Wake Up, New Rent Increases Just Dropped
Rent stabilization, Eric Adams, and you.
Every summer, the Rent Guidelines Board votes on new increases for stabilized tenants. This year, under the guidance of pro-REBNY accused-criminal mayor Eric Adams, they voted for 2.75% increases on 1 year renewals and 5.25% increases on 2 year renewals. This was, unsurprisingly, more than tenant advocacy groups wanted but less than landlords wanted. These increases took effect yesterday, October 1st, 2024 and apply through September 30, 2025. There will be a vote next summer on the increases for October 1, 2025.
What Are You Saying?
If you live in a rent stabilized apartment, and you didn’t sign a two year lease, you will renew in the next 12 months at one of these increases. And while you don’t control the numbers, you at least know in advance what your options will be. This certainty is a driving appeal of rent stabilized units. Not only do they have to give you a renewal, you have a heads up what their offers are.
Note: This also applies to Loft Law apartments, but NOT rent controlled apartments. There are almost a million rent stabilized units, while there are fewer than 25,000 rent controlled apartments.
Why Are You Talking About Eric Adams?
Because he has been very vocally pro-landlord, accepting campaign money from developer donors and saying he understands their pain. The mayor has a huge say in what the Rent Guidelines Board does. Case in point: under De Blasio the RG Board froze one year renewals at 0% increases for multiple years, and even when they weren’t frozen, the increases were small. This was, in part, to make up for years of higher increases under Bloomberg. Again, mayors matter.
This chart shows renewal increase numbers between 2010 and 2020, but you can view all the way back to 1969 here.
And you have a “Take,” I presume?
Ugh. Has everyone seen the video recirculating showing the woman who pays less than $1500/month for her sprawling UWS pre-war co-op? And the discourse surrounding it? That pretty much sums up my “ugh,” both the issues with stabilization and the lack of understanding/nuance by most consumers (through little-to-no fault of their own).
Let’s see if I can explain.
Rent stabilization, the loft law, and rent control are imperfect for many reasons, especially the way these protections only apply to certain units and have created a form of nepotism. Rent control is “worse” than stabilization, because those rents do not necessarily increase year over year, only apply to leases signed before like 1986, and a significant portion are occupied by financially healthy New Yorkers (or their children) paying hundreds of dollars a month for apartments worth many, many times that. It has helped drive consolidation of rental ownership (i.e. more and more held by corps not individuals) as expenses increased and the rules became more complicated. Tenants are incentivized to stay in places that no longer fit them because it’s like golden handcuffs, while landlords are incentivized to get them out by any means necessary.
Before 2019, any time a tenant moved out of a stabilized apartment the landlord could automatically increase the rent 20%, which led to all kinds of horrible tactics (and laws passed in response to said tactics). That 20% increase is gone, but when a rent controlled apartment becomes vacant, the landlord gets to set a new, legal stabilized rent based on the current market. I’ve actually set one of these before. And even though it was full-on COVID era at the time, the new rent is in the $4000’s, because that’s what the apartment was worth on the market. I don’t know where it started (that info was not shared with me). The new tenants got an amazing apartment with a new kitchen/bath and have been protected from major post-COVID hikes, but this is what I mean when I say not all rent stabilized units are cheap. It also means that the Rent Guidelines numbers do drastically different things to different people. A 5.25% increase on $4000 brings your rent to $4210, but a 5.25% increase on an $500 unit (where owner/landlord expenses are likely higher than the incoming rent) brings you to $526. I’m not saying $26/month is nothing; it can push someone on fixed income into an uncomfortable place, especially when compounded with multiple years of large increases. But some of these apartments are home to people making six figures (true even before the 2019 changes to luxury decontrol). Why should they get this protection while people with far less resort to shelters or the street? Landlords are also incentivized to accept tenants they think have a ton of money and/or are likely to move out, to give the apartment to their employees, and/or to be incredibly critical of any potential tenant. So even if these apartments do become available, people in need are not the ones winning a new lease.
There’s no way to have a subset of the city’s housing stabilized/controlled in this way during an affordability crisis and have it be equitable. There’s no way to apply a uniform increase to all scenarios without introducing other issues. And no, you should not require new financial documents every year once someone has moved in, because that opens up a whole host of other problems and forms of discrimination (as well as financial manipulation by those who know how to play the game — do I have some stories for you about Housing Connect…).
And most of the problems that exist with RS/RC units apply to free market apartments and sales, too. I know plenty of people whose landlords rarely increase the rent, so they’re basically locked in at what they paid a decade ago before their neighborhood took off. A large chunk of the co-op market never comes up for sale, because the apartments are owned outright and the maintenance is relatively low compared to what someone would pay in rent or to buy something comparable today. Anyone moving to NYC (or really anywhere, tbh) now has to overcome a post-COVID housing market. The only way to ACTUALLY FIX these issues is not to dismantle stabilization because it’s unfair; it’s to build enough housing that we no longer need these controls. They only exist because we have been in a low-vacancy situation for decades.
Yeah, the system that we’ve built is garbage, but it’s our garbage and while I’ll freely admit the problems, I’m not in favor of simply dismantling it. I can imagine a world where we actually construct enough non-Billionaires Row housing that we start phasing out some of these protections over time, with guardrails, and carefully. But anyone who tells you the answer is as simple as getting rid of them altogether (don’t even get me started on that Argentina article…) is either disingenuous or uninformed. Possibly both.
xo
Anna