New York City residents who live in rent stabilized homes will soon see significant increases in their rent, after the Rent Guidelines Board approved the largest rent hike since 2013 Tuesday night. The mayor-appointed committee approved rent increases up to 3.25 percent for one-year, and 5 percent for two-year leases, in close to 1 million homes, representing roughly a third of all housing units in the city.
Rent stabilization, which prohibits landlords from raising rent above an annually approved fixed amount, applies to most six-unit buildings made before 1973. Most years, rent in these apartments is only permitted to be raised within 0.5 percent to 2 percent, according to the NYC.gov website.
This year’s increase, the RGB says, is due to inflation and pandemic-related rent freezes, and periods of time where tenants didn’t pay rent.
“Inflation affects tenants and landlords alike,” Alexandra Alvarado, Director of Marketing and Education for the California-based American Apartment Owners Association told Hamodia. “I think the proposed increase is still fairly low; it’s not unheard-of, especially for tenants who have been in the unit for 2 years or longer, that’s a pretty modest increase considering the inflation rate of the economy at large; it’s below inflation rate.”
Alvarado says that without substantial increases, many landlords will have to sell their properties, which often result in them being converted to other, non-housing uses. This will ultimately raise rents citywide, as there will be fewer units.
“They can’t afford to not be paid rent for a year and still continue to have their rental unit. That unfortunately isn’t a benefit to tenants, because investors come in to fill that gap, and often turn it into an Airbnb, which means less rental units on the market”
“The data is clear. The adjustment approved by the RGB today will not put a penny of profit in the pockets of small property owners,” Jay Martin, Executive Director of the Community Housing Improvement Program told the New York Post. “The RGB has simply taken steps to limit their losses for the next year,” he said.
The 2022 Rent Guidelines Board PIOC (Price Index of Operating Costs) reports that the cost of operating rent controlled housing increased by 4.2 percent, compared with 3 percent in 2021, and 3.7% in 2020.
Alvarado says that small-time landlords are more understanding of tenants than larger corporations.
“Smaller landlords tend to be more lenient and work with tenants. We surveyed our landlords during the pandemic and it was overwhelmingly the majority of them who wanted to work with tenants, helping them with payment plans, anyway they could during the height of the pandemic. That’s something we don’t see from corporate landlords.”
Data from JustFix.nyc shows that corporate-owned housing units, with landlords who owned more than 20 buildings, were responsible for more than half of all executed evictions in 2018.
However, the majority of rent stabilized homes are owned by large-scale corporations, according to JustFix, which collected data from the HPD registration.
Tenants’ advocacy groups say that the money isn’t going towards much needed repairs or operational costs, that the increases hurt people who are already lower-income or on a fixed income, and that it can even lead to homelessness.
“Half of the 1 million rent stabilized tenants in NYC are already rent burdened because they pay over 30% of their income towards rent. The typical rent stabilized tenant pays $1,400 per month in rent, so the 3.25% RGB increase will raise their rents over $500 per year for a 1 year lease”, Steve Herrick, Executive Director of the Cooper Square Committee, a tenants’ rights group, told Hamodia.
“Landlords have benefited a lot from the weak rent laws that allowed them to deregulate hundreds of thousands of apartments over the past couple of decades. The additional rental income from rent stabilized tenants does not affect their bottom line so much, but affects the bottom line of tenants tremendously,” he said.
“I’ve been a housing attorney for the past 10 years in Brooklyn,” Jean Stevens, Supervising Attorney for Brooklyn Legal Service’s Housing Unit told Hamodia. “Most of our clients come from rent stabilized buildings, and most of them are owned by corporations, LLCs, They‘re not what one would consider small business owners.”
Her clients say that crucial repairs aren’t being made, yet they are expected to pay more rent.
“Pretty much every client I have says that they have numerous things in their apartment that need to be fixed…mold in the bathrooms, broken tiles, cracks in the floor, walls and ceilings.”
“The justification we often hear from landlords is that the rent increases are needed to pay for the repairs. The problem is that the money isn’t going there, and tenants are already paying a substantial amount in rent, that amount itself should be enough to pay for what they need.”
Landlords say that they need to make up for lost rent during the pandemic. “The pandemic made collecting rent nearly impossible in many cases,” Alvarado said. “That means there are less funds available to maintain rent stabilized apartments and break even. Without a rent increase, owning these rent stabilized units may no longer be feasible.”
To make up for missed rent, Stevens says there are other ways.
“There is substantial relief available for landlords under government programs, including the state-run LRAP program, which reimburses them for as much as 15 months of missed rent during the pandemic. Tenants are able to get assistance in a similar program called ERAP, to help them pay rent.”
Though Mayor Eric Adams has in the past, raised the issue of how lower rents are affecting small-time landlords, he was not happy with the RGB’s decision. “While we raised our voices and were successful in pushing the increases lower, the determination made by the Rent Guidelines Board today will unfortunately be a burden to tenants at this difficult time — and that is disappointing,” the Mayor said in a statement.
Some are concerned that this may be the beginning of a trend.
“I’m worried that these increases likely will compound,” Abby Ng, Policy & Communications Coordinator for the tenants’ rights organization Tenants & Neighbors told Hamodia. “The people on the board have two year minimum terms, and I’m anticipating seeing raises like this again next year, and that is really going to hurt tenants.”