New York landlords get a lesson in Democracy
The knockout punch that the New York State Legislature just landed fighting landlords over spiraling rents ought to be attracting wider attention.
Just as with healthcare access or prescription drug prices, the cost of rent increases that mostly benefit big apartment owners is a challenge to the income-gap society that are at the heart of the national political debate. Every urban center in the country is having housing problems, and rents, like mortgages, are a subject at every kitchen table.
For once, the New York Legislature, whose Democrats overcame internecine divisions this session, has abolished rules that let building owners deregulate apartments, and closed loopholes that have permitted landlords to raise rents. And the changes for better tenant protection were made permanent, eliminating the recurring drama over these issues.
Housing as a Right
Because housing laws are so local, these actions are not being seen as important as, say, similar changes in healthcare. But the argument is exactly the same – housing as a right, and it’s the responsibility of government to step in to make costs fairer, and, in the end, it’s representative of the fight over whether to do something affirmative to lessen the gap between haves and have-nots.
Rent control in cities became popular after World War II when soldiers returned home and looked for apartments, prompting rents to increase and leading to a housing shortage. What followed were rules for rent control or rent stabilization that affected as many as 2 million apartments in New York alone at one time, though surveys now peg that number at about half, still a huge number.
Nearly two-thirds of renters nationwide say they can’t afford to buy a home, says Curbed.com, and saving for that down payment isn’t going to get easier anytime soon: Home prices are rising at twice the rate of wage growth. According to research from the advocacy group Home1, 11 million Americans (roughly the population of New York City and Chicago combined) spend more than half their paycheck on rent. Harvard researchers found that in 2016, nearly half of renters were cost-burdened (defined as spending 30% or more of their income on rent), compared with 20% in 1960.
The federal government is silent generally about such issues as being too local, but under Ben Carson, the Department of Housing and Urban Development has been active in limiting public housing options for those needing them, seeing them more as a welfare program than as part of an overall housing plan.
Anger with Corporations
Much of the television advertising to build public support featured single landlords, particularly women of an age, who are trying to make it from day to day managing a couple of apartments. In the aftermath of the vote, however, the explosion of public anger is from big, corporate real estate owners and developers, who are furious that Gov. Andrew M. Cuomo allowed the Legislature to run amok. Landlords see this set of changes as taking money out of their posh suit jackets, and already are threatening to skip needed repairs and avoid other, necessary apartment maintenance and development.
It is the same nationally.
What gave rise to the dispute was the expiration of current rent laws in the state. Of course, housing in New York has been expanding, but well below the rate of population growth. A decade ago, under Mayor Mike Bloomberg, there was an effort to incent developers to build on vacant lots, but affordable units were more a guidance than a requirement, leading to gentrification in several neighborhoods. Pressure has been highest for more affordable housing units on diminishing numbers of open, buildable lots in New York, clearly among the most expensive cities in the nation. That’s one reason that Mayor Bill de Blasio has campaigned for government-sponsored housing units and rules, in general, to force developers to include designated numbers of affordable housing units in larger development projects.
Attacking housing prices, as with attacking the cost of prescription drug prices, healthcare costs, college tuition and the like, is complicated. At stake is a balance for fair rents, fair increases for landlords, and the role of protections altogether.
Here’s a summary of what the changes actually will mean for tenants.
- Vacancy decontrol: Ends a rule enacted in the 1990s to allow apartments to revert to market-rate once the rent-stabilized rent reached a certain rate, currently $2,774 a month.
- Vacancy bonus: Landlords for rent-stabilized apartments have been able to hike rents by as much as 20 percent after tenants moved out. The new rules would prevent that.
- Rent hikes based on building improvements: Landlords have been able to increase rents in regulated apartments by up to 6 percent per year if they made improvements that “directly or indirectly” benefited all tenants, such as a new boiler. That increase would now be capped at 2 percent per year.
- Misuse of “preferential” rents: Landlords of rent-stabilized apartments can offer units to tenants for a price lower than the legal regulated rent. But they can no longer raise the rent to the legally mandated limit when a lease is renewed, a practice that was pushing tenants out.
- High-income deregulation: If a tenant in a rent-stabilized unit earned over $200,000 a year in two consecutive years, the landlord could deregulate the unit. That will no longer be allowed.
- The “owner-use” loophole: Landlords and their family members have been able to remove rent-stabilized tenants from multiple units to use them as residences, a rule sometimes abused by landlords as a way to ultimately raise rents. Now, landlords will only be able to claim “owner use” for one apartment for use as their primary residence.
In addition, security deposits will be limited to one month’s rent, landlords could no longer keep shared blacklists of trouble-maker tenants, tenants would be better protected during the eviction process, unlawful evictions, such as when a landlord illegally locks out or uses force to evict a tenant, would become a crime. Landlords also would be required to provide at least 30 days notice to tenants if they intend to increase the rent by more than 5% or are not going to renew the lease.
Anyone reading this list should mentally note the complexities involved. When we hear presidential candidates routinely say they support – or oppose – Medicare for all, for example, it does an injustice to devising proposals that deal with all the complexities involved.
The New York Times talked with several big developers, who were as surprised at their sudden loss of political sway in Albany as they were with the changes in the rent laws.
The real estate industry has donated millions of dollars in campaign contributions to Cuomo and other state politicians in recent decades. Republicans had dominated the State Senate for most of the last century and formed a close alliance with the New York City real estate industry, which donated heavily to Republican senators.
“I’m in shock. I think many of us in my industry are in shock,” James R. Wacht, president of the firm Lee & Associates and a board member of Real Estate Board of New York, the industry’s leading trade group, told The Times. “It’s a lot worse than we anticipated.”
Real estate industry groups said the bills would do serious damage to housing in the city by reducing incentives for landlords to renovate existing apartments and to build affordable new ones.
After the announcement, industry officials scrambled to figure out what had gone wrong, blaming a combination of strategic miscalculations, resurgent activism by the progressive left and a new mood of antipathy — in New York and nationally — toward landlords and the wealthy.
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