- REAL ESTATE EDUCATION
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Proposed Policies on Rent Regulation Would Harm all New York Tenants
May 9, 2018
Preserving New York City’s housing stock requires a reliable income stream to meet ordinary operating expenses as well as to prepare for capital improvements and keep up with needed repairs.
The New York City Council ignored this economic reality when it recently passed eight resolutions urging the New York State legislature to end vacancy decontrol, eliminate the 20 percent vacancy allowance increase, and extent rent regulations to all rental units, including those which are not currently regulated. These proposals would essentially end all capital investment in New York’s rental housing – in turn jeopardizing the health and safety of tenants.
If enacted, this would upend a system that for a quarter century has protected 2.5 million New Yorkers, strengthened our city’s housing stock, and provided significant tax revenue that fuels the creation of local jobs.
That is why the Real Estate Board of New York is opposed to these measures, as should any responsible actor similarly committed to preserving and improving the quality of housing in New York City.
Turning off the source of private sector revenue, namely by eliminating regular market-based rent increases, would have a devastating impact on the quality of housing stock across the city. Revenue is essential to the operation and maintenance of safe and habitable apartments; unfortunately, one need look no further than to the current state of the New York City Housing Authority (NYCHA) units for evidence of this.
Many New Yorkers are old enough to remember a time when our city was governed by rules similar to those that were recently proposed. After more than two decades of rent regulations the 1970s saw a rapid decline in our housing inventory through tax foreclosures and demolition as rental housing was starved of vital capital. These were disastrous results for New York’s rental housing stock. The loss of rental housing was so dramatic that city officials made a decision not to publish statistics that showed high rates of housing demolition. As the economic viability of rental housing had been undermined by rent regulations, rental building owners saw no remedy but to embark on what was an unprecedented number of rental apartments converted to co-ops or condominiums throughout the 1980s.
Our current system of rent laws were created out of that culture of disinvestment. These laws have had the intended effect of both protecting tenants and providing owners with the capital to maintain their buildings as rental buildings. Conversion rates dropped significantly, owners and investors began to make capital investments in the city’s rental housing, and vacancy decontrol stimulated a wave of new construction that is a part of the solution to the ongoing housing crisis.
Twenty five years of progress has now left our housing stock in the best shape on record: the latest Housing and Vacancy Survey demonstrated that the quality of our rental housing has the lowest measured maintenance deficiencies since the first 1991 survey. The latest Rent Guidelines Board Income and Expense report, too, showed a decline in distressed properties.
There’s no disputing that the vacancy decontrol and vacancy allowance provisions and other aspects of the rent regulation law which encouraged capital investment have improved and transformed the quality of our rental housing, and with it, New York City. Moreover, those policies were created to solve problems stemming from policies very similar to what the City Council now wants to enact again.
If the Council gets its way, the entire rental housing stock in New York City will once again resemble the 1970s and 1980s – a disastrous outcome for millions of New Yorkers and a failure to learn from our past mistakes.
There is ample and overwhelming evidence that the provisions in the rent regulation law, many enacted in 1993 and which this Council asks to be undone, has improved and transformed the quality of our rental housing stock. These bills want to undo this progress and place our entire inventory of rental housing—regulated and unregulated—on the path that will lead us back to the housing conditions of the 1970s and to the present housing conditions at NYCHA.