There is so much misinformation bloviating about from the so called Tenant advocates and those sympathetic but who do not understand cause and effect. Here goes:
1. a rent stabilized/protected tenant is NEVER "forced" out of their apartment IF they pay the rent that is due and owing. This was true before and after law change.
2. Preferred rent means rent less then the legal rent stabilized rent either because the market is less or (no way!) the Landlord agreed to take less. I thought that was a good thing (apparently not). Now landlords will be punished for not charging the max by freezing the rent and increases at the lower rent.
3. Luxury in New York means not subsidized - and make no mistake, those subsidizes come from other taxpaying new yorkers (paying the highest combined state, local, federal in the U.S.) for which they are vilified in this paper and comment section.
4. Building Luxury high-rises in midtown and prime Manhattan does NOT increase the rent for Ms. Castillo and others in the Bronx, nor does it create homelessness. Speaking of the so called, "homeless", you cannot walk a block without sidewalks taken over by - important - NON New Yorkers - almost all white, young tattooed, often with dogs - who do not follow the rules of society the rest of us do. Clearly the word is out to come to NY, you will not be hassled and good access to drugs. BDB & Banks thinks this is good politics to get yet more billions for the "homeless".
6
During the 1950's and later New York State offered low interest mortgages under Mitchell - Lama that produced thousands of apartments throughout the city. They were called coops that offered an apartment at very affordable rates for a very modest investment. I unfortunately missed out on one. Some of those buildings have paid up mortgages and have been converted to market rate rentals which turned out to be a windfall for the tenants still living in their original apartments. A revised version today would probably not work since it depended on urban renewal. There is no longer cheap real estate left. NYCHA were negligent landlords and crime in the projects made life there difficult.
Affordable housing in cities like New York will continue to be scarce as long as social inequities are not addressed. Political solutions by the current candidates offer no answers. We are entering a "Brave New World" unless forward thinking politicians are able to break away from intrenched real estate interests. Landlords are entitled to a fair return on their investment just as renters are entitled to adequate housing and affordable rents. It did exist in New York in my youth. It will take brave politicians with government support to chart a course that is fair and workable. This is not pie in the sky but the main course for survival.
3
Providing good and affordable housing is a social good. We, as citizens and taxpayers, must contribute to this. Rents should be regulated to provide a reasonable return or profit to the landlord. If tenants (who earn say up to 4x poverty) cannot afford the rents to pay for a reasonable profit then the government needs to subsidize that gap. After all, we subsidize home ownership through the interest and property tax deductions to the tune of tens of billions of dollars a year. We should do the same for renters and landlords who need help.
Finally, lets be clear: tenants generally support these tighter regulations because they benefit them while landlords oppose the new regulations because they do not benefit them. So it is largely self interest that we are talking about; we all should be more upfront about this.
5
Problem is this law doesn’t address overly restrictive zoning, regulatory delays, and high construction costs. As a matter of housing policy, most economists will point to empirical research that proves rent controls negatively distort housing markets. Instead, housing assistance payments should go to the needy. It’s what Norway does.
The law should have been time limited and should have forced the City to open up zoning in more areas for denser housing. Most of Midtown West is kept low rise despite being right next to the central business district. Some buildings need to come down to build taller ones.
Unless the City addresses the supply of housing and allows much more apartments to come to market, the problem will persist. The luxury market oversupply is mostly restricted to Manhattan, LIC, and northern Brooklyn. Market rate in the boroughs still remains relatively affordable. There just isn’t demand for luxury rentals in areas like East Tremont.
4
Rent protection laws are not just about reining in skyrocketing rent charges. Under these laws, renters get the right to renew a lease, meaning: protection from retaliatory eviction.
People in "free market" apartments often fear reporting things like the lack of legally adequate heat or hot water.
More dangerous conditions also fester until a tragedy occurs because renters fear that dreaded non-renewal notice. We hear about this in the news all the time, after someone dies.
Even many people in regulated units, people who have legally protected renewal rights, fear reprisals from lax building owners.
The legal right to a renewal is essential for quality of life.
https://emcphd.wordpress.com
11
@Rev. E. M. Camarena, PhD This is very true. I often have to remind people that one of the most valuable aspects of a stabilized lease is the right to renew. And it is precisely this right that forces owners to have to negotiate payouts when they want tenants out, and also why such payouts received by tenants usually get capital gains treatment under federal tax law.
5
@ellienyc
No more incentives exist for payout.
2
let’s look at the actual cost to operate housing in new york. i’ve managed properties in nyc for over 40 years, but i am still baffled at these numbers.
an owner converts his building to cooperative ownership. the co op operates on a break even basis so that the maintenance paid by the shareholders is the actual cost to run the building. there are rent stabilized apartments that rent for less than the maintenance (the actual cost to operate the building) how is that possible is beyond me? the sponsor can no longer afford to subsidize his tenant by losing more money every month, so he defaults on his payments to the co op. the co op takes over the apartment and the rest of the shareholders have to increase their maintenance to cover the shortfall in the rent.
now lets multiply this one unit to building size. the landlord cannot raise his rents to sufficiently cover his expenses, he defaults on his taxes and the city takes over the property. the only difference here is that the co op still has an interest to provide decent housing to its owners, the city does not get its r.e. tax payments and has to raise the taxes on the balance of its properties. sooner or later, there will not be enough properties on the tax rolls to pay for anything
there will be nothing left in new york but burnt out buildings!
6
I’m the treasurer of a standard post war coop. My maintenance BEFORE THE PORTION FOR BUILDING MORTGAGE is a good proxy for what it costs to maintain an apartment here. And I can tell you it’s about 1/3 higher than the rent on comparable stabilized apartments.
Part of the difference is that my coop is property taxed to the hilt and stabilized apartment buildings are not. A second reason is that we stay on top of repairs where stabilized apartments do the bare minimum. Neither situation is good for the long term health of NYC.
3
@allen, i live in a pre-war condo on the Upper West Side. I previously was a rent stabilized tenant.
My monthly "common charges", which reflect the actual cost to run the building except for property taxes and debt service, are less than 1/3rd of what my stabilized rent was before the conversion. Even with my property taxes, which per the treasurer of a coop above are more than a the comparable portion on a rental building, it is still less than 1/2 of the previous stabilized rent.
Statistics from the Rent Guidelines Board show that all expanses except for underlying mortgage equal a little less than 60% of building income per unit. Income includes laundry, parking, and other sold services as well as rent and also includes rent from commercial space, cell phone antennas, etc. The expenses include property taxes and all other expenses except debt service.
So the average pre-mortgage profit is 40% of all income. It has gone up steadily for 13 years straight. Unless the building is woefully over-mortaged, the owner is making lots of money.
4
@bruce bernstein
Rent Guidelines Board numbers are totally cooked. During the Bloomberg years they allowed rent increases. Then during the DeBlasio years they suddenly prohibited rent increases for two years. And even for accurate statistics, they’re overall averages. Smaller landlords and buildings don’t have the economies of scale of large real estate owners.
Just look at the failure of many HDFC co-ops. The City basically gave the tenants ownership, but they wouldn’t raise the revenue to repair their buildings or pay all their bills including real estate taxes. The City Council even bailed out several HDFC buildings as recently as last year. And this is a program that dates back to the 1980s.
2
The Bronx, now as ever, is testimony to the fact that neither political party which ruled the city over the past 50 years cared or cares for preserving or promoting urban culture or communities. And no you can't nlame it all on Robert Moses anymore than you can blame Trump for the Republicans.
Whatever help this measure brings arrives in the Bronx too little too late as far as our political parties are concerned. Give the citizens of the Bronx credit for survival against the odds.
The highways plowed through and debilitated both the central business district and the residential neighborhoods — so that suburbanites could simply transit through at high speeds without stopping.
The public housing was a scam. Eminent domain was used to raze whole neighborhoods destroying countless small businesses and homes which were everything the people had. This was manufactured poverty NONE of it was driven by "the market".
Now wards of the state or living in the largely devalued leftovers the citizens of the Bronx were blamed for the mayhem that followed when social experiment and realestate grifting collided.
They still deserve to have their town rebuilt. This plan is just a drop in the bucket. Urbanism exists. Do the New York Democrats know that? No. They're as corrupt and disinterested in the poor as their ancestors. The Bronx was stripped of it's wealth. Give it back.
6
These laws will VERY negatively effect apartment seekers in NYC. This is due to the law of supply and demand, and how it is perversely effected by rent control.
Fully half of the apartment rentals in NYC are under the rent regulation laws. Due to the artificially low rents, the tenants in many of those apartments sit on them for decades if not for life. As a result, those apartment are in effect permanently off the market. That severely limits the supply. The result is high rents for tenants seeking an apartment. This problem always existed under the NYC rent system. Now it will be worse. Much worse.
8
The amount of crocodile tears NY landlords have been spilling over what might happen to their tenants with the advent of these new rent regulations could fill a swamp the size of Manhattan. They aren't really worried about housing stock or their tenants they are worried about losing what has been a license to grow their fantastic wealth at the expense of the poor and middle class. That the Times even reports their opinions without illustrating how utterly bogus they are is pretty sad too. I haven't ever had a landlord in NY or Long Island who gave two bits for their tenants welfare.
13
The bill should be named the homeless promotion act. Anyone would have to be crazy to build, maintain, or upgrade any housing in the socialist paradise of N Y C.
10
The poor tenant, who pays $1430 for a three bedroom apartment, says “I had to cut my cable, and I still have to put my youngest daughter through college."
Simple question: Why doesn't the government force the cable company into price control for this individual?
Why doesn't the government force the college into price control for this individual?
Why doesn't the government force the supermarkets into price control for this individual?
What about utilities?
Why doesn't the government force all businesses which supply essential goods and services into price control for this individual and others like her???
WHY IS IT JUST ONE INDUSTRY THAT IS PRICE CONTROLLED?
15
Solidly middle-class, I don't have cable. It won't kill this woman not to have cable.
One easy way to save and sock away some money.
8
The Bronx Is Burning meme is misplaced. In those years, the 1970s, the people burning down apartment buildings in the Bronx were arsonists for hire, and the ones hiring them were the landlords. It was the lack of rent controls then that allowed landlords to jack up rents exorbitantly forcing stable tenants to leave. The welfare clients that replaced them had those exorbitant rents paid by the government. The landlords collected the government stipends but allowed the buildings to fall into such disrepair, no heat, no running water, as to become uninhabitable, so that hiring an arsonist to collect the insurance was just the last step in the process. I know, I was there.
13
Let's also remember that whether we like these rent laws or not, they do drive up the free-market rents by reducing supply. I'll illustrate with one example: my aunt, who lived alone in a 4-bedroom (with a living AND dining room), would have moved into a smaller apartment after her kids moved out had the apartment not been rent controlled and therefore dirt cheap. This would have freed up housing for many more people.
11
When NYCHA tried to downsize tenants into smaller apartments, the self declared progressives and housing advocates denounced them. The all conveniently ignored the long waiting list for apartments. But a single senior just doesn’t need a three bedroom apartment anymore. Even when the City owns the buildings, it inefficiently allocates housing.
10
I own market rate rental property in NYC. I just paid $55,000 to renovate 2 bathrooms. Granted, that's Manhattan and it's a luxury building, but $15,000 is too low. Perhaps that would work in an upstate city, but not here.
It would make better sense to allow the $15,000 without proof but to create a review procedure to allow more, up to some more reasonable limit ($25,000 per bathroom, $50,000 per kitchen). You couldn't get the rent increase without going through the approval process.
People who bought buildings under the prior rules paid not the amount that those rules implied, but prices that reflected eventual complete decontrol. I looked at rent-restricted properties and found them overpriced relative to realistic future rents, and paid much more for a market-rate apartment.
Notifying tenants of a more-than-5% increase in rent for a market-rate apartment is fine. Any landlord who, in this low-inflation environment, is raising rent by more than 5% has either undercharged to get a tenant into the apartment or is just counting on the tenant not wanting to do the work to move.
3
With the extreme left overriding New York City and State into oblivion (see Amazon rebuff of 25,000 jobs and billions of tax revenue - yes abated, but still billions) and now this and pandering to special interest groups, be prepared for another 4 years of Trump, because this stuff does not fly in the rest of the U.S.
First, this change will not bring one ADDITIONAL unit to the NY market - which is what is desperately needed to meet demand. It did not address the major issues of costs to build and own - i.e. taxes and construction costs. The Landlords did not create this crazy expensive inefficient system, the state has. Ask why does it cost twice as much to build here then say Chicago?
Sure the EXISTING tenants will enjoy this for the short term (except if they wanted a buy out of tens of thousands $), but yes the buildings will fall into disrepair (has any renter or politician actually spent the money to say renovate bathroom?), perhaps the construction industry should be regulated with no increases in wages and cut the cost of bricks, mortar, etc - its only fair. Our housing stock is 80-100 years old, the city wants them "green", ADA, upgraded, -- well, all that costs money. But they will just blame the landlords now for being slumlords. They will never admit blame.
And Mr. Cohen, "save the Bronx" anyone who has been here for more then 25 years and can only give you a Bronx cheer for that ridiculous comment.
12
It is not difficult to discern the genesis of the new rent regulations. There is already a huge imbalance in power between renters and landlords and the law is one way to rectify some of the imbalance and decrease abuses by landlords.
5
With the extreme left overriding New York City and State into oblivion (see Amazon rebuff of 25,000 jobs and billions of tax revenue - yes abated, but still billions) and now this and pandering to special interest groups, be prepared for another 4 years of Trump, because this stuff does not fly in the rest of the U.S.
First, this change will not bring one ADDITIONAL unit to the NY market - which is what is desperately needed to meet demand. It did not address the major issues of costs to build and own - i.e. taxes and construction costs. The Landlords did not create this crazy expensive inefficient system, the state has. Ask why does it cost twice as much to build here then say Chicago?
Sure the EXISTING tenants will enjoy this for the short term (except if they wanted a buy out of tens of thousands $), but yes the buildings will fall into disrepair (has any renter or politician actually spent the money to say renovate bathroom?), perhaps the construction industry should be regulated with no increases in wages and cut the cost of bricks, mortar, etc - its only fair. Our housing stock is 80-100 years old, the city wants them "green", ADA, upgraded, -- well, all that costs money. But they will just blame the landlords now for being slumlords. They will never admit blame.
And Mr. Cohen, "save the Bronx" anyone who has been here for more then 25 years and can only give you a Bronx cheer for that ridiculous comment.
