Less than a day after Democratic leaders of the State Senate and the Assembly agreed to sweeping changes to rent regulation laws, the real estate industry seems helpless. Here’s a breakdown of the legislation, according to the NYTimes:
- No vacancy decontrol: When the legal rent for a rent-stabilized apartment reaches $2,774 per month, the unit will no longer become free market if there is a vacancy.
- No vacancy bonus: Landlords for rent-stabilized apartments will no longer be able to hike rents by as much as 20 percent after tenants moved out.
- Change in MCI and IAI’s: Rent hikes based on building improvements will be reduced. Landlords were previously able to increase rents in regulated apartments for MCI’s 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 will now be capped at 2 percent per year and the definition of ‘improvements’ has been narrowed. Rent hikes were also permitted for IAI’s if landlords renovated or improved individual apartments – there will now be a cap on how much landlords can spend.
- Redefining “preferential” rents: Landlords of rent-stabilized apartments can no longer raise the rent to the legally mandated limit when a lease is renewed.
- No high-income deregulation: If a tenant in a rent-stabilized unit earned over $200,000 a year in two consecutive years, the landlord will no longer be permitted to deregulate the unit.
- “Owner-use” loophole being curtailed: 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.
Industry fails to push back… Prominent NYC real estate developers including Douglas Durst, Richard LeFrak, and Bill Rudin spoke with Governor Cuomo who told them “to call their legislators if they want to do something about it.”
Messaging must be better. We are the solution, not the problem:
- Units and buildings will fall into disrepair.
- The industry must re-commit to working to increase the affordable housing stock in the city.
- Real Estate community is in favor of tightening certain loopholes and punishing bad actors – political moderation leads to less radicalization. The Real Estate lobby must do better!
REBNY and Rent Stabilization Association (RSA) have some questions to answer: They clearly did not fully appreciate the political zeitgeist, and failed to effectively hedge with donations to democratic campaigns.
- By the numbers: From 2010 until last month, RSA (prominent landlord group) donated more than $800,000 to the campaign committee for State Senate Republicans. In the same time period, the group spent just $25,000 on State Senate Democrats.
- Blood Bath: REBNY spent more than $1 million backing Republicans running for the State Senate. All the candidates they supported lost.