Rent regulations are up for grabs, but experts say not to panic.
At least not yet.
Two days after the laws protecting rent-controlled and rent-stabilised apartments expired, the New York State Legislature is still trying to figure out what to do.
If nothing happens and the laws just die,
Mayor Bill de Blasio said on Sunday, as many as two million people would be forced onto the streets due to landlords jacking rents back up to market.
But is this worst-case scenario even likely to happen? What do the negotiations mean for the average NYC renter?
While the rent regulations have officially expired, they are still very much in discussion, says Tom Waters, housing policy analyst from the Community Service Society of New York.
Lawmakers “will keep negotiating and eventually pass something, for sure,” Waters tells Business Insider. “I don’t know how long that will take. But the laws have expired for brief periods in the past.”
In 1997, several days passed before a six-year agreement was reached. In 2003, the laws had to be extended four times before officials could finalise a long-term plan. And most recently, in 2011, the laws that recently expired took four days to draw up and ship out.
Waters is confident the legislature’s failure to agree won’t spell disaster for the million-plus residents in stabilised apartments and the 26,000 people in rent-controlled units. He described the chance of lawmakers failing to agree at all as “extremely remote.”
“The bigger risk is that the laws will be weakened in some way that affects you,” he says.
For example, landlords hate vacancies. They don’t make money. So one solution that’s on the table is a process called “vacancy deregulation.” This essentially lets owners spruce up their rent-controlled or stabilised units and charge market rates for them.
Rent control and stabilisation are two separate ways the city has tried to keep housing costs down. Rent control came first and offers tenants a maximum base rent (MBR) which changes every two years. Landlords in those buildings can raise monthly rents by 7.5% a year until they hit the MBR. Waters says these terms are part of larger overall negotiations taking place in Albany.
Stabilisation, on the other hand, is a bit more complex.
For rent-stabilised apartments, landlords can’t go above a monthly rent ceiling of $US2,500 if they want to keep a unit stabilised. In most cases, they have no incentive to do so, considering those rents can only increase by 1% for one-year leases and by 2.75% for two-year leases. Generally, landlords prefer more money to less money.
The potential weakening of rent regulations is a problem for everyone.
“It undermines the system,” Waters says. “Eventually, rent-stabilised tenants could end up like rent-controlled tenants, where there’s only a low number of them left.”
Down the road, this dwindling of rent-controlled units could cripple the city’s housing market if it gives landlords too much power. Without any regulation to keep the costs of certain apartments low, the market would be free to outpace inflation at will.
“That’s how we’ve gotten to this situation where rent regulated tenants are paying such high rents,” Waters said.
According to recent census data, the median rent for rent controlled apartments is $US1,020 a month paid by someone making $US29,000 a year. For stabilised units, the median rent is $US1,300 a month paid by someone making $US40,000 a year.
If the laws continue to weaken, traditionally expensive neighbourhoods like the Upper West Side won’t see too much of a hit. But in places like the Central Bronx, where rents are purposefully regulated to accommodate low-income families, deregulation threatens people’s livelihoods.
Here’s the important thing: nothing changes for right now. Landlords should continue acting as if the expiration date didn’t exist. But if residents run into trouble with lease renewals, eviction notices, or any other surprise issues, however, Waters says that Albany wants to hear from them.
The Alliance for Tenant Power put out a fact sheet giving further instruction. Tenants can also call the public advocates’ hotline, Waters says. “Call the governor and demand that he find a resolution and get the law strengthened.”