4
I was never sympathetic to landlords who griped about rent stabilization lowering the value of their properties because they knew the deal when they bought their buildings, and that understanding was reflected in the purchase price. The decontrol laws of the 90's were thus a windfall for landlords who had bought buildings under the old rules. Now, the opposite has occurred. The purchase price of these buildings has been retroactively inflated relative to their profitability. Putting fairness aside, this raises the question of whether the new rules allow landlords to make enough to cover their mortgages. That's the bottom line. I think we need to hear from some experts.
4
@Marty
If what you are saying is that the existing laws allowed landlords to force out stabilized tenants and that it is unfair that they won’t be able to anymore, that is exactly the reason these laws past. We are not talking about the little old lady in the TV commercial that the industry likes to presents as the owners, but the biggest real estate tycoons in the city, as a NYT Saturday article made clear.
3
@Patrick
No, I wasn't commenting on the protections against people being forced out. I was raising a separate issue - whether the new laws would make the buildings unprofitable due to large mortgages that were taken out under different circumstances -- and by implication, whether such a lack of profitability would lead to the neglect of the buildings.
2
the Times reporters failed to "do the math" with Ms. Kirnon's claim that she can no longer afford to fix the roof. Fixing the roof is a "Major Capital Improvement" (MCI). The rules were changed on MCIs: instead of a 6% increase in perpetuity, there is now a 2% increase for 30 years. Under the old rules, MCIs were a huge and perpetual profit source.
the most basic question the reporters should have asked her was, "what is the stabilized rent roll of the building?" let's make a few educated guesses.
She has 26 units. Let's say that the average rent is $1,300 per month (it is probably higher). the rent roll is then $1,300 * 12 *26 = $405,600 per year.
She can recoup 2% per year. 02 * $405,600 = $8,112 per year towards this one repair. (I don't believe she is limited to a single MCI, though maybe the 2% is a cap.)
so the repair is $29,000. She recoups in under 4 years and can continue for 30. Still a major source of profit.
the calculation of how much can be recouped is actually slightly different (i believe the maximum per tenant was 1/40th of the prorated percent of repair costs per month). so it might take her a little longer to start making money. but 30 years is much much longer than 40 months!
she might have trouble paying for repairs for other reasons, but she will still make a lot of money on the MCI.
9
What has not been stated is that over the years, thru prior laws that permitted landlords to deregulate, most buildings are not strictly rent stabilized or market rate but a combination of the two.
I live in one. I am stabilized and pay1750 for my one bedroom with a dining room 900sf apt. My neighbor whose apt. has been renovated/ modernized and about the same size pays over 4K. The landlord is doing quite fine, with the profits from the market rate people, who now comprise over half the building, which is maintained quite nicely, on an elegant Manhattan avenue.
Of course, I paid thousands of dollars under the table to the landlord for the right to have a lease 30 years ago. Landlords know how to maximize profits.
I also renovated my kitchen completely, at my expense.So these horror predictions of landlords going broke are a joke. And by the way, I am also living part of the year and Europe, while I sublet. Ha!
5
In the article Stephanie Kirton is profiled. She seems like a really good landlord and her building is in good repair. She stated that she upgraded the wiring, lobby and the boiler, and will have to do some repairs to the roof. She has been a poster child for the RE industry's pushback on these rent laws. Her building is relatively unencumbered, and her rent roll is probably over $350,000 per year. I think she'll be alright, and so will her tenants.
4
I rent a stabilized studio apt in Nolita with a preferable rent, my landlord replaced my refrigerator with the cheapest alternative $200 then raised my rent $50 a month stating that it was a capital improvement. I had to repeatedly request a fresh coat of paint. I finally decided that I needed to do what I had to do to maintain my apt without relying on my landlord. These people also tried to trick my elderly neighbor out of her apt.
I have NO sympathy for greedy landlords and the business model they think should be the norm. If you're not making the blood-rich profits any longer maybe the business is no longer for you. That business is over!
10
With or without the new rent laws, most landlords do not want to spend money to improve or renovate. Yes, we all know the reasons...*rolling eyes* Look at areas that are seemingly nice on the outside and you will find plenty of old, out-dated interiors in Park Slope, Prospect Heights, Jackson Heights, Woodside, and the upper west side.
While not searching for social services, paying high rent should be for a decent modern apartment that is liveable with dignity.
7
In 1979 you could buy a three bedroom classic 7 apartment on West End Avenue in the 70"s for the mid to high 5 figures. Let's bring back urban blight.
6
It’s called a taking. For the near future the current tenants will be happy. All buildings need upkeep and renovation over time. After a few years, the unintended consequences of this liberal folly will be evident. There will be a gradual deterioration of the rental housing stock. If there is no change the slums of this area will be appearing.
9
What's entirely missing from this discussion is any mention of how this new law will affect the overwhelming majority of New Yorkers who are neither in rent-regulated apartments nor landlords. This legislation will make it harder to de-regulate apartments which means fewer apartments on the market for those of us stuck paying full freight.
The new laws will also make it even less profitable to build apartments which means we'll see even more luxurious luxury buildings and condos - both of which are largely out of the price range for ordinary middle class people. All of which means fewer apartments being competed for by middle class New Yorkers. More competition means higher costs to rent worse apartments.
This bill is a de facto rent hike for the majority of New Yorkers. If we're concerned about "gentrification" how about a law setting max income and asset thresholds for those in regulated apartments. Furthermore how about mandating that anyone who has resided in NYC for less than five years is ineligible to take advantage of rent regulations or NYCHA housing. The bottom line is that NYC's affordable housing shortage is caused by massive influxes of folks who want to take advantage of generous social services financed by excessive taxes on the middle class.
11
NYC inspects multi-residence buildings, and therefore can classify them (eg AAA, AA, A, BBB,etc). The top grade buildings should be deregulated, as should ALL of Manhattan. Lower grade building occupants could be protected against rent gouging, but subject to swift eviction for vandalism, drug use, crowding in people who are not on the lease, or rowdy behavior. Buildings with six or fewer apartments should be deregulated.
4
"...It’s not like we’re going to wake up the next morning and the Bronx will be burning again...
True - it'll probably take 6-12 months for this outrageous and insane expropriation of private property to show its full effect...
17
The same landlords that continually fight against any stabilization are also the landlords whose buildings got into the rundown conditions in the first place WITHOUT those laws.
8
I think the landlord interviewed is not the target of this legislation. The target are people who allow their buildings to deteriorate but still collect their exorbitant rents. The majority of people living in the southern portions of the Bronx like Mott Haven, Hunts Point, Foxhurst, Crotona, Melrose - areas no one writes about or even bothers to visit to see what life is like - cannot afford $2500 a month for a two bedroom. I think there will be a White inflight to the Bronx because of these new laws, and White tenants will be protected in a way that Black and Latino Bronxites never are by our government.
As for Ms. Kirnon, I hate to say this, but just as most New Yorkers are told by landlords and those with money and influence - if you can't afford it, then you should move.
3
@Zeneida
I think you're right about the white inflight. Locals should organize, and they should do so now.
Just Maybe .
Here's a thought worth considering .
Let's put ourselves into the shoes of a potential developer .
Maybe he can build housing that would be affordable and still eke out a modest profit . He may consider doing it, but then he remembers ,hey this is New York . The politicians have a history of letting you build ,and after the fact interfering and impeding the rental income .
He realizes yes there is no rent control on new construction today but who knows what can happen . In ten years from now some clever politicians may decide that any building built 2019 can no longer operate based on supply and demand but can only charge what Albany thinks is adequate . Why build if your income can evaporate .
What happens ? Nothing . Said developer rather builds luxury construction which hopefully is less likely to be interfered with in the future .
Lesson : rent control laws benefit the lucky few winners today at the expense of all of society and future renters of tomorrow .
6
Oh the precious developers. I swear, people talk like they are fragile and precious magical unicorns. Unless you have a pure and gentle maid, sitting silently in a forest glade, a 100-year tax break in her lap, to act as bait, the NY real estate developer will take fright, fleeing back into the misty, magical woods from whence he came, never to be seen again this age.
8
@Glen
Last time I checked neither you nor me are actively engaged in building housing for people , affordable or otherwise .
If people were to depend on us they would probably live in tents outside .
Until we actually do something maybe it's best that there are some greedy developers around who actually make things happen so society does not sleep outside .
3
Yes, Ben, before the NYC slumlord emerged like a colossus from the seas, mankind slept outdoors, huddled naked under piles of cold leaves. Cities were unknown, and we all ate rocks.
2
Price controls always lead to shortages and black markets. They always have and they always will. Sorry, but legislating the marketplace is a loser for everyone. New York needs many more housing units in the Bronx, Queens, and Brooklyn. Developers need incentives.
17
The scare tactics and rhetoric employed by landlords and property managers are pretty pathetic. Oh yeah, I'm sure every landlord will stop maintaining their buildings and the city will turn into a hellscape again. Because the city has no rules, regulations, or laws that would slow or prevent this from happening. The market is the only operating factor in this entire situation, and we perfectly understand the market, which is rational at all times and works to ensure everyone's best interests. Give me a break.
Landlords are threatening to break the law and purposely, illogically allow their buildings to become derelict? The only way to afford basic repairs on a building is to raise the rent to confiscatory levels? Nobody will want to enter the market purely because they won't be able to maximize their profits by taking advantage of consumers? Please. These are the same tired arguments that are always leveled against a hint of new business regulations.
I have yet to hear a coherent argument about why rent control is wrong or bad on a legal or moral level. All of the arguments rest on this "practical" notion that landlords will be so insulted that they will petulantly act against the interests of their tenants and will cease maintaining their own investments, owners will withdraw en masse from the market, and various other nonsensical things. It's all magical thinking. This is called hostage taking, and it shows how desperate some folks are to maintain power over others.
11
@QTCatch10
You’re right. I do get tired of rich people whining about how much more money they can make if we let keep gouging everyone.
I know what poor looks like and it’s not the landlord or the developer. Maybe it’s time to let a more responsible and socially conscious group of people into the market of developing. People who are invested in the city and a high quality of lifestyle for everyone.
There will never be enough money for those developers and landlords. They will always ‘need’ to make more and more and more; and always be angry that that more and more and more is never enough.
6
@QTCatch10
Try it sometime. It's very hard to do in NYC. With low rents, you can't pay the bills.
My wife and I own a small rental property in Brooklyn.
Our RE taxes go up substantially each year (thanks, NYC), as does insurance, utilities, water bills etc.
$15,000 over 15 years as an allowable increase for improvements is a joke. We are doing some kitchen and bathroom renovations now and that number is a fraction of the cost. I guess no more new kitchens or bathrooms for our tenants, and most NY tenants for that matter.
Forget about anything that is not legally required but is just about making the building more aesthetically pleasing or a nicer place to live, like landscaping, cleaning, pointing, painting the exterior of the building, updating the lobby and so on. Tenants can expect the bare minimum on reairs and services going forward, if that.
Owning a building is a business, not a social service. If there is no money in in it, it won't continue.
117
@Robert Tenants already expect the bare minimum and most landlords deliver just that, even without these laws.
20
Tenants in regulated apartments will get a fresh coat of paint every few years. Thats it! No incentive to do any renovations or make an apartment nicer or more modern.
18
I imagine the value of your real estate increases as well but you forgot to mention that.
21
I love the fact that the RE industry has become so bloatedly self-justifying that it actually feels like it can casually threaten to allow housing inventory to fall into disrepair if forced to comply with the law. Can you imagine the outcry if, say, representatives of the auto industry suggested that, regrettably, they might have to skimp on safety features in order to comply with new emissions regulations?
57
@Chris there is no restriction on how much a car can sell for......
38
Ford has exited the business of building cars for North America because of those restrictions. Americans don’t want what Ford can afford to build and still sell at a competitive price. It’s the same concept with real estate. It’s not a threat. It’s the simple fact that there won’t be enough rental money coming in to finance the repairs and mortgages on the buildings. The owners aren’t going to go into bankruptcy if they can afford it. Therefore, they will make fewer repairs. That becomes a systemic effect: all financially strapped buildings will make fewer and fewer repairs because they cannot recoup the expense of paying for them.
21
No, there isn't. Then again, improvements and maintenance made to real property enhance the value of the property, enhancement which accrues to the owners, not the tenants. And many of the associated costs are tax deductible.
13
Probably both sides of this issue are exaggerating the effects of these new regulations. But here are some facts worth considering: landlords cannot charge whatever they wish-they can only charge what the market allows; the high cost of housing is essentially a supply-demand problem and rent control is only going to further hinder the supply problem; landlords have expenses too; rent control is essentially a mechanism for forcing landlords to pay all the costs of a problem that affects all of society (for example, we don't force grocery stores to place limits on the price of food-those who need help are provided with food stamps, which we all pay for). The real winners here are the politicians: they create an impression that a problem is being solved and nobody has to pay a dime other than the evil landlord.
39
@Leo
Responsible landlords maintain their buildings properly to protect their investments without soaking every last dollar out of their tenants. We are talking here about rent stabilization, tightening rent regulations, curbing displacement and hypergentrification in communities throughout the state. Making people homeless does not improve any one's life or the life of the community.
4
@Leo
When you are competing for a roof over your head with the world;s millionaires, billionaires, and all their offspring, or when you would like a two-bedroom apartment for yourself and your one child but the same 2br is marketable to 4 or 5 college students with affluent parents as guarantors, the laws of supply-and-demand fly right out the window.
9
@Leo, you are not familiar with the NYC rent stabilization laws, nor are you familiar with the basic concepts of the laws of "supply and demand."
In NYC and in Manhattan in particular, we have a limited supply. this is not because of any rent stabilization law but because of zoning laws, and protections for tenants against tearing down existing occupied buildings. No one i know argues for getting rid of zoning laws in NYC.
rent stabilization has no effect on the construction of new housing. When a developer of new housing opts out of certain tax benefits, he/she also opts out of the rent stabilization system, if he wishes. QED, no effect on new construction of affordable housing.
4
Everyone wonders where the landlords will get the money to make their apartments habitable. But no one seems to wonder where the tenant will get the money to pay for these same expenses. The answer always seems to be "let the tenant move...relocate to more affordable housing". Well, how about the owners? They made an investment and now they can't keep it above slum-level? Maybe they shouldn't have made the investment. Maybe they should sell the building to someone else why can make it work. Will this make the market decline, and depress values for many buildings? Yes, and that could be a good thing.
