What is causing rent increases in NYC

Rent control in New York - Rent control in New York

Rent control in New York is a means of limiting the rent for apartments. Rent Control and Rent Stabilization are two programs used in parts of New York State (and other jurisdictions). In addition to controlling rent, the system also prescribes rights and obligations for tenants and landlords.

Each city in the state decides whether to participate. As of 2007, 51 communities participated in the program, including Albany, Buffalo, and New York City, which have over one million regulated homes. Other rent-controlled communities are Nassau, Westchester, Albany, Rensselaer, Schenectady, and Erie counties.

In New York City, rental stabilization applies to all homes except for certain classes of housing, as long as they maintain the status that gives them the exemption.

Rent control

qualification

To qualify for rent control, a tenant must have lived in an apartment continuously since July 1, 1971, or be a qualified family member who has succeeded in such a tenancy. When a rent controlled unit is vacant, it is "rent stabilized", except in buildings with fewer than six units where it is normally not controlled. In single- and two-family units, the tenant must have lived continuously in the unit since March 31, 1953 in order to qualify for rental control. As soon as the device becomes free, it will be decontrolled. Rental controls generally do not apply to units built after 1947.

conditions

Rent control limits the price a landlord can charge a tenant for rent and also regulates the services that the landlord must provide. If these are not provided, the tenant may be able to get a lower rent. Outside of New York City, the state government sets maximum rents and rate hikes, and homeowners can request increases on a regular basis.

In New York City, rent control is based on the Maximum Base Rent system. A maximum allowable rent is set for each unit. Every two years the landlord can increase the rent to 7.5% (as of 2012) until the maximum basic rent is reached. However, the tenant can contest these increases on the grounds that the building has violations or that the higher amount exceeds the amount required to cover the costs. The Maximum Base Rent (MBR) is calculated to ensure that rental tax unit rental covers the cost of maintaining and improving buildings. The formula reflects property taxes, water and sewage charges, operating and maintenance costs, return on investment, and flat-rate vacancy and collection loss allowances. The MBR is updated every two years to reflect changes in these expenses. Owners must apply for the Maximum Base Rent system for tenants.

Rent stabilization

Rent stabilization applies to the counties of New York City, Nassau, Rockland and Westchester. It generally applies to buildings with six or more units that were built before 1974 and are not subject to rental controls. Owners of newer buildings can agree to rent stabilization in exchange for tax advantages. Rules and guidelines vary by municipality. Buildings such as apartments owned by non-profit companies are not included in the program. Leaving programs such as the Mitchell-Lama Housing Program or Section 8 may allow housing construction to enter rent stabilization prior to 1974. Apartments that have been converted into cooperatives and condominiums and vacated after July 7, 1993 may not be subject to rental stabilization. In order for rents to be regulated, the municipality must report a housing emergency and the rental vacancy rate must be less than 5% for all or a class or classes of rental accommodation, according to a survey on housing vacancies.

qualification

Rent stabilization qualifications in New York City changed over the years to curb alleged perceived abuses that allowed the rich to enjoy protection supposedly intended for the working class. The apartment must be the tenant's primary residence in order to qualify for stabilization. The decontrol of vacancies and the deregulation of high-income incomes were enacted in 1997 and abolished in 2019. Renovations are no longer a way of deregulating or increasing rents as there is no threshold for high rents. Apartments that were deregulated by law before 2019 will remain in line with the market.

Tenants who live in buildings that were built between February 1, 1947 and January 1, 1974, or who move to a building before 1947 or to certain buildings after 1974, for which tax breaks were granted (e.g. the housing program 80-20 ), are entitled to rent stabilization if the other conditions mentioned above are met. As part of city government programs, some buildings are temporarily rent stabilized in order to temporarily reduce property taxes when those buildings have been converted from commercial or industrial residential buildings to residential use. Two of these programs, J-51 for renovation of buildings and 421-a for new construction, grant tenants of apartments in these buildings temporary rent stabilization, thereby overriding other qualifications.

conditions

Rent stabilization sets maximum rates for annual rent increases and, as with rent control, entitles tenants to receive the necessary services from their landlords together with the extension of the rental agreement. The Rental Policy Board meets each year to determine how much the landlord can charge. Violations can result in a tenant's rent being lowered. There are a few methods you can use to remove your building from the rental regime. For example, you can claim a significant refurbishment or the need for a demolition.

history

In 1920, New York passed the Emergency Rent Act, which effectively entrusted the New York State Courts to administer it. In the event of contestation by tenants, rent increases were checked against a standard of "appropriateness". The definition of reasonableness was subject to a judicial interpretation. Certain apartments were decontrolled starting in 1926, and the 1920 rental laws expired entirely in June 1929, although limited protections against evictions deemed unfair continued.

