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On June 11th, tenants in New York won the greatest victory for housing rights since the creation of rent-stabilization in the early 1970’s. The Housing Stability and Tenant Protection Act of 2019 (HSTPA) enacted strong new protections for tenants across the state and closed loopholes exploited by landlords for decades to harass and evict hundreds of thousands of rent-regulated tenants .
Predictably, landlords fiercely opposed the new protections, declaring the HSTPA to be a pallbearer of economic disaster. In numerous editorials, landlords and their attorneys have attacked the regulations, lamenting the loss of a “benefit to evicting tenants,” and claiming landlords will be forced to let their buildings “deteriorate…into properties that resemble public housing.” Landlords and their allies have even gone so far as to file a lawsuit in federal court challenging the constitutionality of the bill.
Their arguments have been widely published, but is there any basis for their claims? Unfortunately, little editorial space has been given to the important task of dispelling the toxic myths behind these recurring arguments and exposing the reality that the real estate industry is, and always has been, solely concerned with extracting as much profit as possible from tenants- regardless of the human costs. Below are the key arguments landlords are making, why they are without merit, and why the fight for rent-stabilized housing is critical.
Landlords argue that the HSTPA will deter capital investment in housing construction. Ever since the passage of the first effective building code in 1901—which required tenement buildings to have air shafts, outward facing windows, plumbing, and fire escapes- landlords have warned of economic downturn at every new housing regulation. Yet their dire predictions have never come true. From the Emergency Rent Law of 1920, a result of tenant organized rent strikes in a post-WWI housing shortage, to the Emergency Tenant Protection Act in 1974, a result of fierce advocacy by tenant groups against a Republican controlled legislature in the midst of a fiscal crisis, the city has survived the enactment of numerous tenant protection bills. In fact, the city saw enormous construction booms in both the 1920’s and the 1980’s – soon after the enactment of both aforementioned bills.
Now, the real estate industry again argues that the HSTPA, a result of decades of tenant organizing and advocacy paired with a democratic takeover of the NYS legislature, will deter capital investment in the city. But the history lesson here is that capital investment is not now, and never has been, deterred by housing regulation. In fact, landlords continue to reap billions in profits from hundreds of thousands of New Yorkers who struggle to pay their rent every month, while the city is in the midst of yet another housing boom, with the Department of Buildings issuing 165,988 construction permits last year, the second-highest total on record.
Landlords further argue that the HSTPA will cause existing buildings to deteriorate and force smaller landlords to sell. Landlords are required to provide safe and habitable apartments for their tenants under the Housing Maintenance Code and the implied warranty of habitability. These legal obligations exist regardless of any rent regulation law, but landlords have responded that the new laws will result in minimal compliance at best .
However, rent-stabilized tenants have already been subject to “minimal compliance” for decades—not because of the new law, but because the old law gave landlords 20 percent rent bonuses and huge rent increases for unsubstantiated apartment improvements whenever a tenant was evicted or moved out. Then, once a tenant was out and the regulated rent reached a certain level, the old law allowed a landlord to permanently de-regulate the apartment and charge whatever rent they wanted. Such allowances incentivized landlords to seriously neglect their buildings and tenants as a means of harassing them out of their homes. The HSTPA has gotten rid of and restricted these bonuses, and just as exploitative landlord practices were unacceptable then, they remain unacceptable now. Furthermore, landlords still have access to tax abatement and rehabilitation programs which encourage them to complete necessary building repairs.
The notion that the new regulations will strangle profitability and push small landlords under is a misrepresentation at best. Just 9 percent of rent-stabilized landlords own only one building, while over 50 percent of rent stabilized buildings are owned by landlords who own 20 or more. Owning a rent stabilized building in New York continues to be quite profitable: net operating income has increased for the last 13 years in a row, and in 2017 the average profit for a landlord of a rent-stabilized building was $540 per month per unit.
Finally, landlords claim that without an economic incentive to evict tenants they will be unable to stop tenants from illegally subletting their apartments. There is no evidence that this is a widespread problem, or that it will become one under the new laws. If a tenant is illegally subletting their apartment, the landlord has the same right under the new law to try and evict them—they do not need an economic incentive to do so. It is absurd for landlords to suggest that protections for millions of tenants should be sacrificed for the sake of rewarding them for evicting a handful of tenants who may be abusing the system.
More importantly, the reality is that landlords are the primary abusers of the system. In 2014, a state investigation of 1,100 landlords who claimed and received significant and permanent rent increases under the old law for alleged improvements to apartments revealed that 40 percent could not even prove that they actually made the improvements. Worse still, in 2017, New York City landlords filed 230,000 residential eviction petitions, while 21,000 evictions were executed. An eviction is severely traumatic for tenants and families; 21,000 is unacceptable, but also disturbing are the 209,000 eviction proceedings which didn’t result in actual eviction that year. Not only are such proceedings themselves traumatic and burdensome to tenants, but they are an indication of how often landlords are using eviction as a tool to try and remove rent-stabilized tenants from apartments to which they remain legally entitled.
Ultimately, the fight for rent-regulation is more than just a fight for affordable housing; it is a fight for racial and economic justice. The neglect and abandonment which preceded the creation of our rent-stabilization system in the early 1970’s was caused by institutional divestment and the flight of the white middle-class to heavily subsidized suburbs—a flight which black and brown residents were not allowed to make. Now, as this trend reverses and the white middle-class returns to the city—to neighborhoods and buildings which were left to crumble, to black and brown neighbors who were excluded from the opportunity to build generational wealth and who are now being evicted and displaced by the same institutions which abandoned them—the necessity of housing as a fundamental right becomes clear. It is imperative that we cast aside the dishonest narratives perpetuated by the real estate industry, confront the exploitative practices that lay underneath them, and move forward to the strengthening and expansion of rent-stabilization to all tenants in New York State.
Kyle Giller and Alex Berger are part of the CUNY Law School’s Housing Rights Project
4 Comments
Alex Schwartz
Chicken soup of BS. You have no idea what the new laws are or what the real estate business is. Wait five years and NYC looks like Rome. What’s in real time.
Rupert
Totally absurd. Below market rents will lead to massive disinvestment.
Nobody will invest for a guaranteed loss. Complete nonsense.
Seth Miller, Partner
The “no incentive to evict” argument just points to the persistent problem that landlords, unlike nearly every other species of litigant in the civil court system, have been given the right to bring lawsuits without showing that their legitimate interests have been harmed. In lawyerese, they don’t need to prove “standing.” They think they are the police. For example, subletting is a totally victimless “breach” of the lease: if the landlord suffered any actual harm, like any other litigant in the entire court system, they would have an incentive to evict. The most common ground for evicting a regulated tenant, for failing to use the apartment as the tenant’s primary residence, is based on a violation of a supposed public policy against misallocating regulated apartments. The landlord has no incentive, because the landlord has no standing to sue in the traditional sense.
The solution is to leave the enforcement of public policy to the government, and to require landlords to show actual harm before they claim a right to evict.
Donny Pastrmi
Building Owner’s always have a new excuse for failure to maintain their buildings. I seriously laughed when I first heard they were actually crying that if these new laws passed there would be little incentive for them to conduct building maintenance and make timely repairs. I wondered what the hell had prevented them from doing the work for all the years prior to the new laws?
If you doubt the deep-seeted immorality of Landlords one need only look to the White House. The country is being run into the ground by the Landlord in Chief. He runs the country like a typical NYC slumlord. The lies, deceit, and constantly playing the victim. All taken from the New York Real Estate Landlord Playbook.