58
@Mitch4949
Opportunities for rent escalations is - was - the only way for a regulated real estate investment to be made to work, eventually. So investors bought into this type of building with an anticipated longer haul on the rate of return, and then laws like this come along and remove that opportunity and incentive, and for many right when they're in the middle of their investment timeline or worse, possibly toward the end as some units near that market-rate threshold. Yes some landlords didn't do the right thing, but that's an unfortunate element of human nature and exists in everything.
4
As a retired Realtor, I have come full circle in how I regard "investors" of property buildings. I have no compassion for those who whine about the costs to maintain a safe environment. Owning property is not a business suitable for everyone. Keep your property up to the standards in an environment in which you would like to live or do live or get out of being an investment owner. Too many owners do nothing until made to do so in order to keep tenants and properties in a safe and conducive environment in which to live.
63
I grew up in the Bronx, in a series of rent-controlled apartments on Walton Avenue, a block from the Grand Concourse, in the 1950s and 1960s.
These were mostly six story elevator buildings with spacious apartments. There were facilities for doormen and elevator operators, but no staff was present. The buildings were crumbling, there were roaches, and the ill-fitting windows let in the soot from the ancient coal-fired boilers, coating everything.
Rent control allowed my working class WWII vet dad to afford the place. The neighborhood consisted mainly of families like ours.
Rent control also prevented the landlords from making a living, so they did nothing to maintain the buildings. Over the years they turned into slums, and the neighborhood became a nightmare of violent crime. The families fled.
Will this happen again? I don’t know, but I know nothing is free,
43
I grew up in the same area, just northeast in Mott Haven. I grew up in public hosing because our apartment in Longwood fell apart and we were told the entire block on Beck Street was going to be redeveloped (it never was, of course.)
People did not leave the Bronx because buildings were falling apart. They moved because their fortunes improved, they could now afford nicer neighborhoods, their kids were now professionals and wanted the suburban life. Lets be honest, a major reason people moved out was because too many non-white people moved in. And, in the 70s, the nail that sealed the coffin was the economy and crime. I would have moved too! If you can't afford to be a landlord, don't set your building on fire - sell it.
10
When you were living there, the city was emptying. Now it is brimming over full with 1.5 million more people than at the lowest point, not long after you live in the Bronx. To ascribe what you saw to regulations is oversimplified.
7
@Daniel Mozes: Oversimplified? Let's go through the logic:
Return on Investment, in unregulated markets, tends to equalize across all kinds of investments, as people move their money to the best situation.
If you offer a landlord a lower ROI than the free market would determine, he's going to do one of these things:
1. Sell
2. Cut expenses by deferring maintenance, eliminating staff, etc.
3. Cheat
So after a while, when the smart and decent landlords have left the scene, the landlord community consists solely of cheapskates and cheats.
That's what happened before, and I see no reason why it won't happen again.
14
It would be interesting to know how high the property taxes are on these rental buildings. How many landlords are just tax collectors for the city?
4
These laws are nothing more than an exercise in wish fulfillment, coupled with total disregard for unintended consequences.
Those advocating for pie-in-the-sky solutions like aggressive rent control, or socialism, never learn the lessons of the past. Or more likely, they're not interested in the lessons of the past. They'd rather hope against all evidence that "this time will be different." It's a form of psychological delusion. Of COURSE the maintenance condition of these buildings will eventually fall, perhaps even to slum-like levels, if you significantly cut off the supply of income to the landlord. How could it ever turn out otherwise?
34
@JB you make a sound point throughout SANS your use of the S-word. Seriously, look it up first, because NONE of this even remotely falls under that umbrella, and frankly I'm getting sick of it's blatant misuse (often for a political slant).
NYC isn't the landlord, until then, it's not socialism, it's regulation. There are many degrees of the latter, almost all of which fall well short of socialism.
3
I don’t live in NYC, but my daughter does and we help her with her rent, Three thoughts maybe accurate or not. It seems just about everyone in NYC whether rich or poor pays one-half their salary to rent, except for the uber wealthy. Also anytime there is government regulation, it has unintended consequences - each new economic regulation intended to help the poor by taking from the rich only destroys the middle class. This rent regulation is exhibit A. I am sure this law will only force many small-time apartment building owners to sell to the mega NYC real estate barons. How about just deregulating it completely and let free enterprise do its job, cut taxes and increase minimum wage.
19
@M Some of the middle-class elderly pay 75-80% of their income (w/a lot of that income coming from taxable IRA & 401k distributions) in rent for rent-stabilized apartments (monthly rents greatly increased under BLoomberg & Pataki administrations). While there is housing help for poor elderly in NYC, none for middle class (like people with retirement incomes of $40-80k). So these folks will likely either (1) move to other states, if they are up to it (city doesn't provide any help with that either) or (2) "spend down" their income till they have nothing left, can no longer pay their rent, and qualify for Medicaid, welfare, etc.
9
@M If you want the free market to do its job, how about stop paying your daughter’s rent?
19
@M Letting "free enterprise do its job" means abolishing the minimum wage.
6
I own a co-op in the Bronx and I support this legislation.
My mortgage and maintenance payments on an apartment I bought only three years ago are now hundreds of dollars less per month than the market-rate rent on similar apartments. In fact, my monthly outlay is comparable to the regulated rents described in this article.
So I and the rest of the homeowner class can manage our maintenance but the landlords cannot? Spare me.
Runaway rents are ruining this city.
26
@Amv
wait until you are hit for a special assessment.
A spike in energy costs could hit you and your building.
An owner occupied unit is treated by the owner differently than some tenants treat property.
I have seen new stoves beaten to death with hammers.
I have seen brand new refrigerators disappear, to be replaced with something scavenged from an alley.
Coop owners do not typically end up in landlord tenant court for rent payment, or evictions ordered by the Attorney General's office over criminal activity.
Tenants can blow up an oven making crack, cause a fire, and have you cited for apartment condition the next day.
2
@Amv - Yes, if you disregard the cost of capital. But if you took the money you used to buy your apartment, and invested it, you would get a considerable stream of income.
Real landlords have to either borrow money, or tie up capital that could be used for other investments.
In NYC, there is another issue. Many coops have lower property tax than comparable rental buildings.
1
@Lawrence
Interesting that you also fail to mention the landlord's profit motive, which we also don't have.
2
Rent control is a necessary but not sufficient, part of a humane and effective housing policy. Tenants need protection from excessive rent increases, but simply limiting rents will not produce decent affordable housing for everyone.
The cruel reality is that renting apartments to families in the bottom half of the US's income hierarchy is, at best, marginally profitable. Landlords face serious temptations to cut corners and gouge tenants in order to make a profit.
Another part of an effective housing policy is a large, well funded non-private housing sector where rents for decent housing are tied to families' incomes. That's what most European countries do, to good effect. And, ironically, New York City was the only place in the United States that once attempted to replicate the model until the real estate industry smothered the federal public housing program.
34
@jphubba
Most real estate has a higher profit margin than most other businesses.
The Profit and Loss NY Real Estate Study for 2019 states that the median gross income, rent plus other revenue streams the buildings generate, from stabilized apartments in Core Manhattan was $2,729 per unit. The average monthly operating costs for these apartment units was $1,678.
In 1992 the NYC Dept. of Finance did a rare audit which found most miscellaneous costs claimed were administrative or maintenance while 15% were not valid business expenses. A small sampling of 46 rent stabilized properties revealed costs to be inflated by 8% in properties owned by smaller companies and since many owners of large property portfolios refused to cooperate it is unknown how much they lie.
For 2017 5% of the total of rent stabilized apartments were claimed to have costs that exceeded gross income. Assuming that those claiming the 5% operating at a loss aren't lying then 95% of the rent stabilized apartments are profitable. This is great for landlords since it's an improvement from 1990 when it was claimed that 13.9% of rent stabilized apartments were in distress.
Approximately half of all rent stabilized buildings citywide have unaudited reports of spending no more than 64 cents of every dollar of revenue on operating and maintenace costs in 2017. At the 70% level owners pay no more than 73 cents of every dollar of revenue and the remaining pay out 76 cents of every dollar received.
8
After generations of rules that favored the wealthy, yeah, let's try something different.
If the rich decide that they can't squeeze enough money out of the poor, they can always sell.
5
Investors will learn to live with lower returns. Lenders will learn to live with lower debt coverage ratios. Contractors will learn to charge less for capital improvement projects. The market will adjust, like it always does.
3
@Father of One
OR
they will invest, lend and contract elsewhere.
The market is not just New York and most of the country doesn't have these ridiculous rules!
1
@Father of One
Nope. Both will take their business skills elsewhere. NYC will suffer big time.
2
A lot of what I read here the fat cats are squealing.
The burdened tenants are too busy working to meet the rent to indulge in the luxury of commenting in the New York Times.
6
@Mary
Landlord here. Most stabilized tenants do not work.
2
I hear both sides of the argument. For many years I lived in a rent stabilized apartment in White Plains. The building was managed by Helmsley Spear. Service and maintenance in the building was on an emergency basis after repeated requests. Perhaps it was because a percentage of the apartments were under some sort of rent regulation. The owners had no interest in basic public hallway maintenance but I was fortunate that as a retiree I was able to afford the rent . I gave that apartment up when I was able to find an affordable apartment in a senior housing building in Massachusetts. I now live in an area where I could not afford market rents if not for the fact that the management receives some HUD government subsidies. The management here has been honored by State and Federal regulators for providing seniors affordable and beautifully maintained housing. There is a five year waiting list at present. As I see it, the solution may be more government support of affordable housing which is anathema to the free market called Socialism. We seem to have reached the dividing line between Free Market Republicanism and Social Democrats.
Either you are left among the have nots and the working stiffs
who live in abject poverty while those with almost unlimited means continue to invade neighborhoods to acquire even more wealth. I guess that is one definition of democracy
4
I'm sure AOC will take care of everything. I have complete confidence in her.
6
There are two ways to destroy a city:
1.) Aerial bombardment.
2.) Rent Control.
They both take a while (nuclear weapons excepted, of course.)
This will be like putting the entire city in a time machine, right back to 1975.
9
Ms. Kirnon, the small landlord pictured here, is a woman of color. Undoubtedly many other small landlords consist of minorities. Progressives endlessly lecture society about their concern for nonwhites but have no concern about them when rent control threatens minority landlords. Class warfare trumps concern for these powerless individuals. Shameful.
7
Is anyone taking bets? Capping rents does just what capping prices in Venezuela does. Need toilet paper? It's cheap but there isn't any.
10
@Kurfco
Landlord minus state sanctioned restraints mirroring parasitical “entrepreneur” selling $20 bottled water after hurricane.
1
@Sean
Want to know what $20 bottled water does? Sends a signal to the entire US that getting water to the affected area is a money making idea and water quickly appears where it is needed, driving down the price. You might want to look up the word "gouging". There is no such concept in economics. It is a purely political idea.
1
Sadly defunct muckbreaking Village Voice used to print annual "Worst Landlords List"--always dominated by single entity always boo hooing discrimination.
6
This is government seizure of private property rights. A very bad set of decisions, without reasonable and sensible changes in regulation here. It’s simply about votes and not a forward thinking plan. We already saw mass abandonment of rent regulated properties in the past. The government is making landlords
responsible for people for life, and at a discount to them. How is this fair? It’s worse than an arranged marriage. I do not support this socialist loser philosophy. Being a landlord takes guts and a lot of work and money. If you need assistance there should be well run public housing.
6
"Tenant Paradise or Return of the ‘Bronx Is Burning’?"?
Almost comically simplistic reductionist distortion and one that concocts a misleading and really false "either/or" dichotomy!
You can have BOTH sane development and reasonable profits for builders AND ALSO build/preserve housing for the middle- and poorer residents of NYC and sane protections for non uber-rich NYC residents (of which there are still a few, but on endangered list...)
It's simply not "either or"!
Such headlines may generate clicks, but they don't add anything to the public debate. In fact, they muddle the public debate and serve to provide what amounts to disinformation!
Times readers expect more! (But, sadly, seem to be getting less...)
PS Having lived in NYC int he 1970s, I can attest that it wasn't "paradise" but actual day-to-day life wasn't the bad comic parody some commentators want to present.
And in the 70s, it was at least possible for a recent college grad, a teacher, and/or an average middle class family to afford to live in NYC, without spending 50-75% of their income on rent or trying to pay off a $750,000 mortgage for a closet!
4
the laws of supply and demand do NOT apply to housing. we have nothing to fear from price controls.
the fact that SF and NYC have totally dysfunctional housing markets is A COINCIDENCE
7
Tenant advocates may come to regret this legislation. Progressives may feel emboldened these days but so does the conservative majority on the Supreme Court. This legislation could spawn litigation that someday results in a future Chief Justice Kavanaugh issuing a decision, for the majority, holding that rent regulation of any kind constitutes an unconstitutional taking. Be careful of what you wish for guys.
12
@Dennis Sure, as soon as those MAGA idiots show us how it's done.
Interesting arguments from the developer side and landlord side. Just like other cities - San Francisco, Vancouver in Canada - the developers have a clear vested interest in raising prices and acquiring property for new development and will leave cities stranded and businesses shut down because workers can no longer afford to live in proximity to jobs or services.
In these same cities, tax incentives (that end up passing higher taxes to residents) are used to subsidize developers / new development, providing deeply discounted property pricing in areas that cities want redeveloped for “revitalization” - often in marginal areas where lower cost housing exists.
Look no further than Vancouver, Canada for a city gutted by foreign ownership, criminal money laundering through real estate speculation and overdevelopment. Boomer retirement funds or home equity loans are being used to help millennials buy overpriced housing for which pricing is unsustainable. Housing prices are completely detached from local economics.
Noting that Ms.Kirnon inherited the apartment building and has owned it for several years - I’m wondering why she has a mortgage on it that she states that she may be unable to pay? Running a building is a business which requires reinvestment and planning. If equity loans or cash has been taken out of the building by other means such that landlords can’t afford basic repairs under reasonable regulation, it’s time to sell.
8
@Este
The property could already have had a mortgage when inherited, or a loan could have been necessary to pay estate taxes or other needed repairs. .
1
@Este: There are no buyers for money losing properties. Ms. Kirnon's building is unsalable. A tragedy.
