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So, here we go again. Every year New York City landlords and tenants are pitted against each other to determine who gets to feel the pain of the economy.You can read more about who the NYC Rental guidelines board is here. Essentially they over see the nearly one million rental apartments that fall under NYC’s rent stabilization laws.

As a born and bred NYC resident I have seen and experienced first hand the benefits and pains on both side of the fence. Here is a little editorial before we get to the nitty-gritty proposal.

My 2 Cents

Why have rent control anyway? Why not let a free-market determine the value of the apartments? I think that if people aren’t renting, then landlords will lower rent. Essentially the rent control rules tie the hands of landlords from getting fair market value for their product - in this case, apartments. I know that there are special cases, and people who need the rent stabilization rules to live in the city - but is this just a sign of a greater problem? Does stabilizing rents really help anyone - or is it simply another bubble that can potentially burst if a long term solution is not found.

Should rent stabilization be based on historical values, i.e. year over year - or present market value? To me, rent stabilization does not allow the economy to work. It limits the price of a commodity, and therefore limits advancing the product and improvements to the product. Why should a landlord fix things in an apartment that they can’t get market value for - the whole thing really doesn’t make sense to me.

I am not on the side of landlords or tenants. I rent, I have rent increases every year, and I have owned 2 multi-family homes in NYC. Since they were less than 4-family I did not have to stick to rent control rules, so I truly just want to understand - why bother with all of this?

How about this idea? Warning it may be half-baked: What if  the rent stabilization rules were tied to income? For example, If the household makes above $200K a year, you get a 5% increase, if you make above 100K a year you get a 3% increase, if you make less than $100K a year, you get 1% increase, less than $50k a year, no increase. The current rules are based on the year the building was built, number of units, and whether the rent was then $2K since 1993 (whatever). It just prevents the free market from working and keeps people stagnant in apartments just because they are cheap.
(/end editorial)
What makes an apartment rent stabilized? Here you go:

How to tell if a building is rent stabilized

In general, stabilized buildings:

• Contain 6 or more units;
• Were built before 1974;
• Are not co-ops or condos;

However, not all apartments in these buildings are necessarily rent stabilized. For an apartment to be stabilized it must:

• Have had a rent of less than $2,000, if one initially moved into the apartment in 1993 or later.

There are many exceptions to these rules. read more here

The Stabilization board consists of nine members, as it says on their site:

“…all of whom are appointed by the Mayor. Two members are appointed to represent tenant interests. One of these serves a two-year term, and the other a three-year term. Two members are appointed to represent owner interests. Like the tenant members, one serves a two-year term, and the other a three-year term. Five members (including the chairperson) are appointed to represent the general public. One of these serves a two-year term, another a three-year term and two serve four-year terms. The chairperson serves at the pleasure of the Mayor.”

Source: http://www.housingnyc.com/html/about/rgbmembers.html

Last night they determined the PROPOSED increases for this year:

They are proposing an increase of  2 percent to 4.5 percent for one-year leases and 4 percent to 7.5 percent for two-year leases. Last year, the board approved its highest set of rent increases in 20 years. Those raises were 4.5 percent on one-year leases and 8.5 percent on two-year leases.

The problem, of course is that the landlords are asking for MORE this year and tenants want a freeze since last year’s increases were so high. Furthermore, with the current economic conditions many tenants are feeling the pinch or are fearing layoffs. The landlords on the other hand are feeling the pinch of increased property taxes and expenses in building management.

Clearly, this is a tough situation.

The board will hold two more public hearings, on June 15 and June 17; it is to take a final vote at a meeting June 23. The public needs to get involved and voice their opinions to this board. Here is the link to see where to go and when: NYC Rent Guidelines Schedule.

The opinions expressed here are my own, and do not reflect my company or anyone else’s opinion.

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