Rent Regulation: How It All Started

Read More

Since the 1920’s New York City has had some sort of regulation laws when it comes to housing. In a city of renters, and prices that are known to be sky high, rent protection is needed to make living affordable for many New Yorkers. After a long history of new laws and reforms these legal protections are now known as rent control and rent stabilization.

Often confused by average New Yorkers, these protections do not apply to every tenant or every building in the city. Rent control applies only to buildings built before February 1947 and only covers apartments in those buildings that have been occupied by the same tenant, or their lawful successor, consecutively since July 1, 1971. On the other hand, rent stabilization applies to buildings with six or more units that were built between February 1, 1947 and December 31, 1973.

Tenants living in rent regulated apartments have certain protections including limitations against unexpected rising rents. Their rent increases are only determined by law, not the landlord. Also, they are entitled to a lease renewal.

A tenant has the right to live in a decent apartment, an apartment that is in really good condition.

Constantino Tejeda, community organizer

 

“You’re entitled to remain in your apartment so long as you don’t do something that either violates the lease or the law,” said Samuel Himmelstein, tenant’s rights attorney for Himmelstein, McConnell, Gribben, Donoghue & Joseph LLP.

These tenants can only be evicted by order of a judge. Furthermore, tenants in rent stabilized apartments have protections to required services, such as heat, hot water and any repairs they need to be made. When the rights of these tenants are not being met, they can file a complaint through the Division of Housing and Community Renewal (DHCR). In some cases, like not receiving required services, tenants can file for rent reduction.

Constantino Tejeda is a community organizer for Woodside on the Move, where he educates tenants about their rights and guides them through court cases. “A tenant has the right to live in a decent apartment, an apartment that is in really good condition,” said Tejada. He added: “When tenants are living in these kinds of apartments landlords cannot do whatever they want.”

When an apartment is no longer rent controlled, it falls under rent stabilization instead. The only exception is in buildings with less than six units, which in that case the apartment goes through deregulation. In the case of rent stabilization, there are several ways an apartment can become deregulated, but the most common one is High Rent Decontrol. Once the rent goes above $2,773.75, and its current tenant leaves, that apartment automatically becomes deregulated. This amount changes every year on January 1st, and it depends on the one-year renewal lease increase percentage the Rent Guidelines Board decided on the previous year. On January 1, 2019, this amount will increase $1.01 to $2,774.76.

Today rent stabilized apartments are much more common in the city than rent controlled, however the numbers of both types of protected apartments have been rapidly declining. According to research done by the Rent Guidelines Board, the number of rent-controlled apartments in New York City fell from two million in the early 1950s to 103,000 in 1993. According to the NYC Housing and Vacancy Survey, in 2017 the number of rent-controlled apartments fell to approximately 22,000. On the other hand, a report made by the Rent Guidelines Board in 2017, states that since 1994 there has been a loss of approximately 151, 899 rent stabilized units. Currently, there are roughly one million rent stabilized apartments.

A lot of the developers decided not to build in New York because they were worried about being controlled and their prices being controlled.

Joseph Strasburg, president of the Rent Stabilization Association

 

New York’s first rent control laws appeared after World War I when New York was lacking resources and there was hardly any new construction. Due to the housing shortage, rents were spiking up and tenants were protesting. Thus, came the April Rent Laws handed down by New York State courts which were in charge of the administration of rents. In these laws, the increase in rent was measured by a standard of what was “reasonable.” In 1928, due to vacancy rates rising from 1% to 8%, rent regulations started to be phased out and they expired entirely a year later.

By the middle of World War II, the federal government established a price regulation system nationwide called the Emergency Price Control, due to shortages and inflation caused by the war.

“You had all these vets returning from the war and people couldn’t find places to live,” Himmelstein said. Because of this, in November 1943, New York City rental units experienced a rent freeze. Fearing the expiration of federal control laws, New York State applied a similar rent control system in 1946 making millions of apartments formally regulated by the federal government to now be overseen by the state. Federal government rent regulation control officially ended across the country in 1953.