2
On the one hand, a lot of tenants can't afford a market rent in the city, so therefore this legislation is pushed. Definitely understandable, but this is not the landlord's fault. The landlords have expenses, which increase based on market rates. I will repeat this, so folks can understand it: The state regulates the income you can receive from rentals, but the state doesn't regulate the expenses you have to pay to your suppliers (electricians, plumbers, etc). How that makes sense to anyone in their right mind is beyond me. What's not beyond me, is understanding that folks can't afford market rents. Then have the government pay the landlords the difference. That's the way to intervene, if you want to intervene. Being an owner of a business, you have to make profit (that's the incentive). If the state doesn't allow you to charge market prices for your products, you don't live in a market economy. The State can't dictate a homeowner what to charge for the house it sells. Then also don't dictate what the buyer charges its tenants. It is ridiculous to even talk about this.
7
1430 for a 3-BEDROOM is a golden deal in NYC. Being that old probably means you're living with 4 or more other adults in the apartment; many Hispanic families live as so. I'm black and if I could find a 1430 1-BEDROOM, I would be grateful to hell and back.
6
Landlords prior to this bill have not been doing adequate upkeep. They took all the money from deregulating apartments and pocketed it. Few probably actually invested in their properties, as in making them better. So now they'll only do minimal upkeep. What's the difference? Tenants won't be abused. To think that a landlord would ever consider the well being of a tenant first is ludicrous.
8
@Mike Owning a building is a business. Landlords want and should want to make as larger profit as they can. That's why it's a business, just like any other business you can think of. If the landlord doesn't maintain the place, then the tenants can move out. They don't own the place, they are renting for one year. Don't understand the issue.
3
@Mark
Business attracting congenital parasitical bottom feeders.
1
If there is to be rent regulations ( rent control) then there also should be a moratorium on the city’s ability to raise property taxes and “fees” on the controlled buildings. That’s fair, ain’t it!!
How about putting a moratorium on the price of fuel oil that private companies can charge the owners of rent regulated buildings? And cap the cost of sanitation charges if private sanitation companies are used!
You get the picture. Why is it the average, perhaps small time, landlord has to absorb the loses when the costs of running the buildings increase but none of it can be passed onto renters to share the load.
Santayana said, “Those who don’t learn the lessons of history are doomed to repeat them!”
My father-in-law was a small landlord who owned a couple of buildings in Brooklyn years ago. Rent control got so bad and the losses became so high he couldn’t sell those buildings at any price. He offered to sell them to NYC for a single dollar. The City didn’t even want them. So, he simply walked away from them. There were lawsuits. As if lawsuits would actually “fix” the underlying problem!
I can see the return of slums on the horizon. Nobody invests money in a business if it’s doomed to lose money. Not private owners and not investors.
The landlord needs to make a fair and decent living as an incentive to invest and take care of his property and his renters. To do less is pure folly in the long term!
10
Here is what happened in 1972 when NY instituted vacancy decontrol
"Vacancy Decontrol Is a Failure"
https://www.nytimes.com/1974/03/10/archives/is-a-failure-vacancy-decontrol-is-a-failure.html
There follows 1,330 words detailing a mess so horrible that a few months later a republican controlled legislature and a republican governor brought back rent regulation and established The Emergency Tenant Protection Act - which would "sunset" if the NYC vacancy rate ever hit 5%.
QUOTE: "One defense raised to justify vacancy decontrol is that it was necessary to allow rents to reach 'market level.' The problem is, that 'market level' in the city is a fiction because there is no free market. Vacancy rates were reported in the 1970 census to be less than 1 per cent, and surveys indicate a rate of less than 2 per cent in 1973. Economists believe that at least a 5 per cent vacancy rate is necessary for free market to exist. A 2 per cent rate creates a monopoly market, giving the landlord the power to set rents arbitrarily and still be assured of renting the apartment. Allowing all rents to rise to the levels prescribed by the 'landlord market' would simply reinforce the artificiality of our already inflated housing market."
All building owners had to do was increase the apartment stock. They never did it and so we never had a free market.
Real Estate all but asked for what happened this past week. The ball was in their court and they blew it.
https://emcphd.wordpress.com
9
What you're arguing is that because NYC doesn't have enough supply of available apartments, there is not a free market to set the correct prices. That might be true, but then a few burning questions should hit immediately: How will not allowing landlords to set their rents is going to fix the problem? Because now a lot of landlords are upside down, their expenses are larger than their income. Have you done an analysis on that? If the state sees a problem in supply, then should incentivise builders or build their own stock of apartments. That's how you fix that.
2
@Mark
It strains credulity that their expenses are larger than their income.
Buildings don't turn dilapidated overnight. Failure to spend small amounts of maintenance often results in huge expenses down the line. If you don't already know that, you're a lousy business person.
3
@Mark: Follow me on this, please.
1) I make no argument. I merely cite a report on the wreckage caused by decontrol in the '70s.
2) You speak about owners who are "upside down." If any are, it is not owing to the rent laws. As I have stated elsewhere, all owners of regulated units are guaranteed under the law a minimum of 7.5% profit. The rent regulations are a license to make money for building owners. Anyone who fails to make that profit may apply for a hardship rent increase. All they have to do is open their books to prove they are not making at least 7.5%. They all know this, or should know it. Any "upside down"owners are either not doing their job properly or hiding something and don't want their books examined.
https://emcphd.wordpress.com
3
Are these same people who told us every bar in NYC would close then when they banned smoking?
16
I have always felt that Andrew (Cuomo) was more moderate than his father Mario. He managed to push through legislation like same sex marriage, before SCOTUS did, and he's managed to do some infrastructure like replacing the Tappan Zee Bridge (albeit naming it for Mario) and basically rebuilding LGA. His failure to control the Amazon situation, and his lack of involvement with, and failure to veto, this astonishingly bad piece of legislation are really surprising. It will take a long time, if ever, before this legislation is fixed or reformed, and what conditions will have to be to get there are frightening. We are back to the bad old days. I wouldn't invest a penny in NYC for the foreseeable future.
6
@dave — how much were you investing in New York BEFORE this legislation? My bet is nothing.
2
Here's the inside secret to the NY real estate industry.
Big landlords, the guys who own and build luxury high rises, make large donations to NYC politicians and get what they want. That's why these laws won't negatively affect their non-regulated apartment buildings, and they'll continue to build ugly monstrosities that destroy the skyline.
On the other end of the spectrum are low income tenants that are well organized to demonstrate politicians to keep rent regulated rents as low as possible. They make a lot of noise and represent a large voting block.
However, small landlords, like the ones depicted in this article, people that own old buildings with 10-40 units have no true representation. The RSA, which claim to represent these people, really only help the big guys. The working landlord, the ones most NY'ers rely on for housing, are the ones getting hurt by these new regulations. Ultimately, this will destroy their business, and both landlords and tenants in these buildings, will suffer.
18
@John Doe
Agreed
A clue to the rationalizations for the planned decay of rent regulated buildings maybe the NYC City Planning agency's and real estate developer's 10-20 years plans. It will begin with NYCHA buildings which are on the fast track for demolition since the City allowed the repair costs to outweigh any realistic budget considerations...
7
The elephant in the room is the lack of a truly-livable wage for all workers that is tied to the locality in which they work. The number of people needing deep subsidies for shelter would be far fewer if all businesses matched their pay scale to the prevailing local cost of living. As a society, we are de facto subsidizing many businesses now by allowing them to not meet the prevailing wage -- this places the stigma and actual cost burden on the employees. "Just move elsewhere" doesn't address how the jobs they do will be done in retail, health care etc. Instead, as a community, we could devise a formal plan for directly subsidizing the salaries of the employees of those businesses. This is a fairer and more honest way of continuing the already acceptable practice of subsidizing businesses.
14
I can't speak for the Bronx, but speaking as a long-time rent-regulated tenant in a large prewar doorman building in Manhattan, I have an idea how difficult it has become to attract new market tenants to these older buildings with all the new rentals on the market. I don't think market rate rents in my bldg. have gone up significantly in the last 5-10 years. Yet my stabilized rent has gone up every year (sometimes more than rate of inflation) My rent is now not that far from a market rate in my bldg. I think the owner (who owns thousands of apts in Manhattan) thought they would just start getting rid of stabilized tenants, slap down some granite and marble in kitchens and baths, and jack up the rent and continuing jacking it up. Initially that worked. But lately they have had to resort adding a gym, redoing halls, and remodeling vacant apts. every time a market tenant moves out (which is often -- many stay only 6 mos - a year). They are ALWAYS, like every year, putting new finishes, to accord to latest tastes, in those apts, redoing floors, etc., but doing nothing in stabilized apts. Now they are doing major capital improvements, apparently in hope of passing on some of escalating costs to stabilized tenants, so I was relieved to see some limits placed on those.
11
Google Glenwood Management and you will see that one bedrooms in the type of building you describe rent for close to $4000 per month. Forgive me but I’m very skeptical that your stabilized rent is anything more than a fraction of that.
3
@GC My stabilized rent for a 1 BR apt in Manhattan is over $2500 a month and includes none of the amenities in a market rate Glenwood apt. I don't even have a real kitchen.. Have half size fridge and stove aat end of LR.
5
@ellien
Why not move? What's so grreat about NYC?
1
The City is seeking to have private rental buildings match the repair standards set by NYCHA public housing. This is a good step in that dubious direction.
11
Don't be fooled by landlord scaremongering. Their properties are worth a fortune and increasing in value by about 20% annually.
If they don't keep them in order and repair to an acceptable standard then they must be compulsorily purchased by the state of New York for social housing.
They'll soon keep up then.
9
@dan Yes, because we all know how well NYC maintains things.
6
Urban Blight all over again. Thanks Democrats
15
@NYC Dweller
I don't know about you, but I consider Donald Trump's racist housing segregation a prime example of "Urban Blight" -- and he's not even a Democrat.
2
Let's be frank. The majority of the people in the Bronx, except Riverdale, are not middle class. They are poor. The city needs to stop making private landowners responsible for the city's own failure to house the homeless. In essence, this bill is nothing short of shifting the burden for housing the destitute from the city to the private sector with no compensation.
28
@MikeJJNYC Lets be even more frank, many of these in work residents are spending two thirds of their annual wage in rent. Time to stop greedy landlords from profiteering off the backs of the working class.
2
@dan. Why is that the landlords' problem? How about forcing employers to pay a living wage? Also, that doesn't address my issue which is that many of these people are not capable of holding down jobs.
10
When was the last time you met a broke NYC landlord? Nope, didn’t think so.
These landlord lobbying organizations know full well that the reason for these laws coming to pass is squarely at their feet. Their members’ poor behavior, harassment and neglectful business practices has led us to where we are today.
16
There's a reason why NYers don't trust anything that comes out of the mouth of 'developers'.
Now, due to the rent reg laws, landlords won't have enough money to properly care for their buildings? Gee, I wonder how many of their tenants would say the buildings have 'never' been properly cared for?
17
Next up is the health "care" industry.
7
Tenant activists and the not-for-profits that run large numbers of affordable housing units aligned because they see the future of affordable housing as intertwined with ownership by the non-profit groups.
For profit owners will sell if their long term prospects aren’t promising, and the ability of the NFPs to raise money at preferential interest rates and to qualify for tax abatements will enable them to acquire more rental housing stock.
Hopefully they will maintain what they buy.
4
Real estate developers are never good people who care about the community. They always look to profit off people. Housing is a right, not a commodity.
14
@Angel Lets try a little change. " Grocery store owners and medical care providers are never good people who care about the community. They always look to profit off people. Food and medical care are rights, not commodities. "
Let's get something straight. All grocery stores and most hospitals and apartments are businesses. By definition, they are seeking to make a profit. There is nothing wrong with making a profit by providing a service someone wants to buy of their own free will.
26
Her property is as profitable as it is only because her mortgage is a slim $300,000, or $12,000 per unit. She has a ton of equity invested in that building. Which invested elsewhere would generate more than $60,000 per year with fewer headaches.
12
@GC Then she should sell the building. Also, where are you making these numbers up? 4337 Gunther Ave, Bronx, NY 10466 is a multi family home built in 1931. This property was last sold for $37,750 in 1997.
7
@GC:
ALL regulated rental property is, by law, profitable. The laws governing regulation have a guaranteed minimum profit of 7.5% built in. The real estate lobby does not like to mention that. Most businesses would kill for such a guaranteed profit.
Clearly, many people commenting here on the previous law - 1974's Emergency Tenant Protection Act - do so without basic knowledge of the law and its history.
https://emcphd.wordpress.com
9
This was in response to Ben but didn’t get tagged there. All from his analysts - 25 units, $300k mortgage, net income $60k.
1
The progressives that now rule Albany believe in two things. First, they believe that low and lower-middle income residents have financial problems, and deserve to be helped. Second, they believe you can get something for nothing. They are to be commended on the former, but the latter tenet is a serious problem. The progressives’ concept that the problem of enormous housing costs in NYC can be easily solved by placing the burden on landlords and apartment owners is silly, and a recipe for disaster. The costs of providing rental housing in NYC are astronomical, including maintenance and repairs; regulatory compliance; and among the highest taxes in the nation. The city just made a bad situation worse by the recent passage of a law requiring many buildings to be retrofitted at great expense to meet new energy efficiency standards.
Routine maintenance will decline, and buildings will likely be abandoned by their owners, as happened before. The ghost of NYC rental housing’s Christmas future, which will inevitably follow this new law, has a name: NYCHA.
As a resident of Indiana, I see no easy solution to the exorbitant costs of housing in NYC; it would be helpful if papers like the NYT could do more reporting on why housing costs 4+ times more in NYC than in many other cities.
There are many very livable medium sized cities throughout the nation in which housing costs a fraction of what it does in NYC, including cities in upstate NY. Perhaps, people should consider relocating.
15
"There are many very livable medium sized cities throughout the nation in which housing costs a fraction of what it does in NYC, including cities in upstate NY. Perhaps, people should consider relocating."
With 35 years in Albany, I can tell you that many young professionals don't want to live here. They come here for college or graduate school, but many are off to the NYC area as soon as practicable. It may be expensive, but they see more opportunity, better nightlife and cultural offerings in the city.
9
I'm not in NYC but frequent often. I think what gets lost in all this is the fact we NEED janitors, cleaners, fast food workers, etc. But in cities all over America, esp NYC, they simply cannot get ahead because they are so rent burden. It's one thing if we live in a European style country, or even Canada, that has more safety nets. But here in USA, all these safety nets are crumbling and these people are becoming more poor. I met a lady at the CLT airport who takes the bus 2 hours each way to work at Burger king. She got up at 3am every day. She was probably in her 50s and a sweet personality and lovely lady. But she looked tired, worn out, and I just wondered how on earth she does it. I don't have any answers but we can't demand the cheapest everything and then blame these workers who can't afford these crazy rent increases. These low wage jobs are growing so we have to deal with it somehow rather it be this way like in NY or some other way.
