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With rent regulations set to expire in 165 days and housing advocates gearing up for a fight to renew them, a new report issued Wednesday identifies what it says are dangerous fictions about rent stabilization and rent control in New York.
The Community Service Society of New York’s report examines the structure of the current regulations, their impact and history. It also makes recommendations for how to reform the regulations.
The report analyzes what it says are five myths surrounding rent regulations.
One is that rent regulated apartments go to the wealthier households. The report says “rent regulated apartments house significantly more low-income New Yorkers than NYCHA and subsidized housing combined.” However 13 percent of household do have a higher income.
Another myth, from the 1970s, blamed rent regulations for triggering the decline of property ownership and fomenting housing abandonment. The report said the myth was debunked in 1980s but still exists in the real estate world.
The most prevalent myth argues that rent regulation “restricts housing supply as landlords remove units from the rental market to make a larger profit, lowering vacancy rates and driving up rents.” The report says that the landlords who find “loopholes” in the rent control laws such as major capital improvements, when a property owner makes physical improvements and raises the rent to cover the costs, are to blame for rents rising and not rent control policies.
Another myth listed is that “rent regulation encourages tenants to ‘hoard’ apartments, constricting the overall supply of available units and causing rents to rise.” The report says data has shown regulated renters are more likely to live in crowded conditions when compared to unregulated renters and homeowners, suggesting rent-regulated tenants are not occupying larger apartments than they need.
The last myth the report tackles is the possibility that rent regulations hurt small landlords. “Moderate rent control frameworks, including New York City’s, offer ample hardship provisions and room for profit,” the report said. “According to the Rent Guidelines Board (RGB), from 2015 to 2016, the net operating income for all rent stabilized housing grew by 4.4 percent.” (It’s worth noting that pro-landlord groups, like the Rent Stabilization Association, have questioned the numbers used by the RGB to estimate the costs faced by landlords.)
CSS in its report recommended the repeal of vacancy decontrol to stop the rapid loss of rent stabilized units, making preferential rents last for the duration of the tenancy and tenant protections, eliminating the vacancy bonus, and reforming the Major Capital Improvement (MCI) and Individual Apartment Increases (IAI) processes. It also calls on the state legislature to remove geographic restrictions in the Emergency Tenant Protection Act (ETPA)–which is now restricted to New York City, Nassau, Westchester, and Rockland counties–and to pass a statewide “just cause” law to extend security to those who reside in unregulated housing.
In his annual State of the State address on Tuesday, Gov. Cuomo endorsed much–but not all–of that agenda.
“We have the opportunity to finally reform the rent regulation program, including eliminating vacancy decontrol, ending preferential rent limits, limiting building and apartment improvement charges, and strengthening the tenant protection unit so we actually enforce those laws,” he said, referring to a rent-law enforcement initiative he launched in 2011 that has returned illegally deregulated units to the rolls and reversed rent increases it said we based on improper claims of apartment upgrades.
The governor did not embrace the idea of expanding rent stabilization to new areas of the state.
The full report by CSS (which is a funder of City Limits) can be read here.
