This crisis has a simple cause: supply and demand. There are just not enough homes to provide affordable rent for all the existing residents of New York, let alone those who wish to move here.
The obvious solution to ensuring affordable rent for all is to create enough housing to meet demand. Instead, lawmakers have tried to legislate the problem away, believing onerous restrictions can change the market. Anyone who has tried to find an apartment knows that this approach hasn’t worked.
Lawmakers promised the most recent changes to New York’s rent laws, passed by Albany in 2019, would usher in affordable rent for all. But they didn’t generate a single new unit. All they did was make it financially impossible to make the improvements tenants need and deserve.
Meanwhile, outdated zoning rules continue to block or delay new affordable housing construction, driving prices up for renters and homeowners alike by preventing the creation of new affordable apartments.
We can fix this. Step one to facilitating affordable rent for all New Yorkers is building more affordable housing in every part of the city, so New Yorkers have better options and skyrocketing demand doesn’t drive up rents. That way we’ll have affordable homes for everyone – not just the lucky few who win a housing lottery.
But it takes time to build. So we need to subsidize people, not regulated units. Rent control is a subsidy for a unit of housing, not the occupant. In some cases it traps tenants in apartments that don’t fit their needs because they cannot afford to move. That is why we need a robust voucher system that is more user-friendly, so New Yorkers have more freedom to choose what neighborhoods and apartments best meet their unique needs.
The modern concept of rent control dates to between WWI and WWII, when the return of soldiers, coupled with a population boom, led to a lack of affordable housing. Fearing rent strikes and unrest, governments limited how much rent owners could charge.
The purpose at first was to protect tenants in privately-owned buildings from illegal rent increases while allowing building owners to realize a “reasonable profit.”
Eventually, backlash from rent controls led to more than 35 U.S. states implementing a ban on its use in cities, unless authorized by the state.
Subsequent changes in New York – particularly the 2019 Housing Stability and Tenant Protection Act (HSTPA) – leave property owners with no path to increase revenue at a rate to keep up with costs, upgrade buildings or do anything beyond the bare minimum maintenance.
Under the rent laws, any locality can declare an emergency if the vacancy rate is less than 5 percent and enact rent control. For more than 50 years, New York City has been in an emergency.
The Rent Guidelines Board (in NYC, Nassau, Rockland, and Westchester counties) sets annual allowable increases for rent-stabilized apartments.
The overall goals of rent control – creating affordable rent for all New Yorkers – haven’t been fully realized. New York’s affordable housing has grown worse, not better, and many of its neighborhoods are still not more racially or socio-economically diverse.
Rent regulated housing includes “rent controlled” and “rent stabilized” apartments.
Rent stabilized apartments are available on the private market and can be rented in the same way as a market rate unit but rent increases and lease renewals are regulated by the New York State and New York City government. The majority of rent stabilized apartments are in buildings with six or more apartments built before 1974.
A rent-controlled apartment must have had the tenant or their family living in that unit continuously since before July 1, 1971. When that apartment becomes vacant, it either becomes market rate or rent stabilized, depending on the size of the building.
According to the Rent Guidelines Board, roughly one million out of the more than two million rental units in New York are rent stabilized, and an additional 27,000 are rent controlled.
The NY Rent Guidelines Board (RGB) oversees rent adjustments for all apartments subject to the Rent Stabilization Law in New York. There are nine unelected members of the RGB, all of whom are appointed by the Mayor of New York City.
The RGB is supposed to base rent increases on a number of factors, such as increases to taxes, sewer and water rates, maintenance costs, and vacancy rates. In practice, members tend to vote in ways that align with the politics of whoever is in office. Under former Mayor de Blasio, the RGB frequently refused to allow even minor rent increases to keep pace with the cost of inflation and rising taxes.
Under the current rent laws, property owners cannot raise the rents on vacant apartments more than $83, no matter how much they spend on renovations.
Market rates for housing are driven by both supply and demand. Building owners are only able to charge what a prospective tenant is willing and able to pay. The more apartments there are on the market, the more building owners have to compete for tenants by lowering prices or improving the quality of their buildings.
Rent regulations effectively take nearly half of all apartments in New York off of that market. Meanwhile, for building owners – most of whom are small businesses – operating margins remain very thin. Costs continue to increase every year, everything from property taxes to major repairs.
So, for every apartment in a building regulated at a lower rent, the building owner needs to charge more for the other units just to break even – otherwise they’ll lose money and be forced to sell the building. That means that for the majority of renters, prices are being driven up by these rent regulations.
New housing construction actually drives rents down and makes neighborhoods more affordable. It’s all about supply and demand.
New York City’s population grew by 629,000 people in the last ten years. As more people from across the country and around the world move to the five boroughs, apartments get harder and harder to find. Whoever is willing to pay the most for an open apartment gets it.
By building more housing for people of all income levels, neighborhoods can grow without pushing out current residents. Even if some new buildings contain higher end rentals, the average rent in a neighborhood will go down as long as new supply can stay ahead of new demand.
The Community Housing Improvement Program (CHIP) and the Rent Stabilization Association filed a federal lawsuit in 2019 that challenges the constitutionality of New York’s rent control program.
The outcome of this legal challenges could have national implications when it comes to both protecting the rights of property owners and ensuring that housing policies are smart, sustainable, and bold enough to provide enough housing to facilitate the widespread availability of affordable rent for all tenants.
The mounting affordability crisis in New York and cities across the nation make it clear that rent control isn’t working to create the racially and socioeconomically diverse communities that residents want and need. In fact, it is preventing the growth necessary to provide renters with choices when it comes to safe, high-quality, and most of all, affordable units so they can live wherever they choose and not be constrained by price.
What New York City and urban centers nationwide need are fair and well-designed programs that are proven to encourage housing construction and upgrades to existing buildings so the goal of affordable rent for all can truly be realized.