22
New York's new rent control law is socialism gone amuck. There are a finite amount of money in circulation. The progressive democrats who embraced this new law didn't put more money into the market. Fundamentally, the intent of this law is for building owners to subsidize renters. It's classic socialism; take from the perceived haves and give it to the have nots. That may work for awhile, but eventually the owners will curb the subsidization and trim their operating expense. They will trim costs by reducing maintenance and upgrades. It has to happen, benevolence has its limits. Then a decade from now when the progressives complain about the squalor and crime, when the building owners cannot find buyers for their properties, will the progressives remember how they caused this mess?
28
@Donald Smith
What do you know about the New York City rental housing market living there in Alaska? Not much, I suspect. Progressives are advocating for affordable housing, not crystal palaces. What is always about owners for you?
14
@Donald Smith "They will trim costs by reducing maintenance and upgrades. It has to happen, benevolence has its limits." Landlords had all the cards for quite some time and only proceeded to gouge, inflate, and torment people. You are speaking of multinational corporations to some degree. This is not Anchorage, where by the way, the socialist state is quite strong. Enjoying your share of oil money?
9
@Donald Smith How is that annual check from the state government's oil slush fund treating you?
I thought so.
3
WILL HISTORY REPEAT ITSELF ?
Rent Control, a World War II program , froze rents on aging
building for over 25 years. Maintaining an aging building without
any ability to raise rents caused buildings to go into disrepair.
Landlords , especially in the Bronx and throughout the city decided not to rent apartments as they became vacant , operating cost either exceeded revenue or did not allow for a fair return. A housing shortage resulted. Owners exercised their property rights.
The City was forced to recognize that the WWII Rent Control needed reform and introduced Stabilization for vacating apartment and Maximum Base Rent for Rent Control. This allowed Landlords to increase rents and better maintain building.
The Bronx did not burn because landlords wanted to collect insurance proceeds . Mortgage holders and tax arrears would have had priority. It burned because of buildings being abandoned and drug addicts nesting in these buildings and inadequate municipal services . This history is lost today and could repeat itself . The historically minimal rent increases could
replicate the past and this law will hurt older building owners , time does not discriminate when it comes to building upkeep and maintenance.
NYCHA and the terrible conditions that tenants live with are acceptable ? Does Albany have double standard when it comes to what is a decent home. A safe home is the most important family stability , future allowable increase have to allow for this.
12
Where were all these landlords and developers, so concerned for their renters, when the skyline was filling with repositories for Russian and Chinese money laundering investment properties that no one ever actually lived in? Or when rental apartments were becoming de facto hotels courtesy of Airbnb’s? It’s only when tenants are being protected that landlords suddenly worry about them. Let’s give this new law the same benefit of the doubt we gave to the real estate get-rich-quick schemes. Who knows - maybe a populist president will emerge from the tenant population.
30
@M. Bayer
You're mixing up big landlords with small landlords. That's like comparing the corner grocery store with Amazon.
6
The Trump family did not get poor owning apartment buildings in Queens and Brooklyn. They stole as much money as they could and then didn't pay taxes for years on the profits they made as they came up with numerous scams to cheat everyone. Feeling sorry for landlords who have also practiced Trumpian abuses on their tenants is hard. The new law needs to be made to work for the landlords and the tenants by city supervision. Without that a level of fairness cannot be expected.
21
@Michael
And don't forget the Kushners who have been doing the exact same thing.
5
Inflationary rent is not just a NYC situation. Any area with high population growth experiences the same problem. Austin, TX is one of those places. But we also have slumlords who ignore city inspections, and it's a sin that the city doesn't follow through on enforcement.
Most landlords don't want run-down properties, but there's a tendency to put off maintenance and repairs so as to maximize this year's profit. But maintenance and repairs won't be less costly next year, so figure out how you will deal with repairs when they are needed. Why should I feel sorry for the landlord worrying about $29K in roof repairs when she owns 26 units? Your income is going to take a hit for a few years, but your soul won't be stained by greed.
10
@Mary J Please define "greed." Seems it often applies when someone wants to charge more for something you buy, but never seems to apply to yourself when you want to charge more for something you sell.
5
As for the return of "the Bronx is burning" period in that borough and others, during the last mayoral campaign, GOP candidate Joe Lhotta warned that a drastic decrease in the amount of stop-and-frisks would lead to a crime rate of that same period.
How'd that work out?
9
In Brooklyn, it was up sixty four percent this year, as reported in this very newspaper in April.
The Post reported up thirty percent in the Bronx, year over year, as of March.
So, the murder rate is up, where the naysayers said it would go up.
4
Why create misery at the margins? Why not tax to the max anyone owning a dwelling they don't ever live in? That would encourage real housing stock in our tight urban markets on the coasts. Get rid of those non-tenants investing in unused, unneeded luxury "apartments".
7
In 1972 the rent laws were eliminated and replaced with total vacancy deregulation. Rents skyrocketed and money spent on maintenance was virtually nil. Then a building owner killed several long-time renters to get them out. By 1973 Governor Rockefeller appointed a commission, headed by Andrew Stein, to study the mess. Surely reporters have access to this report.
https://www.nytimes.com/1973/10/02/archives/governor-asks-stein-panel-to-evaluate-rent-increases.html
By 1974 the situation was so alarming that the republican controlled legislature and a republican governor not only reinstated the rent laws, but expanded them - creating Rent Stabilization. That is The Emergency Tenant Protection Act. The law has a built in Sunset provision. When the NYC vacancy rate hits 5%, it ends.
Under the ETPA all owners of rent regulated units were guaranteed a minimum of 7.5% profit. By law.
Rent Regulated buildings became a hugely coveted investment because no matter what the state of the economy, rents went up annually and there was that guaranteed minimum profit margin.
The Bronx of the 70s was about the odious policy of Red Lining, not laws that protect renters from abuse and neglect. Do not conflate the two. Look at the Stein Report.
https://emcphd.wordpress.com
13
@Rev. E. M. Camarena, PhD
Thank you for providing some actual information!
4
I grew up near Yankee Stadium in the 60's and early 70's. Many of the white landlords were "mom n' pops" who were friendly with their (overwhelmingly) white tenants. The "white flight" mentioned was in part due to new housing anti-discrimination laws. Working class Jews and Catholics suddenly had more housing options. As those tenants moved, they were frequently replaced by Hispanics (whom it was harder to turn away due to the same anti-discrimination laws). The landlords weren't interested in developing relationships with the new tenants. Its easier to neglect a building when the city limits your income AND requires you take tenants you aren't interested in.
The $15k/15yr cap on renovation pass thrus is daft. You can't do a whole lot of anything to an apartment at the rate of $1k/year. So yes, working class housing in the Bronx may be "saved" for another generation, but in what shape will the apartments be in at the end of that generation?
13
@DAW Part of the flight in the 1970's was due to private sector housing initiatives like Co-Op City in the Bronx. 15,000 brand new units. People moved to better housing and the generation also got older and moved to the suburbs or retired to Florida.
5
I have seen how landlords operate from the inside. Most are not tenant friendly. They will do the least amount of work possible to get by. They will hire the cheapest contract labor they can get. They purchase the cheapest appliances that they can get. They’ll charge the highest rents they can get. After all, it’s a business and business is about profit. So before you start worrying so much about landlords, most of them are greedy profit seeking vultures that could care less about tenants.
22
@Mike L "greedy, profit seeking vultures." When the grocery store charges the highest profits they can get, are they "greedy, profit seeking vultures"? How much do you think the supermarkets or Costco really care about you?
6
new york without rent control would be like London London, milionaires in nice apartments (in rehabbed former slums and workhouses) and the unemployed or unemployable in high rise public firetraps but nothing in between.
8
Even in the three years I've lived in the South Bronx, I've seen dramatic improvements in the housing situation here. While gentrification is a factor, it remains a minor one; the vast majority of improvements are in buildings that remain working class. It's hard to see how the new law will play out here, but none of the new construction (and there's a lot of it here) will be subject to rent stabilization laws.
6
I moved into my rent stabilized apartment in the early 90’s. At the time, there were literally junkies selling clean needles outside my front door and whole swaths of the neighborhood were considered unsafe to walk in daylight let alone after dark. But I and my neighbors persevered. My building opted out of Mitchell-Lama and turned market rate about a decade ago but us few original pioneers that remained were grandfathered as stabilized. Now my neighborhood is considered trendy and a destination for millennials. The current owner of my building is a conglomerate that paid a fortune for the building and is charging corresponding rents to young tenants who are sharing apartments with 3-4 people and act like we live in a college dorm. I do not have a second home, am generous and kind to the building staff and have been a good tenant for these many years. Whenever I need work in my apartment I pay for it myself- the building is either glacial to respond or does shoddy, disinterested work. All of this is to say that there are those of us who are lifelong, tax-paying, contributing New Yorkers that are just trying to remain in the homes that we have lived in for many years. We came to these neighborhoods when no one else would and are not trying to get over on anyone.
35
@DaisyMae
That's great, but doesn't justify these insane new rent laws that will strap private real estate investors from properly taking care of their properties.
1
The Profit and Loss NY Real Estate Study for 2019 states that the median gross income, rent plus other revenue streams the buildings generate, from stabilized apartments in Core Manhattan was $2,729 per unit. The average monthly operating costs for these apartment units was $1,678. In 1992 the NYC Dept. of Finance did a rare audit which found most miscellaneous costs claimed were administrative or maintenance while 15% were not valid business expenses. A small sampling of 46 rent stabilized properties revealed costs to be inflated by 8% in properties owned by smaller companies and since many owners of large property portfolios refused to cooperate it is unknown how much they lie. For 2017 5% of the total of rent stabilized apartments were claimed to have costs that exceeded gross income. Assuming that those claiming the 5% operating at a loss aren't lying then 95% of the rent stabilized apartments are profitable. This is great for landlords since it's an improvement from 1990 when it was claimed that 13.9% of rent stabilized apartments were in distress. Approximately half of all rent stabilized buildings citywide have unaudited reports of spending no more than 64 cents of every dollar of revenue on operating and maintenace costs in 2017. At the 70% level owners pay no more than 73 cents of every dollar of revenue and the remaining pay out 76 cents of every dollar received. Factor in all the tax loopholes and it is difficult to feel sorry for anyone in the real estate business
11
@artman
Thank you for bringing actual information to bear!
2
@artman And under the Emergency Tenant Protection Act of 1974, all owners of rent regulated units are guaranteed a 7.5% profit... minimum. As any business owner knows, that is extremely generous. Do restaurants get this legally mandated profit? Taxi owners? Delis? Lawyers? Doctors? Ha!
Building owners have it easier than they want the pubic to know.
https://emcphd.wordpress.com
2
What is it about New York that its housing market requires rent control, while most all of the rest of the country works fine without it?
Rent control drives wages down, as a large population of low wage workers are subsidized and they continue to stay in NY. This pool of workers allows employers to pay less for their workers than would be the case if market forces set housing prices.
12
@Richard P M: I will answer your question: Here in NYC residents compete for apartments with people and corporations from all over the world. We are not Podunk, you know.
https://emcphd.wordpress.com
9
Oh yeah, they’re doing just great in San Francisco without rent regulations. Your statement is simply false.
7
@Richard P M Since you live in Silicon valley you would not understand . The rest of the country does well without it simply because the cost of living is lower in most cities and hence affordable ; they also do not pay state and city taxes . You're in California and your taxation rate is also high but I'm betting you (with your let them eat cake) can afford taxes and everything else . Your premise that rent control drives wages down is a false one ; as far as subsidizing low wage workers continuing to stay in NY , well those folks in their towers need them to do the menial work they won't do for themselves and the slaves of NY must live somewhere close . Thank you for acknowledging the low wage situation but employers have always had their bottom line in sight and are miserly with pay , especially now that they have literally been handed the keys to the city . Thank to NY State Democrats for finally undoing Joe Bruno's deal with the devil .
3
A return to the terrible old days of the 1970s is the old canard that those who seek to profit always pull out when their interests are threatened.
We have watched the rental market be transformed from one that young working folks could enter -- and afford -- to one that makes it almost impossible to live in NYC (even for older folks). These policies aren't a return to rent control but sensible rent regulations. If we want NYC to continue to be one of the economic powerhouses of the country, then we have to make it possible for people of all classes to live here.
Instead of whining about renters not paying rent, why not turn the tables and ask why developers and landlords are out to gouge their tenants.
In addition to these very sensible rent regulations -- updated to address the current conditions -- why not also pursue a policy of building affordable housing? And while we're at it, we should also be encouraging changes in our Federal tax code that make it less attractive to landlords to keep units empty, allowing them to claim depreciation and the losses of carrying costs against a loss of income.
17
Even in countries that are actually Communist dictatorships, people have to pay their rent. It's pretty astonishing that tenants cannot be evicted for non-payment of rent for two years. That's just whacky and invites abuse.
44
good lord. even life long liberal economists know that price controls dont work. its econ 101.
never mind. lets control the prices. lets control prices of food, cell phones, air travel while we're at it- think of all the money we will save when prices are controlled!! yay!!!
23
Once again, you see people on the other side of the economic imbalance howl and moan over any attempt to help low income people. "You cant' enforce wage increases," "you can't force rent stabilization," "you can't tax us," etc... meanwhile their margins and stock portfolios grow profoundly every day.
They are addicts. They will howl and moan if you even suggest that they have to do with less of the drug they crave. Time to cut off their supply. Time for them to sober-up.
28
I can count 15 cranes on top of new construction and buildings from my view of midtown Manhattan, the Village and Lower East Side. Real estate developers are doing absolutely fine. They should stop their whining and, frankly, they've been getting away with "luxury condo-ing" every neighborhood since the 1980s and forcing out the working class, artists, the elderly and people of color for the rich and for foreign investors. Developers have had their day and they can just suck it up for a while. It's time to restore affordable housing for lower and middle class workers and families and to once again return New York City to a place of thriving economic and cultural diversification.
33
@James L. If you don't like the condo-ification of the city, you probably shouldn't support this law. One obvious and near-term effect will be an even stronger bias toward condominium construction in all the neighborhoods you've listed. New rental construction in expensive neighborhoods doesn't pencil out without the 421a tax abatement, and projects built with this tax abatement must remain stabilized for up to 35 years. So the economics of condos vs. rentals just got further weighted toward condos. Good luck to the lower- and middle-class folks who want to buy a $1,500/sf condo.