Federal Ordinance (1943–1950)

In 1942, President Franklin D. Roosevelt signed the Emergency Price Control Act. The aim of the law was to prevent inflation in the booming, fully employed war economy by introducing price controls across the country. In November 1943, the Price Administration Department froze rents in New York at the March 1, 1943 level. When the Emergency Price Control Act expired in 1947, Congress passed the Federal Housing and Rent Act of 1947, which exempted construction from rent control after February 1, 1947, but continued that regulation for properties that were already closed by that time. New York's current rental control program began in 1943. It is the longest-running in the United States.

State regulation (1950–1962)

New York State took office when federal regulation ended in 1950. Following the first permanent state laws in 1951, New York took a similar regulatory approach to the federal government. At the time, there were approximately 2,500,000 rental units nationwide, 85% of them in New York City. The original laws covered all rental units and regulated all owner-tenant relationships in terms of rents, services, and evictions.

In the 1950s, a severe housing shortage led to the first deregulation of rental units. In New York City, single- and two-family homes were deregulated after April 1, 1953. Cities and towns outside of New York City were given permission to deregulate when they were ready. The most expensive luxury apartments in New York City were deregulated from 1958. Until 1961, only New York City and 18 of New York's 57 other boroughs had a rental regime.

Mixed regulation (1962–1984)

New York City and the state government began dual administration of rental regulation in 1962, and by 1968, 75,000 expensive apartments were gradually deregulated. In 1969 construction and vacancy rates plummeted, leading to an increase in unregulated rents at the national level. This rapid rise in rents prompted New York to do that Rent Stabilization Act of 1969 that introduced rental stabilization for units built after the 1947 cutoff for buildings eligible for rental control, covering approximately 325,000 units in New York City.

With the Local Law 30 of 1970 A new method of calculating the rental control price has been introduced, based on the maximum base rate and adjusted to the changing costs of landlords in order to pass these costs on to tenants. A 1971 bill removed New York City's ability to regulate rents and gave power to the Albany government.

State regulation (1984 - today)

The 1997 Rent Reform Act limited rent stabilization to apartments where the statutory or stabilized rent was less than $ 2,000 per month. The decontrol rent was set at $ 2,000. The decontrol income was $ 175,000.

In June 2011, New York State legislature in Albany passed the Rent Act 2011. It did the following:

  • The limited vacancy increases at once a year
  • Reduction of the permanent rent increase in buildings with 35 units or more for individual apartment improvements to 1/60 instead of 1/40 of the costs
  • The minimum rent for deregulating an apartment has been increased to USD 2,500
  • Increase household income to $ 200,000 for deregulating an inhabited apartment with rent of at least $ 2,500

In June 2015, New York State legislature enacted the 2015 Rent Act in Albany. The rental laws were extended to 2019 for another four years.

  • Increase the minimum rent for deregulating a high rent or high income home to $ 2,700, which is adjusted each year by the annual increase allowed by the Rent Guidelines Board. The minimum rent for deregulation is now reached according to the previous lease and no longer due to an increase in vacancy or improvements to units or buildings after the vacancy.
  • Creation of a gradual increase in the vacancy for a two-year lease of 5% with a vacancy period of less than two years, 10% with a vacancy period of less than three years, 15% with a vacancy period of less than four years, 20% with a vacancy period of four or more years. The vacancy increase for a one-year rental agreement is less than the approved percentage difference in rental price increases between one-year and two-year rental agreements.
  • The payback period for major capital improvements has changed from 84 months to 96 months in buildings with fewer than 35 units, and the payback period for major capital improvements has changed from 84 months to 108 months in buildings with 35 or more units.

In June 2019, the New York State Legislature in Albany passed the 2019 Housing Stability and Tenant Protection Act.

