axxis real estate llc/
May 15, 2019
New York has implemented both state and city-wide rental regulations for decades, in an effort to create affordable housing for low-income tenants. The laws generally apply to rental buildings that have six or more units and were built prior to January 1, 1974, as well as some additional properties that are in regulatory agreements with the city or state under the J-51 and 421A tax abatement programs. Currently, rent-regulated properties make up 45% of the city’s rental housing stock (approximately 988,000 in 2017). The current laws surrounding rental regulations are set to expire on June 15, 2019, leaving many State legislators pushing for big changes to the current statutes. So, what does that mean for the housing market?
Nine bills, put forth by the Democratic Party, are getting a lot of attention. These bills aim to protect tenants by addressing the loopholes in the current laws that have, according to some parties, drastically lowered the number of rent-stabilized apartments available in the New York City area. The proposals being discussed are as follows:
- Broaden the Emergency Tenant Protection Act (S5040/A7046): This bill proposes that the implementation of rent regulation should be available all across the state of New York. It is currently only in effect in New York City and in Rockland, Westchester, and Nassau Counties. These state wide regulations could be put into effect when the rental vacancy rate in a given area drops below 5%.
- Ban Evictions without Proven Reasonable Cause(S2892/A5030): This would give more definitionto what is deemed acceptable reasons to evict a tenant, making it harder for landlords to arbitrarily move through the process without clear, reasonable cause.
- End Vacancy Decontrol (S2591/A1198): This bill is set to remove an existing provision that allows landlords to permanently deregulate an apartment when the rent rises past $2,774.76 (effective Jan 1, 2019) and a tenant moves out.
- Do Away with the Vacancy Bonus (S185/A2351): This would remove an existing provision that allows landlords to raise rents 20% in rent stabilized apartments when a new tenant moves in.
- Make Preferential Rents Permanent Until Vacancy (S2845A/A4349): This bill would stop landlords from having the ability to raise preferential rental rates at lease renewals and only allow them to do so when signing a lease with a new tenant.
- Limit Rent Hikes (S3693/A6322) and (S3770/A6465): Both the 6th and 7th bills are aimed to limit what landlords can raise existing rents for. These bills would eliminate their ability to raise rents to pay for major capital improvements and/or individual apartment improvements that may or may not actually be necessary (therefore eliminating the possibility that landlords are making the improvements as simply a means of raising the rental price).
- Increase Time for Overcharge Complaints (S4169/A5251): This bill would remove the 4-year cap that currently exists for tenants to file formal complaints against their landlords disputing overcharges. It would also give the Division of Housing and Community Renewal the authority to fully review any and all rental history during investigations.
- Rent Stabilization and Rent Control Parity and Prohibition of Fuel Pass Through Charges (S299A/A167): This would allow the Rent Guidelines Boards to cap the amount rent could be increased in rent-controlled apartments on par with adjustments for 1-year leases in rent stabilized apartments. Additionally, it would prohibit fuel pass through charges in rent-controlled apartments.
Both supporters and critics of these proposed changes have been plenty vocal. Supporters argue these changes will help protect tenants and drop the homelessness rate in the area considerably. Critics, on the other hand, argue that these changes will only serve to make the existing system even less effective.
- Positive Impact: Advocates see these proposals as a way to eliminate the technicalities that have allowed landlords to push out tenants as a means to raise rents and make a higher profit. It would also mean extending these rental regulations state-wide, resulting in other areas (where the cost of living is on the rise) also benefitting from the changes.
- Negative Impact: Doubters are much less enthusiastic about the good that could come from these changes. In fact, they argue that implementing the new regulations will inadvertently benefit upper-income households, create less-than-ideal living situations for tenants (with the right to raise rents to make improvements taken away) and will effectively deteriorate the housing stock and lead to lower property values and a loss of property and transfer tax revenue.
Only time will tell how drastically these changes will affect the New York housing market, but change is imminent one way or the other.
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