2
The Bronx didn't burn because of rent controls! The Bronx burned because Robert Moses ran highways through thriving middle class neighborhoods accelerating *ahem* middle class * flight.
44
Moses also drove highways through Brooklyn, Queens, and Staten Island. But you didn’t see Whitestone or Bay Ridge burning to the ground. The Major Deegan and Cross Bronx were built decades before the Bronx burned. And many of the neighborhoods were never middle class. They’ve always been poor to working class.
What happened in the Bronx was a confluence of several factors. But some owners torched their buildings for the insurance rather than fix and rent them. You don’t think rent control was one of the considerations.
9
Only partly true. The Bronx also suffered when Co-op City went up and, at the same time, New York City subsidized families (far too many with dysfunctional or criminal sons and grandsons) and moved them into formerly quiet, safe buildings in the Bronx, many on the grand Grand Concourse.
My cousin's family moved off the Grand Concourse not because the new families were not white but because they made noise all night, hung out all day, and made living in their apartment building and then, as more came, the neighborhood, impossible. My cousin and her family moved to Brooklyn, but many of their neighbors went to Co-op City.
Obviously, not all poor people do not know how to behave.
Obviously, not all landlords are unscrupulous.
15
Great photo. You could see that owner of her 26 unit building commuting from her Hamptons house in her limo, her greed, her callousness. Maybe not quite the picture all the rent regulators like to see shown.
14
Rent control was created to help soldiers returning from WWII.
It is an out dated, archaic system of byzantine laws. It has created less housing rather than more and driven rents and property costs up not down.
For example, if your income raises to above $200,001 and your rent rises to $2,750 the landlord can charge "market rates." If your income is $3,000,000 and your rent is $346.87 you're fine.
Anyone who takes an evening stroll in Manhattan will notice entire blocks of apartments that sit empty. Take that stroll regularly over a decade. Never a light. Ever. Landlords will allow units to sit empty for decades waiting for the last stabilized tenant to "move out." When that happens the block comes down and up goes the "luxury" building.
No one knows for sure how many apartments sit empty. Hint: tens of thousands.
Because a landlord can never end a lease, the lease can be transferred to another person and rents can never be increased, landlords would rather see units remain empty than be stuck in a relationship that gives his property rights to non owners.
Meanwhile, tenants in "market rate" apartments in buildings where some units are controlled are directly subsidizing their neighbors.
It's not an accident that every city in the country that has rent control also has the highest rents.
Rather than figure out more ways to manipulate a market, New York should at least study the impact getting rid of all rent stabilization and control and let markets work.
53
@Johannes de Silentio, great Piont and true, only missed the most important Piont “ Those 2,400,000 voter” who get the hand out !!!
How long ago was WWII , 75 years ago , all those people that needed help are Dead!!!
9
@Johannes de Silentio: Ah yes. The WW2 canard again. The Emergency Tenant Protection Act dates from 1974.
Read up on why it was passed.
https://emcphd.wordpress.com
4
@Johannes de Silentio So why don't you just pass a vacancy tax? That seems a LOT more sensible instead of removing one of the few bulwarks working people have against the vagaries of the market.
8
Is the same legislature that freezes landlord's income also willing to freeze their property and income tax expenses? If not, where are the landlords going to get the cash to pay the increasing taxes? From money that would otherwise be used for upkeep and renovation, that's where.
51
I believe that it is patently unfair to require one group of private citizens (building owners) to subsidize the life style of another group of private citizens (tenants).
If we as a society deem it appropriate to give subsidies to some people, then we as a community should do so thru our tax dollars. If we think certain members of our society deserve a subsidy to live in prime buildings in great locations, then let all of us taxpayers ante up. However, as frequently shown, in many cases these tenants are far from needy.
Finally, as the article states, nothing provides a greater disincentive to investors to create new housing than the idea that the government is going to control the price for what you can charge for your property when it is completed.
49
@Richard Huber
It is patently unfair for millions of people to live under extreme stress to make millionaires into billionaires.
The majority of real estate companies in NYC make money by exploiting a market made up of people with little options being challenged by a constant stream of new comers prepared to compete for limited housing.
What if we substituted the word housing with the word food. All the grocery stores owners see that the practices of the real estate industry are more profitable. They buy milk for example for $3.20 a gallon from the distributer and instead of charging $3.49 they charge $9.50. Everything in all the grocery stores are marked up the same way and when people complain the trade organization tells the enquiring press that people should shop someplace else if it's too rich for their blood. The prices are what they are because the food stores took out huge loans at high interest to pay for the food they sell and to pay for all the overhead and someone has to pay for that. The grocery store owners also want to move into other markets but because they don't want to tie up their own money they borrow even more and raise the food prices once again to pay for those loans. There is no other business structured like real estate for good reason and it's time to reign it in.
Next step should be to stop exceptions to zoning laws ruining the city. How many 700 ft and taller buildings do we really need?
24
This problem is much more complex thn rising rents, deteriorating housing stock, the deire of people to live in reasonably acceptable housing and the greed of big developers.
Folks who are not being paid a living wage have to pay far more of their income for life's necessities than often they can afford. so let's start there. Then perhaps the landlords (hopefully there are a few who are decent) could perhaps have the funds to renovate and to raise rents reasonably, when necessary.
As for the profiteers, tough. Like most real estate, the trend to gentrify the Bronx and other neighborhhoods will pass. You'll find other, less fraught and potentially more profitable areas to gentrify.
Decent landlords who are true stakeholders and investors in their community, I hope this can work out. it is amazing waht a little hope, dent housing and a seinse of community does for all is members - tenants and property owners alike.
2
Rent controlled apartments will deteriorate. Econ 101. However , pols love it because it makes them appear
“Concerned”. And they make the law so complex that you have to go to them on blended knee to find out how it affects you
8
@Philip Getson
Philip, when you move to NYC where greed and avarice are the more common traits of landlords than empathy and humanity you can express an opinion but for now you can keep your ignorance to yourself.
@Philip Getson — did all these people citing “Econ 101” in their comments (and they are predictably too many) ever REALLY take this mythical Econ 101 in college? Or even GO to college? Somehow I doubt it. In any case, just mentioning it is not a successful argument.
Sometimes old buildings require so much maintenance that it makes sense to replace them. The real estate industry needs to become more efficient and stop relying upon speculation.
5
Perhaps landlords could be given permission to raise rents to whatever level in return for giving current tenants relocation assistance to move elsewhere.
Retiring in such a high cost area as NYC is not for those scraping by on Social Security. Move, with financial assistance, to Florida, where there are lots of similarly situated retirees, many of whom have come from all over the country and starting over fresh with new social networks.
7
@Jim S.
Seriously? So when people get to retirement age they should be forced to moved hundreds of miles away from where they were born and lived their whole life far from all that is familiar and far from friends and family. What makes you think that landlords who wouldn't tell you the time of day without charging for it would give financial assistance to tenents to move?
Give me your address and I'll help to move you out next weekend to South Dakota or West Texas where you know no one but it's a lot cheaper than Cleveland.
Why do so many people who aren't rich only seem to have empathy for the wealthy and greedy?
26
@artman
Yes, seriously. People aren't forced to move, but if given incentive they might find that there are indeed other places in the county that are quite livable, at far less cost than NYC.
And I speak from personal experience about Florida, spending winters in a condo complex where there are many former New Yorkers (as well as people from other parts of the country) living there year round, who have adapted very well, and who have found many new friends.
5
@artman
Economic migration just might be a universal.
7
It is safe to ignore the howling of real estate speculators that warns the rent regulation will return the Bronx to the madness of the 1970's, when drug addiction and endemic violent crime caused those who could to flee. I was born and lived with my mother, father and sister in the South Bronx, in a three room rent controlled apartment until 1960. Needless to say. living conditions less than luxurious, but the building and the streets - which were our playground - were clean and safe. The Bronx started burning in the 70's when those afflicted by virulent racism and a culture of poverty and despair replaced the strivers of my generation. The Bronx has now returned to what is was - a place for hard working people of modest income to live and perhaps aspire for a more generous life for their children
16
Why stop with rent control?
I say the price of bagels should be capped at $1. That way, everyone can afford them, not just the rich.
Try it. See what happens.
36
@Michael: Ah yes, I was just waiting for the slippery slope logical fallacy to appear.
Not eating bagels isn't going to make someone homeless.
Perhaps your ire should be directed at the people who have stagnated wages for 30+ years which makes rising rents unaffordable.
29
There’s plenty of low cost rentals available in flyover country. There also are jobs paying $15/hr or more to start, no experience necessary. Maybe people should move.
12
@Lmca
Why is it a fallacy? If it works in one context, why not another context?
In fact, since housing is a durable good, I think price controls would be much more effective than rent controls for housing, which experiences depreciation.
If New Yorkers believe in minimum wages and maximum rents, why stop there?
7
Everyone will lose, just give it a few years
29
Where is the unbiased economic analysis of the cost of operating and maintaining housing in NYC? Landlords are driven by seeking profit and lobby with campaign contributions, tenants seek to keep rents down and lobby with their voices and votes. The Rent Guidelines Board is supposed to consider the cost of operating, but most commentary we read indicates that their decisions are based as much on politics as finances. We need a trusted independent study to weigh in on this question.
23
These new rent laws will only be as "permanent" as a democratic majority in the state legislature. And given the vast amount of money the "poor" NYC landlords pour into elections to buy politicians I'm sure that these new laws will be gutted as soon as the landlords buy their politicians in the next election. Furthermore, the rent increases on stabilized apartments are set annually by the Rent Guidelines Board, and with the exception of the last 5 years, that entity has done a Republican Mayor's bidding and allowed rents to rise substantially for regulated tenants, well-beyond the rate of inflation or average wage increases for most New York workers.
13
@Steve725
False. The RGB increases have averaged 1.75%/yr over the last
10 years. Meanwhile everything else has skyrocketed.
5
No need to wonder why the rate of homelessness in this city continues to grow with almost every new building geared toward the ultra wealthy and luxury class.
Meanwhile these new rent laws are coming too late for thousands of New Yorkers who have already been evicted to satisfy their landlord's demand for higher paying tenants.
Too little.
Too late.
19
@N. Smith Land and labor are extremely expensive everywhere in NYC. The days of building apartments solely for the middle-class are long gone.
11
Many neighborhoods in Brooklyn and the other boroughs are solidly middle and lower-middle class. People of all colors and creeds own modest homes. It's a wonder to me that the Times and its commenters insist that New York City has become a shiny plaything of the rich.
These neighborhoods, seemingly not on the map, do not offer the pizazz of, say, Park Slope, but who ever said one can live wherever one chooses on the cheap?
My family going back generations in Brooklyn lived where they could afford.
9
@NYC Taxpayer
What middle -class?? That has been all but decimated.
Another thing.
A decent place to live in a decent neighborhood should not be the exclusive realm of the rich.
I'm a native New Yorker and I remember a time when decent hard-working folks could find and afford an apartment.
And living wages haven't kept pace with the avarice that now controls the city real-estate landscape.
4
NYC has clearly been in an economic transition for more than two decades. The most effective role of the government is to mitigate the consequences for those negatively affected and direct this transition towards a city that remains inclusive for the poor and middle class. The new rent regulations are an admirable attempt, but ultimately benefit half of renters to the detriment of the other half without actually discriminating for individual situations. While the Mayor has made building or preserving 200,000 "affordable" apartments, today there are 200,000+ apartments in buildings that do not earn enough money to covers expenses. A progressive myself, it's hard not to label these changes as stereotypical Liberalism - imposed with good intentions without complete understanding of the real world impact.
23
I think there should be a more nuanced approach to this:
* we have to stop privileging the building of luxury developments which further pushes up rents and makes low-income housing look unprofitable year-by-year;
* we should be more giving more privileges to the landlords and tenants that live her 365 days a year, so no privileging people who have pied-a-terres in tax policies, etc.; it doesn't make sense to allow too many of these in a shortage of housing marketplace;
* realistically, we should be offering the small landlords who are below the median in profits and owned number of buildings whose tenant population is mostly working class, working poor, disabled, etc. (because it's basically cheaper to keep people housed then to let be homeless and then be housed as numerous studies have shown) preferred treatment in property tax policies and utility costs, etc.;
* we have to think about having a cheap loan scheme to help the segment of landlords that cater to poor income areas and populations. I know some of the commentariat would hope that the poor just up and leave (or just die, from the looks of some commenters), but the reality is that the poor aren't going to just up and leave without funds. The sooner we face that fact, the sooner we can start effective and humane solutions.
Being a landlord is a choice; many a times, being poor is not.
18
One need only look across the country to SF to see where this is going. SF introduced stringent tenant protections in an attempt to curb displacement, but instead cultivated unparalleled dystopian class disparities. If your family is paying $700 for a 2br downtown apt, good for you. But for everyone else, either find $4,000 every month, join the burgeoning homeless population in the needle and human waste-strewn Tenderloin, or leave the city altogether and commute 2+ hrs each way. How alarmist are the RE lobby's concerns when SF actually exists? Furthermore, it's disappointing that sensible rules like being able to deregulate an apartment when a tenant's income reaches a certain level (i.e. means testing) were scrapped while shortsighted ones like limiting landlords to a paltry $15k in repairs over 15 years were added. Finally, this legislation does nothing to encourage more housing units, which is ultimately the most effective long-term form of rent regulation. It feels like this legislation resulted from appeasing the most raucous voices, but the best solutions come when all voices are heard. Both sides have valid concerns and NYC needs balanced legislation that hears them both. This doesn't do that.
26
@Reader The intellectual gymnastics here show the orwellian absurdity of market fundamentalist disinformation. You blame the disparity on the fact that some people are benefiting from tenant protections, when others are paying more. How's that? O
The truth is, rent control did not create inequality. It counteracts inequality caused by other factors.
12
@Reader
The Tenderloin is populated by parolees and other people abandoned by society, in particular by the wealthy suburbs surrounding SF. You are blaming SF for attempting to make a dent in America’s issues. Have you ever asked yourself why these issues exist in the inner cities, no matter where you go in America?
3
The city should provide tax assistance or direct aid to those landlords who own properties with the rent controlled properties provided they can show financial hardship from conducting major maintenance projects like new roofs or HVAC.
City and state should set some profit percentage threshold and subsidize those works.
Delayed maintenance is no option either.
21
This is a pyrrhic victory for NYC tenants.
The middle ground should have been to allow the rents to rise, slowly, over time, with an eventual cap, but as a condition, hold the landlords responsible for modernization of the units because as I see, now, most of these units will not be modernized or repaired, and slum areas might re-appear in certain parts of the city.