  • Makes the rental regulation system permanent so that they will not expire at any time in the future without lawmakers overriding or terminating them.
  • Removal of the provisions that allow units to be removed from rent stabilization if the rent exceeds a statutory high rent threshold and the unit becomes vacant or the renter's income is USD 200,000 or more in the past two years.
  • Restricts the use of the owner's use provision to a single unit, requires the owner or his immediate family to use the unit as their primary residence, and protects long-term renters from eviction under this exception by reducing the currently required rental period from eviction to 15 years become.
  • Limits the temporary non-profit exemption from rent stabilization by requiring units to remain rent stabilized if made available to people who are, or have been, or are at risk of becoming homeless. Offers people who are rented permanently or temporarily by non-profit organizations, while ensuring that the units used for these purposes remain rent-stabilized.
  • Removal of the "vacancy bonus" rule, which allows a property owner to increase rents by up to 20 percent each time a unit becomes vacant. Removal of the "Longevity Bonus" provision, which allows rents to be increased by additional amounts based on the length of the previous tenancy. Forbids the local Rent Guideline Boards to reinstate the vacancy bonus themselves.
  • Prohibits the Rent Guidelines Boards from making additional increases based on the current rental cost of a unit or the length of time since the owner was allowed to make additional rent increases, e.g. B. a vacancy bonus.
  • Prohibits owners who have offered tenants a "preferential rent" below the statutory rent from increasing the rent to the full statutory rent if the rent is extended. Once the tenant is free, the owner can charge any rent up to the full statutory rent as long as the tenant has not vacated because the owner has not kept the unit in a habitable condition. Owners with regulatory tenancy agreements with federal or state agencies can continue to use preferential rents based on their respective agreements.
  • Sets the maximum increase in the collective rent for rent-controlled tenants to the average of the five most recent annual rent increases of the Rent Guidelines Board for one-year extensions. This bill also prohibits charges for transferring fuel.
  • Extending the four-year review period to six or more years, if this is reasonably necessary to determine a reliable base rent, extends the period for which an owner can be held liable for rent overload claims from two to six years and would no longer grant the owners permission by Avoid triple damage if they voluntarily repay the amount of rent overrun before a court or Housing and Community Renewal (HCR) decision is made. Allows tenants to bring their overburden claims to court or HCR, and states that an owner can discard records after six years but does so at their own risk.
  • Lowers the rent increase cap for Major Capital Improvements (MCIs) from six to two percent in New York City and from 15 to two percent in other countries. Provides the same protection for the future two percent cap on MCI rent increases attributable to MCIs that have been in effect within the last seven years. Further slows the surge by extending the payback period of the MCI formula. Eliminates MCI surges after 30 years instead of keeping them in place permanently. Heavily tighten the rules that determine what spending is eligible for MCI increases and tighten enforcement of those rules by requiring 25 percent of MCIs to be inspected and audited.
  • Limits the amount of IAI spending to $ 15,000 over a 15 year period and allows owners to create up to three IAIs during that time. Lets IAI increase temporarily and not permanently for 30 years and requires owners to fix any dangerous violations in the home before collecting a raise.
  • Requests HCR to provide an annual report on the Tenancy Administration and Tenant Protection Department's programs and activities to implement, manage and enforce the rental control system. The report will also include data points regarding the number of rental stabilized units in each county, application and permits for major capital improvements, units with preferential rents, rents and congestion complaints.
  • Strengthens and makes permanent the system that protects tenants in buildings that owners want to convert into cooperatives or condominiums. Eliminates the option of "evacuation plans" and introduces reforms for non-evacuation plans. 51 percent of tenants in the dormitory must agree to buy apartments before the renovation can take effect. (Currently 15 percent of the apartments have to be sold, and the buyers can be external investors.) For senior citizens and disabled tenants during the renovation, evictions are only permitted for good cause if an indeterminable rent increase is not an important reason.
  • Removes the geographical restrictions on the applicability of the rent stabilization laws so that any municipality that otherwise meets the legal requirements (e.g. regulating less than five percent vacancy in the housing stock) can opt for rent stabilization.

Sales of rental units in New York City

2002 2005 2008 2011 2017
Art units % of units units % of units units % of units units % of units units % of units
Not regulated 665.0k 31,9% 697.4k 33,3% 772.7k 36,0% 849.8k 39,1% 936.0k 42,9%
Rent controlled 59.3k 2,8% 43.3k 2,1% 39.9k 1,9% 38.4k 1,8% 21.8k 1,0%
The rent stabilized before 1947 773.7k 37,1% 747.3k 35,7% 717.5k 33,5% 743.5k 34,2% 692.7k 31,7%
The rent stabilized after 1946 240.3k 11,5% 296.3k 14,2% 305.8k 14,3% 243.3k 11,2% 273.8k 12,5%
Others regulated 346.5k 16,6% 308.0k 14,7% 308.6k 14,4% 297.6k 13,7% 258.0k 11,8%
TOTAL 2.085k 100% 2,092k 100% 2.144.000 100% 2.173.000 100% 2,183k 100%

See also

Footnotes

further reading

  • Walter Block, "Rent Control" in the concise encyclopedia of economics.
  • Robert M. Fogelson, The Great Rent Wars: New York, 1917–1929. New Haven, CT: Yale University Press, 2013.

External links