Rent control in New York

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Rent control in New York is a means of limiting the amount of rent charged on dwellings. 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.[1]

Each city in the state chooses whether to participate. As of 2007, 51 municipalities participated in the program, including Albany, Buffalo and New York City, where over one million apartments are regulated. Other rent-controlled municipalities include Nassau, Westchester, Albany, Rensselaer, Schenectady and Erie Counties.[2]

In New York City, rent stabilization applies to all apartments except for certain classes of housing accommodations for so long as they uphold the status that gives them the exemption.

Qualifying units[edit]

To qualify for rent control, a tenant must have been continuously living in an apartment since July 1, 1971, or be a qualifying family member who succeeded to such tenancy. When vacant, a rent-controlled unit becomes "rent stabilized", except in buildings with fewer than six units, where it is usually decontrolled. In units within single and two-family homes, the tenant must have resided in the unit continuously since March 31, 1953, to qualify for rent control. Once the unit becomes vacant, it is decontrolled.[3][4] Rent control does not generally apply to units built after 1947.[3]

Terms[edit]

Rent control limits the price a landlord can charge a tenant for rent and also regulates the services the landlord must provide. Failure to provide these may allow the tenant to receive a lower rent.[3] Outside of New York City, the state government determines the maximum rents and rate increases, and owners may periodically apply for increases.

Maximum Base Rent[edit]

In New York City, rent control is based on the Maximum Base Rent system. A maximum allowable rent is established for each unit. Every two years, the landlord may increase the rent up to 7.5% (as of 2012) until the Maximum Base Rent is reached. However, the tenant may challenge these increases on grounds that the building has violations or that the higher amount exceeds that needed to cover expenses.

Maximum Base Rent (MBR) is calculated to ensure the rent from rent control units covers the cost of building maintenance and improvements. The formula reflects real estate taxes, water and sewer charges, operating and maintenance expenses, return on capital and vacancy and collection loss allowance. The MBR is updated every two years to reflect changes in these expenses.[5] Owners must apply for the Maximum Base Rent system for the tenants.

Rent stabilization[edit]

Rent stabilization is applicable to New York City, Nassau, Rockland and Westchester Counties.[6] It generally applies to buildings of six or more units built before 1974 that are not subject to rent control. Owners of more recent buildings can agree to rent stabilization in exchange for tax benefits.[3] Regulation and policies vary by municipality. Buildings such as housing owned by non-profit corporations are not included in the program. Upon leaving programs such as the Mitchell-Lama Housing Program or Section 8, housing may enter rent stabilization if built before 1974. Apartments that are converted into co-ops and condos and vacated after July 7, 1993 may not be subject to rent stabilization.[7] In order for rents to be placed under regulation, the municipality must declare a housing emergency,[8] the rental vacancy rate must be less than 5% for all or any class or classes of rental housing accommodations, as demonstrated by a housing vacancy survey.

Qualification[edit]

New York City rent stabilization qualifications changed over the years, purportedly to curb perceived abuses that allowed the wealthy to enjoy protection that was ostensibly intended for the working class.[9][10]

Rent stabilization is restricted to apartments where the legal, or stabilized, rent is under $2,700. A unit can be deregulated when the rent surpasses that amount and is either vacant or the household adjusted gross income or is over $200,000, for two consecutive years. The apartment must be the tenant's primary residence to qualify for stabilization.[11] The decontrol rent is adjusted each year by the increase allowed by the Rent Guidelines Board.[12] The minimum rent for deregulation is achieved following the prior lease and not as a result of a vacancy or post-vacancy improvements. Upon vacancy of less than two, three, four, or more years, rent may be increased by 5%, 10%, 15% or 20%, respectively. The vacancy increase for a one-year lease is less by the approved percentage difference in lease increases between one- and two-year leases. The amortization period for major capital improvements is 96 months in buildings with less than 35 units and 108 months in larger buildings.

