Early last month, NYC’s Rent Guidelines Board (RGB) voted to approve the largest rent increase on regulated apartments since 2013. The vote was cast with the narrowest margin possible, and the public reaction to the vote has been a vociferous mix of disappointment and resentment.
As always, Jack Jaffa & Associates is here to bring you the inside scoop on anything and everything NYC landlord-related in the news. Read on for all you need to know about the recent rent hike.
How high was the increase?
The board voted to permit rent increases on stabilized apartments by 1.5% for all one-year leases and 2.5% for all two-year leases. The increases will go into effect on October 1st for all of the city’s rent-stabilized tenants who choose to renew their lease.
This vote marks the second year in a row that the RGB has approved rent increases following the historic freezes of 2015 and 2016.
The city’s landlords have seen some of the lowest rent increases under the Bill de Blasio administration. In 2014, during his first year as mayor, the RGB announced the lowest rent increase ever: 1% for one-year leases and 2.75% for two-year leases. The next year, the mayor supported the first rent freeze to go into effect since the board was founded in 1969. The freeze was voted into effect again in 2016, and last year, the board ended the freeze with rent increases of 1.25% and 2%.
Who voted for this decision?
The RGB is comprised of nine members: five members from the public, two tenant representatives, and two owner/landlord representatives, all of whom are appointed by the mayor. In this important vote, four public members and one landlord member of the RGB voted in favor of the increase, sealing the vote’s outcome by the narrowest margin possible.
Why were landlords disappointed by this vote?
Although gratified for any rent hike, NYC landlords and property owners found the increase to be woefully inadequate.
The Rent Stabilization Association, representing 25,000 owners of rent-stabilized apartments, called the rent hike “pathetically insufficient.”
This reaction is largely due to the costs of maintaining rent-stabilized buildings which have been rising steadily since de Blasio was voted into office. In the last four years, owners’ costs rose by more than 11% and their taxes saw a 25% increase. This year alone, operating costs for rent-stabilized buildings rose by 4.5%.
The Rent Stabilization Association was calling for steeper increases to the tune of 4.5% and 7.25%.
It isn’t easy to turn the same profit when your costs are rising but your revenue is not.
What was the reaction of tenant groups?
The many groups representing tenants were naturally disappointed to see a rent increase for the second year in a row, no matter how modest.
One group, the Rent Justice Coalition, claimed NYC’s landlords had been “overcompensated for decades” while as much as 30% of rent-stabilized tenants spent more than half of their monthly paycheck on paying the rent.
There were a total of 966,000 rent-stabilized apartments in 2017, comprising 44% of all rental units in New York City. With a vacancy rate of these dwellings hovering at 3.63%, it’s difficult for tenants to find apartments. And with many rent-stabilized apartments renting at more than $2,000 a month, even a slight increase is significant for cash-strapped tenants.
In short, neither side is thrilled with last month’s vote to increase the rent on regulated apartments. Hopefully, though, this is the beginning of an upward trend on rent increases for NYC property owners like you.