The Legislature and the Governor should have studied this matter properly to create a fair solution for both sides, but they have not, as only one side "won."
As a landlord, I find it unfair that we are often viewed as having large reserves to do anything that the tenants want, but most landlords are small property owners like Mr. Kirnon.
33
The comments here have made my day and given me hope that the insane new rent control laws are a passing phase and will be modified in due course. Hopefully, sooner rather than later before small landlords like Ms. Kirnon in this article and New York as a whole are irreparably harmed.
16
My family owned New York City apartment buildings for many decades. Even though many people were willing to pay market value for our apartments, we were forbidden by rent regulation to accept the amounts people were willing to pay to us to live in those units. Meanwhile, our property taxes, fuel costs, insurance, water bills, etc. went up each year. Does the government tell grocery stores how much they can charge for milk, bread, fruits and vegetables? Why should government get between a customer (tenant) willing to pay what a business (landlord) is willing to sell (rent) for? It’s THEFT on behalf of government. After a while, we had enough of this. With the government stealing from us (in “hidden” form) by not allowing us to sell our goods for what people were willing to pay, we had enough. Instead of building or buying more housing, we sold. We are completely out of the business. 100% of our proceeds from sales are now in the stock market where they will just sit and grow and grow for us for many generations/years to come. I suspect MANY people who would otherwise build/buy properties that would provide housing are also no longer incentivized to do so, as the government and their regulations, along with vilification of “evil landlords” removes all or nearly all incentive to put in the work and take the investment risk. This leads to less supply. Less supply, with increasing demand… and there you go… housing shortage. This is Economics 101.
58
@ABC123 I still can't figure out the democrats endgame. Maybe for whatever reason they want a return to the days of decay and abandonment. The new laws even make co-op and condo conversions more difficult, now requiring 51% of tenants to approve the conversion, not 15% as it was previously. Discouraging ownership is bad for the democrats I guess.
7
@ABC123
Let me get this straight: you buy a highly discounted building below market rate, fully aware that it is regulated, and expect to rent it out at market rate? And then cry foul when you cant?
Could you possibly be any more disingenuous?
Regulated buildings were purchased far below market value, usually with government backed loans/mortages. Not to mention generous tax incentives.
21
@NYC Taxpayer follow the money. Even when the Bronx was burning, there were people making money from it. We spend billions on homelessness and all we get in return is more homeless people...but the shelter operators are raking in cash. The democrats will create new slums as landlords allow more buildings to be vacant/not repaired, and eventually someone will buy the buildings cheap and rebuild and regentrify.
1
It has always appeared to me that rent control is the most popular approach to the housing affordability crisis because it doesn’t require actual sacrifices like “changing the character of a neighborhood” through new development or paying more in taxes for housing subsidies. This is why we keep rejecting the evidence that rent control hasn’t proven to be a good solution for most people who are struggling.
If rent control only helps the few people who are lucky to win the lottery of getting an available unit, there will be countless more losers than winners. Landlords are an easy target since so many are bad actors, but they are also an easy way to deflect blame for the bad motivations of other property owners and tax payers who don’t want to take any responsibility for this issue.
Fully funding housing vouchers (cash assistance for rents) seems to be the best approach to address one aspect of the housing affordability crisis. It gives people the freedom to move where opportunity is located like well off people have the luxury of doing. It does not, as often asserted, enrich landlords anymore than the rent that I pay to my landlord. The other important approach would be to build more mixed use/income units.
Housing vouchers also don’t distort the market for affordable rental units like rent control. This new regime seems likely to encourage landlords to convert their units into condominiums and avoid building for anyone under the income threshold.
15
Yes, yes yes. Housing vouchers....if only. But that approach eliminates the pols ability to brag about all the goodies they have bestowed on their constituents.
5
Essentially, you are talking about Section-8, which enabled far too many irresponsible, heedless, and even criminal people to move into formerly pleasant apartment buildings and wreak havoc.
Obviously, not all Section 8 families caused our neighborhoods to turn into slums. But when enough hallway lightbulbs are smashed every week, and enough people use trash closets as urinals, and enough drug sales happen outside your apartment door . . . .
5
Once again, it is a perpetrator-victim mentality that has won the day. This time the victims are renters and the perpetrators are landlords. Well, for every landlord that games the system there is at least one, and probably more, renters who do.
Try being a landlord sometime. For our children's college we invested in three homes in Illinois and rented them. It's not fun. It's not an easy way of making money, and you get to see the worst of people's sides.
46
@Travelers
"We bought three homes and rented them, but it was hard work!"
Oh yeah, so relatable. I'll definitely take a try at being a landlord sometime. Right after that hundreds of thousands of dollars appears in my bank account...
6
I wonder how many of the comments come from the same IP address based on the outsized pro-landlord commenting here. The fact is that this is a common sense law that has been long overdue. Landlords before this law were just as crooked, just as negligent to repairs, and just as greedy. Now there’s actual regulations to reduce their incentive to harass tenants, fake improvement costs to increase rent, or to speculate on new buildings where they see opportunity from the above. Any New Yorker that has gone through the rental process here knows that Landlords have outsized rights. The blacklist they kept allowed them to discriminate against residents that fought for their rights against slumlords.
28
@Stephen K.
So true... kind of obvious too.
Anyone who regularly reads the NY Times knows how peculiar all these pro-landlord comments are.
16
@Stephen K. Your logic is flawed. Just because people agree that the law is ridiculous you assume they’re all posted by the same group / same motive. You say rent control is common sense. Well free market system is actually more common sense, and grounded in economics, which is why mostly folks on this forum argue that position.
9
Rent regulations benefit existing tenants and people with the connections to obtain a regulated unit. Because of that, the rest of us compete for market rate units, pay more, and effectively subsidize you. Most NYC residents live in market rate units. So opposition shouldn’t be surprising.
11
Rent controls to protect tenants need to be combined with incentives for landlords to maintain and improve properties. Rent control cannot succeed without landlord support. To encourage Amazon the city and state offered billions in abatements and other incentives. Why not the same for the regular investors who own buildings that need maintenance and improvement? Government can afford to create a low interest long term payout loan program for landlords who maintain and improve property. This is not a suggestion to enrich NY’s mega builders and landlord-it is a simple suggestion that if we are concerned about protecting tenants, we need to protect their landlords as well. Municipal adventures in public housing have not worked. Public-private partnership does and should be seen as a way to serve landlords and tenants.
8
Don’t landlords already have a myriad of tax breaks to maintain their investments? If they can’t afford to upkeep their building they should sell it.
9
@Stephen K.
No. That's urban myth.
1
Putting aside the myriad political issues, is $15,000 sufficient to maintain an apartment over 15 years? Welcome to the land of unintended consequences.
31
@Andy Deckman It's intended.
1
As a native New Yorker in my sixth decade, now living abroad. I can assert what so many know well: the majority of landlords to the middle and lower classes have a lousy track record of serving their tenants.
We all know people who’ve been gouged beyond belief, frail elderly evicted on (you should excuse the expression) trumped-up grounds, and disastrous and dangerous conditions foisted on tenants with limited options.
Thank God for rent control, though does seem to be a less than perfect move. The New York I knew and loved has lost much of its kaleidoscope of affordable neighborhoods and living-wage jobs inside the city. There is craven speculation, oodles of overseas money laundering, and other unwholesome factors behind the shift.
In my direct personal experience, there is a particularly venal and duplicitous business culture among most NYC landlords, and there has been since my grandmother grew up in a LES tenement.
And you know it, too. Do what you do, but spare me the martyrdom.
22
The article here failed to mention another key provision of the new rent regulations. Nonpaying tenants can get to keep their apartments for up to a year if a housing court approves. Given the fact that the housing court judges want to keep their jobs in a super liberal city, they will almost always approve. Other comments have mentioned that landlords can no longer charge rents adequate to keep up their buildings which are now unsalable. Like in the 1970's, they will start to walk away from their buildings which will become uninhabitable. These buildings were all built in 1974 or before and require extensive upkeep.Those individuals concerned about the plight of poor tenants will have to come to grips with the fact the poor will have fewer rent-regulated apartments to live in, not more. Don't we ever learn from the horrific failure of socialism in countries like Venezuela? What we have here is expropriation of private property and turning it into a public utility at the expense of landlords, many of whom will soon walk away. What insanity.
50
@Alex Do you seriously not understand the difference between dictatorial socialism (e.g., Venezuela) and democratic socialism (e.g., Denmark)?
14
@Alex
I don't know how much landlord tenant court has changed in twenty years, but in the 80's and 90's, unless a tenant didn't show up, 6 months was a "win-win" to evict a non-paying tenant, a year about average. It was virtually impossible to evict a tenant for non-payment.
As one judge told me in granting a fourth or fifth reprieve to a tenant to come up with the rent, "The apartment was their asset and he wasn't going to deprive them of it without giving them ample opportunity to redeem it."
I also had another judge, who after giving a tenant once last final delay (his fourth or firth final delay, I forget), and she didn't come up with the rent, actually got up from the bench and telephoned the welfare agency and demanded they get down there that session and to pay her rent by the next week (after of course granting this next final delay.
I had a tenant who, in the midst of a long non-payment case-had a brain hemorrhage and was declared brain dead. The judge, at the tenant's sister's persistence, refused to believe she wouldn't recover, and would not grant control of the apartment for over a year (and then only when I agreed that the estate would not have to pay the back rent.
All this was just normal procedure, so when I keep reading stories of tenants being thrown out of apartments with no lawyers or protections, I.m wondering: who are these people, what courts are they in.
14
What great judges.
3
The thing that fails to get mentioned time after time is the number of UPPER middle class New Yorkers who are able to hang on to their rent regulated units for life - despite their increased wealth and personal real estate holdings outside of NYC. We read article after article in the NY Times about New Yorkers with second homes and weekend "getaways" and guess what - many of these people featured in these articles have rent regulated apartments - that's how they can afford the their "getaways"! These new rent regulations only exacerbate this issue. Now for instance, someone making $500K a year who has a winter home in Florida that they use less than 181 days a year is entitled to hang on to their NYC rent regulated apartment FOREVER so long as they claim it as their primary residence. This amounts to a rent subsidy financed on the backs of all the other renters who are paying market rate rents which they can barely afford. If the State Legislature REALLY wanted to reform rent regulation, help tenants and increase the number of available units, the first thing they would do is not allow those with a rent regulated apartment to own real estate anywhere else. They won't dare do this because half the pols in town live in rent regulated units and own second homes. Ridiculous and shameful!!
111
@LeCe: [CLAP, CLAP, CLAP]
Thank you for highlighting the biggest wealth transfer scheme in NYC after tax abatements: people who no longer NEED rent control/rent stabilization but hold on to them like it's a pied a terre. Get rid of this loophole and we'll put a dent into the availability of rent control/rent stabilization for the large swathes of working poor in NYC.
38
@LeCe
100% agree. Also, they should have implemented means-based testing at every lease renewal to ensure these units are going to people who truly can't afford anything more.
19
@LeCe
Wrong.
The thing that is most often fails to get mentioned is the rampant abuse and fraud by the laws by landlords. It's literally endemic in the system.
Further, landlords got into the business and bought their buildings knowing full well that they were regulated. Then they cry foul when they can't charge market rate.... talk about transfer of wealth!
13
The SF Bay Area needs Rent Laws.
12
I no longer live in New York City but I grew up there in Brooklyn and Queens and remember how the mindless stupid rent regulations helped to ruin or at least greatly degrade neighborhood after neighborhood. All I can think is here we go again. The degrading won't happen overnight. But rest assured, it will happen, for the same exact reasons as it happened before.
61
The correct compromise would have been to keep the current vacancy bonus, the recapture rate for capital improvements with much better enforcement, and decontrol for rents that reached $2,700 upon a vacancy and a renovation (a tiny fraction of all vacancies). The current rent guidelines would remain.
Instead, vacant apartments will no longer be renovated (other than a paint job), and the building trades who would have renovated the apartments will be decimated.
And that $1,400 rent stabilized apartment that previously would have gone to $3,500 can only go to $1,475? It will remain vacant forever. Who in their right mind would give a stranger a life-time below market lease at $1,475 when everyone else in the building is paying $3,500?
22
Brace yourself. In coming years, there's going to be an onslaught of articles chronicling people living in apartments that don't get repaired and landlords that don't take care of their buildings.
Of course, it will blame the landlords as greedy people who just don't care. Truth is, you can trace the forthcoming conditions back to these newly enacted laws.
72
@John Doe... there’s already a ton of those articles. Now it’s just that tenants will be paying less for their subpar services from their landlords.
25
@Biz Griz
Yeah - those are the articles about NYCHA and other regulated apartments. Get ready for tons more in coming years.
2
@John Doe
Also there will be a million articles about skyrocketing free market rents. I wonder why?
2
"Rental prices have been climbing since last fall, in part because of weakness in the for-sale market amid a glut of new luxury condos in Manhattan"
How is this possible in a free market? How can the luxury condo market afford to keep constructing more buildings, when there are not enough buyers?
I thought that a free market would produce enough products for the markets to consume. However, America is increasingly producing real estate for the wealthy consumer, and the middle-class is being starved out, even though there is strong demand for affordable housing. Why isn't the market producing what the people want?
14
@Uptown Guy: Unfortunately, building in NYC is expensive. To build a basic no-frills 1 bedroom apartment - BEFORE factoring in the cost of land or paying property taxes - costs $300,000. The rent would need to be at least $1900 / month to cover just the construction cost. The problem is not the housing market, but the fact that the top 1.0% make 36% of all income generated in the city.
7
@Uptown Guy Rental prices may be climbing in new buildings, but certainly not in older buildings. I believe market rents in my prewar doorman building have been pretty much stagnant over last 5-10 years, and landlord is now re-renovating market units every time someone moves out (which is frequently - sometimes every 6-12 months) to attract new tenants who grew up on HGTV.
1
I think it's incredibly irresponsible to make such sweeping changes permanent at this stage without a trial-run period. Doing so makes is very difficult for the city to modify this legislation as time reveals its shortcomings.
22
@Reader Every pro-landlord legislation was done without any trial-run period. Was that irresponsible?
2
Really, New York Times? Evoking the Urban blight of the seventies? It was high time that the unfettered real estate business faced some limits. Regular working people - even ones earning much more than the median income of 32,000 in the Bronx, cannot afford to live in NYC anymore. Manhattan has become a boring park for rich people. Former Mayor Bloomberg did not care enough to make sure some housing stays affordable for all kinds of New Yorkers earning less than 100,000. At some point even millionaires should realize that their doctors, lawyers and private schools don’t function without teachers, nurses, secretaries and paralegals. There are programs for very low earners but none for professionals making 50-90,000. Besides the abundance of luxury apartments is starting to undermine their value.
