Regulation State of Mind: New York Considers Rent Control for All Apartments in the State
Just last year, the New York State Assembly passed the Tenant Protection Act (TPA) of 2019, which made expansive revisions to both New York’s Rent Stabilization Law (RSA) and New York State Real Property Law. The Tenant Protection Act made rent stabilization in New York City and surrounding counties permanent, meaning it no longer requires periodic renewal by the state legislature, and allows other municipalities throughout the state to opt in if their vacancy rate falls below 5 percent. The revisions of New York State Real Property Law established by the act apply statewide. While the apartment industry is still adapting to the new changes, some state legislators have indicated they believe more regulation is necessary.
A proposal to expand last year’s Tenant Protection Act statewide (S 5040 / 7046) has been introduced and, while it is concerning, by far the most onerous legislation comes in the form of an amended good cause eviction bill (S 2892 / A 5030) that currently sits in the Senate Judiciary Committee. The good cause bill includes a 3 percent cap on rent increases and would apply to all residential apartments in New York. Its passage would mark the return of strict rent controls that characterized the post-World War II New York City housing policies of the 1950s.
Subjecting all housing in the state to rent control would have massive detrimental effects on the housing stock by preventing owners from recouping the cost of maintenance and upkeep through rent increases. New York’s Rent Guidelines Board (RGB) estimated in its 2019 Price Index of Operating Costs that rents should increase 4.75 percent to keep up with costs in regulated buildings. The RGB also stated that taxes increased 7.1 percent, while labor and insurance costs increased by 6 percent. According to Jay Martin, the Executive Director of the Community Housing Improvement Program (CHIP), implementing a 3 percent cap on rent increases is unsustainable.
“A building isn’t a bank,” he says. “It doesn’t have an unlimited supply of funds to cover costs if tenants don’t pay rents that match expenses. Taxes are still due; utilities and repairs are still needed. We see this in NYCHA’s [the New York City Housing Authority’s] recent struggles — proof that when a landlord can’t match rents to the costs of running the building, the building stops running.”
The reference to the well documented struggles of city’s housing authority here is important to further highlight considering these potential new regulations. NYCHA has a massive maintenance backlog, with 200,000 complaints filed by residents for bedbug and roach infestation in 2018 and 2019 as well as consistent elevator malfunctions and problems with lead paint. It is estimated that roughly $32 billion is needed to rectify these problems, but the housing authority only has approximately one-third of the money required. Many property owners could find themselves in a similar situation if the good cause bill is enacted – saddled with older buildings in desperate need of repair and maintenance with no way to cover those costs and limited avenues for selling their properties. For context, buildings constructed before 1980 constitute 78 percent of the state’s housing stock, with 55 percent built before 1959.
The New York Capital Region Apartment Association (NYCRAA) issued a press release last week warning the bill will lead to the decay of the rental housing market and urging legislators to vote no. “If this legislation were enacted into law, it would reduce the housing stock across the state and deter others from owning property,” said Deborah Pusatere, a local landlord and NYCRAA’s President. “Small business landlords are already struggling under the current laws. This policy will deepen the loss of control an owner has over the property, and will cause additional landlords to sell, diversify or leave New York State entirely.”
NAA will continue to work with the affiliate network to ensure that public policy does not impede but rather enhances the ability of rental housing providers to run their businesses and provide housing to one-third of Americans.
NAA offers a variety of tools, expert insight, research and resources to assist in making your conversations with residents, media and policymakers all the more effective (including an entire library of resources dedicated to policy issues):
Modeling the Impacts of Rent Control Research
Please stay tuned to www.naahq.org for further updates on this bill and other housing affordability issues.