 280,000 units.
The end result of the loss of low-rent units and the focus on high-rent unit production is a rental market heavily skewed toward high-income earners. High-end vacancy was nine percent in 2017, while low-rent vacancy was under two percent.
The production of high-rent units does not ease the pressure on the low-rent submarket, because of housing market segmentation. If rents in Long Island City’s or Chelsea’s new towers drop because there are too many ultra-luxury rentals, there may be a leveling impact on the adjacent rental submarket of slightly cheaper, but still high-rent units across the city. However, this impact will not filter down to a moderate or low-rent apartment in Kingsbridge or on an unregulated basement apartment in Queens Village.
The nine bills in the Assembly and Senate are a step toward mitigating the loss of low-rent units and the ubiquitous sense of housing insecurity among low-income New Yorkers in the city and beyond.
Oksana Mironova is a housing policy analyst for the Community Service Society.
CSS is a former owner of and currently provides some funding to City Limits.