Tenants who live in buildings built between February 1, 1947, and January 1, 1974, or who move into a pre-1947 building or into certain post-1974 buildings that received tax breaks (such as the 80-20 housing program) qualify for rent stabilization if the other above terms are met. As part of city managed programs, some buildings become temporarily rent stabilized in return for a temporary reduction in real estate taxes when those buildings have been converted to residential use from commercial or industrial. Two of those programs,[13] J-51 for renovating buildings and 421-a for new construction, grant temporary rent stabilization to tenants of apartments in those building, thus overriding other qualifications.[14][15][16]

Terms[edit]

Rent stabilization sets maximum rates for annual rent increases and, as with rent control, entitles tenants to receive required services from their landlords along with lease renewals. The rent guidelines board meets every year to determine how much the landlord can charge. Violations may cause a tenant's rent to be lowered.[3]

History[edit]

In 1920, New York adopted Emergency Rent Laws, which effectively charged the courts of New York State with their administration. When challenged by tenants, rent increases were reviewed by a standard of "reasonableness." The definition of reasonableness was subject to judicial interpretation. Certain apartments were decontrolled beginning in 1926, and the Rent Laws of 1920 expired completely in June 1929, although limited protections against evictions considered unjust were continued.[17]

Federal regulation (1943–1950)[edit]

In 1942, President Franklin D. Roosevelt signed the Emergency Price Control Act into law. The goal of the act was to prevent inflation in the booming, fully employed wartime economy by setting price controls nationwide. In November 1943, the Office of Price Administration froze New York rents at their March 1, 1943, levels. When the Emergency Price Control Act expired in 1947, Congress passed the Federal Housing and Rent Act of 1947, which exempted construction after February 1, 1947, from rent controls, but continued that regulation for properties already completed by that date. New York's current rent control program began in 1943. It is the longest-running in the United States.[18]

State regulation (1950–1962)[edit]

The state of New York took over when federal regulation ended in 1950. Under the first permanent state laws in 1951, New York took a similar regulatory approach to the federal government. At the time there were about 2,500,000 rental units statewide, 85% of them in New York City. The initial laws covered all rental units, and regulated all relationships between owners and tenants concerning rents, services, and evictions.[18]

Into the 1950s, a severe housing shortage prompted the first deregulation of rental units. In New York City, apartments in single and two-family homes became deregulated after April 1, 1953. Cities and towns outside New York City were given permission to deregulate when ready. The most expensive luxury apartments in New York City began to be deregulated starting in 1958. By 1961, only New York City and 18 of New York's 57 other counties had rent regulation.[18]

Mixed regulation (1962–1984)[edit]

New York City and the state government began dual administration of rent regulation in 1962, and 75,000 expensive apartments were gradually deregulated by 1968. In 1969, construction and vacancy rates slumped, causing non-regulated rents to rise nationally. This rapid increase in rents caused New York to pass the Rent Stabilization Law of 1969, which introduced rent stabilization to units built after the 1947 cutoff for buildings to be eligible for rent control, covering approximately 325,000 units in New York City.[18]

The Local Law 30 of 1970 introduced a new method of rent control price calculation, based on the Maximum Base Rate, which adapted to the changing costs faced by landlords, allowing them to pass those costs on to renters. A 1971 law took away New York City's ability to regulate rents and gave the power to the state government, in Albany.[19]

State regulation (1984–present)[edit]

The passage of the Rent Regulation Reform Act of 1997 restricted rent stabilization to apartments where the legal, or stabilized, rent was under $2,000 per month. The decontrol rent was set at $2,000. The decontrol income was $175,000.[11]

In June 2011, the New York State Legislature in Albany enacted the Rent Act of 2011.[11] It did the following:

  • Limited vacancy increases to once a year
  • Reduced the permanent rent increase in buildings of 35 units or more for individual apartment improvements to 1/60th instead of 1/40th of the cost
  • Increased the minimum rent for deregulation of an apartment to $2,500
  • Increased the household income to $200,000 for deregulating an occupied apartment with a rent of at least $2,500

In June 2015, the New York State Legislature in Albany enacted the Rent Act of 2015.[20] Rent laws were extended four more years through 2019.

  • Increased the minimum rent for high-rent or high-income deregulation of an apartment to $2,700, which will be adjusted each year by the one-year increase allowed by the Rent Guidelines Board.[12] The minimum rent for deregulation now is achieved following the prior lease and not as a result of a vacancy increase or improvements to unit or buildings after vacancy.
  • Created a stepped vacancy increase for a two-year lease of 5% if vacant less than two years, 10% if vacant less than three years, 15% if vacant less than four years, 20% if vacant four or more years. The vacancy increase for a one-year lease is less by the approved percentage difference in lease increases between one- and two-year leases.
  • Changed the amortization period for major capital improvements from 84 months to 96 months in buildings with less than 35 units and changed the amortization period for major capital improvements from 84 months to 108 months in buildings with 35 or more units.

Rental unit distribution[edit]

New York City[edit]

See "Rent Stabilization in New York City" by the Furman Center for Real Estate & Urban Policy for the 2011 figures.

