Comptroller Lander Calls on the NYC Rent Guideline Board to Reconsider Proposed Rent Increases

 

Calls 9% hike (for two-year leases) far too high. Urges Board not to return to the days of Giuliani and Bloomberg’s unreasonably high increases.

 New York City Comptroller Brad Lander released a statement following the release of the Rent Guidelines Board’s Income and Affordability Report and ahead of the Rent Guidelines Board’s deliberations over annual rent adjustment.

“The NYC Rent Guidelines Board has a critical task: establishing fair rent increases for rent stabilized housing that balance cost increases facing building owners with affordability issues facing tenants, all in NYC’s tight housing market. That is always challenging, but especially during times of high inflation when owners are more likely to experience rising costs, while tenants—many of whom will not see wage increases—are squeezed by price increases they cannot possibly afford.

“Unfortunately, the Rent Guideline Board staff proposal missed the mark. Potential rent increases as high as nine percent on two-year leases are far beyond what many rent-stabilized tenants can possibly afford, while the city’s housing courts are slammed with 200,000 pending eviction cases and market-rate rents in many neighborhoods are spiking to their highest levels ever.

“Protecting tenants from unaffordable rent increases, in a tight housing market, at a time of high inflation is a large part of why our City adopted rent stabilization and established the Rent Guidelines Board in the first place.

“While inflation is leading to rising costs for many property owners, the Board’s methodology for assessing cost increases recommended a 2.7 percent hike for one-year leases and 4.3 percent for two-year deals. That should have been the ceiling for proposed ranges for the board’s consideration.

“Significant rent increases are often justified by referencing the pain of rising costs to mom-and-pop owners. However, it is large landlords (those with twenty-one or more buildings in their portfolio) that own more than half of the City’s rent stabilized buildings. These larger owners are generally much better capitalized and have far more ability to weather cost increases. The Board’s methodology should be updated to analyze the impact that real estate ownership and capitalization have on prices and affordability.

“Part of the challenge of the rent stabilization process is balancing staff research with what is ultimately a decision made by the Board, all of whom the Mayor appoints and therefore inevitably reflects politics. Members of the Board are expected to be a balance between landlord interests, tenant representatives, and members of the public, but the Mayor’s appointment of a public member to the Board who has expressed skepticism about the entire system of rent regulation is deeply troubling in this context.

“While a modest rent increase may be merited this year, Mayor Adams’ appointed Board must not return to the days of Giuliani and Bloomberg’s unreasonably high increases. I urge the members to strike a far better balance between the needs of tenants and owners and revise its methodology to reflect the housing market we have today.”

Background:

The Rent Guidelines Board’s assessment comes from its staff’s 2022 Income and Affordability Report, but misses key demographic data about those who would be affected by the Board’s decision. 76% of rent stabilized tenants identify as non-white, nearly half are immigrant households, more likely to be female-headed, and make an average of one third less in wage and salaries than tenants in non-regulated housing.

Moreover, the Income and Affordability report paints a rosier picture of declining unemployment and increased wages. The Comptroller’s Office analysis shows that the economic recovery from the pandemic has not been evenly experienced across race or gender. The unemployment rate for Black residents of NYC increased to 11.6% in February, double the citywide average and nearly four times the national average.

The Income and Affordability study highlighted a temporary 3.8% decline in average rents early in the pandemic in market rate units within buildings that also include rent-stabilized apartments. The Comptroller Office’s April 2022 Monthly Economic and Fiscal newsletter highlights that the current median asking rent is $2,975, a 10% increase since October and November 2021. Every indication shows that rents generally have skyrocketed since the data compiled in the RGB reports. Landlords hit hardest by declining market rate rents in 2020 already benefited from most increases in 2021 and 2022. In addition, the report neglected to thoroughly analyze the likelihood of a surge of evictions as the pandemic eviction moratorium has expired.