Although recent control laws were introduced to protect tenants, some argue that the protections ended up having damaging repercussions. “[Landlords] started abandoning [rent control] because they couldn’t cover the cost,” said Joseph Strasburg, president of the Rent Stabilization Association, which represents the interests of landlords across the city. Rent levels weren’t enough for landlords to afford the cost of maintaining their buildings running properly. But once rent stabilization came, landlords still feared the regulations would not be profitable for them. “A lot of the developers decided not to build in New York because they were worried about being controlled and their prices being controlled,” he added.

Rent stabilization in New York City first appeared in 1969. At the time, vacancy rates were falling and landlords were starting to increase rents in non-controlled, post-war apartments. It was because of this that Mayor John Lindsay created the first Rent Guidelines Board and proposed that owners from non-regulated apartments come up with a self-regulation system. The Rent Guidelines Board, to this day, is still in charge of the annual establishment of lease renewal guidelines. This means that the board is who decides what will be the monthly percentage increase in the contract rent across the city. This affects rent stabilized tenants who sign one-year leases. If the tenants decided to sign a two-year lease, the monthly rental increase won’t affect them. But by signing a one-year lease, and in the case of wanting to renew their lease beyond that year, the increase percentage will automatically apply to their rent.

The proposal that we have is to eliminate the vacancy bonus, we see no reason for a landlord to get 20% for doing absolutely nothing to the apartment.

Judith Goldiner, Attorney-in-Charge

 

In 1971, New York State passed the Vacancy Decontrol law, that is still in effect today, where rent-controlled apartments become rent stabilized if the tenant vacates the unit after June 30, 1971 and has no one to succeed that apartment. Under this law, landlords can also raise rents to rent stabilized apartments up to 20% upon vacancy. If the landlords have new tenants often, they will make more profit due to the vacancy decontrol rate applied to the new contract rent.

The vacancy decontrol law has been and still is one of the most controversial issues when it comes to housing in New York City. In 1973, after the denial of a court action brought by New York City to delay this law, Mayor Abe Beame stated that the decision would affect mostly the low- and middle-income families since their rent was increasing to high amounts and many of them had to leave the City to find affordable rents.

People in favor of tenant’s rights, want to get rid of this law. “We see a lot of fraud with [vacancy decontrol] as well because it’s so lucrative for a landlord and it drives the rent ever higher and it’s driving rents out of the system,” said Judith Goldiner, Attorney-in-Charge of the Civil Law Reform Unit of The Legal Aid Society, during a panel about rent stabilization reform held on Nov. 29 at NYU Furman Center. New York’s rent regulation laws expire in June 2019, and people like Goldiner want to see some changes. “The proposal that we have is to eliminate the vacancy bonus, we see no reason for a landlord to get 20% for doing absolutely nothing to the apartment,” she said during the panel.

Assembly member Victor M. Pichardo introduced a bill back in 2009, to eliminate the statutory vacancy bonus. The bill passed in the assembly but has yet to be acted upon in the state senate.

Also rooting for a change in 2019 is Ellen Davidson, staff attorney for the Legal Aid Society. “Responsible landlords are being crowded out by people who see rent regulated buildings as the opportunity to push people out and deregulate,” Davidson said. She believes that vacancy decontrol created problematic market incentives by having unregulated money come into the system. “As long as deregulation is a possibility in the system,” she said, “a responsible landlord will not be able to compete with predatory equity investors.”

Landlords and those in favor of landlord’s rights, of course, disagree. “Whatever changes are going to occur in June of 2019, is going to exacerbate the problem because once it happens you are going to find more, more people deciding not to invest in New York. You are going to see people who are owners not investing in their buildings,” argued Strasburg.

While the future of New York’s rent regulation laws is uncertain, we can say with certainty, however, that there are as many people rooting for the laws to renew as people fighting for a change.