2002[21] 2005[22] 2008[23] 2011[24]
Type Units % of units Units % of units Units % of units Units % of units
Non-regulated 665.0k 31.9% 697.4k 33.3% 772.7k 36.0% 849.8k 39.1%
Rent controlled 59.3k 2.8% 43.3k 2.1% 39.9k 1.9% 38.4k 1.8%
Rent stabilized pre-1947 773.7k 37.1% 747.3k 35.7% 717.5k 33.5% 743.5k 34.2%
Rent stabilized post-1946 240.3k 11.5% 296.3k 14.2% 305.8k 14.3% 243.3k 11.2%
Other regulated 346.5k 16.6% 308.0k 14.7% 308.6k 14.4% 297.6k 13.7%
TOTAL 2,085k 100% 2,092k 100% 2,144k 100% 2,173k 100%

See also[edit]

Footnotes[edit]

  1. ^ "NYC Rent Guidelines Board". Archived from the original on September 13, 2017.
  2. ^ http://www.dhcr.state.ny.us/Rent/about.htm#rcmuni
  3. ^ a b c d e "Fact Sheet #1 - Rent Stabilization and Rent Control" (PDF). New York Division of Housing & Community Renewal. Retrieved March 5, 2017.
  4. ^ "Fact Sheet #30 - Succession Rights" (PDF). New York Division of Housing & Community Renewal. Retrieved March 5, 2017.
  5. ^ "Fact sheet #22 - Maximum Base Rent Program (MBR)". New York Division of Housing & Community Renewal. Retrieved January 28, 2008.
  6. ^ "About Office of Rent Administration Operations and Services". www.nyshcr.org. Retrieved 2018-09-26.
  7. ^ "housingnyc.com". housingnyc.com. Archived from the original on November 23, 2010. Retrieved September 5, 2018.
  8. ^ "Emergency Tenant Protection Act of 1974".
  9. ^ Williams, Alex (June 17, 2002). "Rent Asunder". New York Magazine.
  10. ^ But see the New York Times, Wars Over Regulation of Rent Are Only a Sideshow by Gina Bellafante: "Of the city's 1,063,000 rent-regulated units, approximately 41,000 are in the hands of households making $150,000 a year or more. If we hired private investigators to examine the ranks of those households, we would surely find egregious abuses of the system — unmarried lawyers making $350,000 salaries — but we would presumably also find families of five living on less than half of that. (And it hardly bears remarking that $175,000 in New York City is not the same as $175,000 in Jackson, Miss."
  11. ^ a b c "NYC Rent Guidelines Board: Rent Act of 2011".
  12. ^ a b "Rent Administration Homepage". www.nyshcr.org.
  13. ^ {{J-51: The status of J-51 is the subject of a great deal of litigation since New York State's highest court reaffirmed in Roberts v. Tishman Speyer that owners who receiving these tax breaks may not de-regulate stabilized apartments even if the rents and income exceed the legal limits. Failure to insert the existence of the J-51 in the tenant's lease means the tenant remains regulated for the duration of the tenancy. Litigation in related areas continues, as does a fight over the extension of J-51 itself."}}
  14. ^ "Loading". Housingnyc.com. Retrieved September 5, 2018.
  15. ^ "J-51".
  16. ^ "421-a".
  17. ^ Collins, Timothy. "An Introduction to the NYC Rent Guidelines Board and the Rent Stabilizaton System," [1] Archived September 28, 2013, at the Wayback Machine.
  18. ^ a b c d "History of Rent Regulation in New York State 1943–1993". New York Division of Housing & Community Renewal. Retrieved October 24, 2007.
  19. ^ Peters, Jeremy W. (February 3, 2009). "Assembly Passes Rent-Regulation Revisions Opposed by Landlords". The New York Times. Retrieved May 22, 2010.
  20. ^ https://www1.nyc.gov/assets/rentguidelinesboard/pdf/rentact2015.pdf
  21. ^ "Loading" (PDF). Housingnyc.com. Archived from the original (PDF) on November 23, 2010. Retrieved September 5, 2018.
  22. ^ "Loading" (PDF). Housingnyc.com. Archived from the original (PDF) on October 31, 2008. Retrieved September 5, 2018.
  23. ^ "Loading" (PDF). Housingnyc.com. Archived from the original (PDF) on November 23, 2010. Retrieved September 5, 2018.
  24. ^ "Selected Initial Findings of the 2011 New York City Housing and Vacancy Survey" (PDF). February 9, 2012. Archived from the original (PDF) on September 1, 2012. Retrieved April 2, 2012.

Further reading[edit]

  • 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[edit]