27
Abundance of luxury apts undermining their value - that’s exactly the point!! It’s called supply and demand, and we need about a million new apartments to take the pressure off the demand side of that relationship. A few set asides in a building near Central Park is not going to do anything to make apartments more affordable. You need a million of them so that people can spread out from roommate situations. Only then will the 2 and 3 BRs occupied by roommate situations start to free up for working families.
17
@Therese B. "Manhattan has become a boring park for rich people." I did not know that Inwood, Washington Heights, Harlem, East Harlem, the housing projects, and the 5-story walk-ups in Yorkville were teeming with rich people. That's for the info.
11
You mean rich people who have Ivy League educations and graduate degrees, and can discuss boring intellectual matters, the fine points of boring classical music, art and literature? Right, the poor and uneducated are much more “fun.”
13
This latest price control debacle shows how the socialistic mindset has taken over the Democratic party. It's a party that quite plainly just doesn't believe in markets anymore. They believe the government can create prosperity through fiat. The government mandates prices. The government mandates wages. And if private businesses collapse as a result, no reason to be concerned, we'll all just get one of those "government guaranteed jobs."
Spoiler alert: It doesn't work.
48
@J. I cannot go back to the wonderful, kaleidoscopic Manhattan I lived in for a quarter of a century—exploring distinct neighborhoods, affordable housing, diversity, joy. I understand cities change from generation to generation, but today’s city to me is homogenized, dominated by catering to the wealthiest. I drop in regularly to go to the theatre and museums. I know there are still pockets of the city I walked endlessly, but know that they too will be swallowed up.
16
@J.
Ahh, the classic Repub line of, "If it's anything that helps the poor, it's socialism!"
7
I wonder how much of this mindset is imported... schools need to focus more on educating children in economics and less on social studies... you can’t help anyone once the well is dry.
1
Does anyone know if the new MCI and IAI rules will be retroactive? Or at least can we request rent reductions for previous work once the respective 30 year and 15 years limits are up? I’ve seen mention of retroactive in earlier articles but none of the most recent mention it. Thanks.
4
@Biz Griz
No, nothing's retroactive.
1
@Tall Tree.. this recent nytimes article right here has a paragraph that mentions “Another argument could target the retroactive rule that limits how much landlords can charge tenants for past upgrades“:
https://www.nytimes.com/2019/06/17/nyregion/newyorktoday/nyc-news-rent-laws-ny.html
2
@Biz Griz
Some MCIs should be repealed retroactively (though I'm sure they won't be). Example: I live in Stuyvesant Town where about 25 years ago the Management replaced all the windows which were single-pane, leaky, drafty things. The windows were replaced with double-paned thermal windows and a huge MCI was imposed. Problem was/is the new windows were totally defective. They started to implode shortly after installation. The LL (then MetLife) went to each apartment and released the irgun gas from between the panes of each window. Also, they are so badly designed that they are almost impossible to clean the outsides. Now, those windows are as drafty as the originals plus condensation gathers between the double panes and it is impossible to remove. We are still paying an arm and a leg for these atrocities! The inadequacy of these windows was especially noticeable this past winter when our current landlord (Blackstone) made the decision to supply almost no heat (at best minimal heat on the coldest days).
There have been duplicate "improvements" such as faulty intercoms for which we pay an arm and a leg forever for substandard equipment.
5
This was a very dumb move by the State Legislature, and the pandering politicians should be ashamed. Long-term, this puts the city's housing stock at extreme risk. There is no point to owning and maintaining rent regulated buildings if you can't make a return.
77
@Osito
Pretty much guarantees that nobody will ever want to build regulated housing again.
14
The Bronx burned when 1.5 million fewer people lived in NYC.
11
This begs a GIGANTIC ethical question. One that economists and business schools are terified to even talk about. And that is: how much profit per dollar of revenue is acceptable? You will not be able to do any research on many if not most smaller LLC's or how ever they are structured. What is an acceptable profit margin? Can I still own a rental building and after expenses make money, and how much money? What amount of money could I make that is acceptable? The Bible does talk about greed, and it is one of the 7 deadly sins. For good reason also.
16
Here is the problem with the rent regulation debate: Landlords dissemble.
As it happens, one can identify Ms. Kirnon's holdings based on HPD multiple dwelling registrations.
She owns three properties, two in Manhattan that are too small to be subject to rent stabilization (less than 6 residential units) and one - 4337 Gunther Ave - in the Bronx, which has 25 residential units, all rent stabilized as reported by her to the department of finance in 2018.
Because this property has more than 10 residential units it is required to file a real property income and expense (RPIE) statement, which the DOF uses to determine the property's taxes.
In 2018, she reported an estimated income of $267,750, expenses of $161,319 and paid property taxes of $44,300 leaving her with over $60,000/year in profits. She has a $300,000 mortgage on the property (according to ACRIS, the city's register of deeds), on which she is paying somewhere between $1500 and $2500/mo (depending on the terms of the lease).
I know lots of New Yorkers who would be happy to have this level of passive income. It sounds like she can forego one years worth of profits to cover her new roof.
Cry me a river.
127
@Ben
Your "budget" doesn't include energy costs (for heat, hot water and electricity for common spaces), custodial services, insurance, taxes and fees etc. Sounds like a breakeven proposition at best not your "cry me river" income of $60,000. A responsible landlord would also maintain a reserve to cover emergency repairs like replacing a boiler or other major piece of equipment.
I can think of any number of businesses I'd rather be in than owning a rent controlled building in the Bronx.
101
@ben By your math, the remaining 30K in profit after she pays her mortgage, as you call it passive income, is what she earns for maintaining a building with 25 units. Trust me, having managed buildings I can tell you that the work of managing and maintaining rent regulated apartments in a very old building is anything but passive. That’s a tiny margin for a lot of work, especially should something go wrong. A re-roof would eat that up, a boiler would cost double, pointing the building would also cost double. Buildings are constantly in a state of decay and in addition to regular costly maintenance, a major expense comes up every few years. Taxes go up, water and gas prices go up, insurance goes up as the cost of labor to repair or replace assets increases. So you’re asking her to provide housing to 25 families for 30K a year, losing money some years, with decreasing margins?
99
@Ben
According to your numbers, her income is only $30,000/ year. Sure, to some people that's a lot. But to most, it's not. You're underestimating the importance of her work - Providing livable housing.
If I was her, I'd be crying.
71
The new laws will do little if anything to alleviate the housing shortage in NYC. They do nothing to create new housing stock. And those who make more than $200k/year for two consecutive years get to keep their bargains. That is a travesty. Tenants will soon begin to complain about buildings falling into disrepair, but with no avenue to fund adequate repairs and improvements, they won't happen. The most angry group here should be young people looking for an affordable place to live. The entrenched 'tenant rights' groups totally ignored the needs of those New Yorkers, who will be further and further proced out, as well as future generations. But, hey, at least they get theirs.
59
@Peter... the high income deregulation never deregulated it for the high earners living in the apartment. Their apartment would stay regulated as long as they were in it. What it did was deregulate it for the next tenants, which is arguably a bad thing because then the incoming (possibly low to moderate income residents) would be in a deregulated apartment.
5
@Biz Griz
False. The rent had to be over the deregulated limit.
1
Landlords who want higher profit margins will invest elsewhere. There's a whole country out there where your profits aren't capped by the state plus second-growth forest and farmland on the edges of the New York metro area waiting for sprawl.
This form of growth isn't good for global warming, but the business models of Apple and Microsoft - building corporate fortresses 50 miles outside of cities, forcing everyone to consume more and more energy - seems to be preferred by progressives like AOC. Urban redevelopment like the Amazon model increases rent and is bad.
Suburban sprawl and the accompanying energy consumption was the product of zoning, government-run Urban redevelopment, and rent controls. History has a funny way of repeating itself when you don't pay attention. The Poconos are ripe for new subdivisions full of NYC commuters.
12
@J lawrence You're claiming that up is down. The formula for sprawl wasn't created by zoning. It was enabled by a LACK of zoning that would have protected suburban green space and ensure efficiency in housing size and transit-centered development. Compare US sprawl to the suburbs immediately surrounding Brussels.
5
Yes, the RE market has swung to the landlords in the last twenty yrs. squeezing out affordable rents.
However, as little as 30 yrs. ago the opposite was true, NYC becoming a RE wasteland due to regulations.
Don't let it happen again. Give tenants safeguards but don't turn NYC into another RE wasteland like in the 1970s-1980s.
32
@Paul
Hopefully next time it swings as far to the left and rent control is removed completely like it was in Boston.
1
What happened to presenting both sides! The Article spends 6-7 paragraphs letting Rent Control advocates promote the new law and demonize landlords, and then gives a landlord 2-3 sentences to say the new law will hurt, the next few paragraphs go back to the advocates to boo hoo the landlords concerns,
It’s not really a surprise that the NYT has no issue with what in reality is the taking of private property and redistributing it. As the headquarters they sit in on 8th Avenue was land taken from several small property owners for their benefit,
92
@R.L
Because even with all the new laws, landlords will still be making money hand over fist.
Nobody forced you or any landlord to buy rent regulated buildings. Landlords received enormous tax incentives for purchasing said buildings. And now they want market rate?
Thats crony capitalism if I ever saw it.
15
@Marc
False. Rent stabilized buildings get no special tax treatment.
2
How about broad sweeping regulations on luxury residential buildings? Developers haven't been constructing buildings for regular New Yorkers for decades. Gone are the days of Mitchell-Lama, where there were incentives for creating housing stock for middle class families. As usual, it's the little guy who gets hurt: Developers are allowed to construct luxury towers of exclusion for LLCs, enriching the .01% to ever ungodly degrees.
Meanwhile, landlords like Ms. Stephanie Kirnon, who live on a slim margin, struggle to provide decent housing to the 99%. Why is it that luxury developers get all the tax breaks, while the average landlord in the Bronx, who provides much needed housing, struggles to provide basic infrastructure? This is completely back asswards.
160
@Regina Valdez: Totally agree with this opinion. The people who make NYC work are not the uber rich, but the everyday folks working and buying here. Why can't housing policy favor those who contribute to the tax base?
20
@Regina Valdez
Real Estate Property Tax Reform is a necessity. A coop valued at 5MM pays in tax than a similarly valued multi family dwelling. Up to a third of revenue of a multi family
building revenue can go to Real Estate Tax. The tenants
indirectly assume that burden. Give tenant vouchers based on income and their apartments buildings real estate tax or make all valuations and taxes paid equal.
3
This is an article about a dispute over the long-term economic impact of rent regulation. The authors, however, made the curious choice to omit any comments from economists (or at least anyone identified as a professional economist). Why? Isn’t that like writing an article about a dispute over vaccination rules and failing to interview any public health professionals?
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Fourteen-hundred dollars a month for a three-bedroom apartment.
I have to say, it's a steal. Three bedrooms.
Three.
Unless the landlord is Kushner or someone like that, I feel sorry for the landlord.
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Depends on location and conditions of the 3 bedroom apartment.
16
In any borough, anywhere in any borough, and assuming the ceilings are holding up (which they must be, since a decrepit condition would surely have been pointed out), a three-bedroom for less than fifteen-hundred dollars a month is very cheap indeed.
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The article says that the women lives in on The grand concourse. The flats there are huge. Her apartment was probably a one bedroom apartment decided into three (something that has been happening in NYC for the last 30 years).
Second point, the women lives in a section of nyc that has been forgotten about and receives the most minimal amount of services and is crime ridden.
As the article states, the women is a cleaner and works two jobs. Please stop the inference that poor people who do menial jobs that support the city are undeserving of basic housing and that they in somehow are takers that benefit from other people’s hard work.
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I am surprised that none of the articles the Times has published on the new rent law have mentioned the role that property taxes play in the ongoing landlord-tenant drama. For the City plays a part in this too. At our building in Brooklyn, for example, property taxes have more than doubled in the past fifteen years—they’ve jumped from $40,000 to $50,000 in just the past 5 years—and their inexorable rise (since the increases show no sign of slowing) will eventually cripple some landlords, as they're caught between City’s own unabated appetite for revenues and attempts by the State to cap or moderate rents.
To me, this seems like a critical facet of the problem that we are currently ignoring.
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@Harveyman Absolutely, and it speaks to the waste, fraud, and abuse that drives the problem: the crisis of corruption, cartels, and collusion in city infrastructure spending among other concerns.
15
Sometimes I wonder whether the people who push these kind of regulations have even a basic understanding of economics or business.
Isn't it obvious? If the landlords cannot afford to make repairs and improvements, then they won't make repairs and improvements. If owning a rental property is not profitable, then people won't want to own them. Or build them. How can people fail to understand this?
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@Marty Not to worry, it won’t happen tomorrow: ‘“It’s not like we’re going to wake up the next morning and the Bronx will be burning again… We’ll wait and see.”… the comparison with Bronx’s past is unfair, given that there were other factors at play then…’ Which, of course, had nothing to do with basic economics.
20
@Marty
While your comment seems to be a reasonable one, it does not align with existing landlord practices in NYC.
See NY Times article from May 30, 2019, entitled, “$95,000 to Fix Up a Studio Apartment, but It Was All a Scam, Officials Say”
“... Employees of Newcastle Realty Services, a Manhattan real estate investment firm, made up prices for renovations, lied about specific repairs, and forged documents, abusing a provision in state law that enables landlords to raise rents when they renovate rent-regulated apartments, the suit said.
Along the way, contractors paid more than $1.2 million in kickbacks to two employees at the firm, including cash and checks to cover splashy expenses like country club dues and a loan on a Porsche.
The goal was to systematically push the rents of regulated apartments in Manhattan and Brooklyn past the threshold that deregulates the apartments, thrusting them into the more lucrative free market. ...”
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@DJ- cherry pick the scam of one apt renovation and there you have your reason for justifying this insane group of laws.
The bottom line is that this won't be the salvation for renters because nothing that they could afford will be built and having overseen 100's of apt renovations in NYC without fraud, the renovations will now stop. Sure they can stay in their small (or large for small rent) forever and tell me how that is fair. The laws were already onerous and loaded with tenant benefits but this will kill small buildings totally and larger rent regulated ones.
Small landlords will be destroyed but hey in your mind that is the price of admission,right?
29