Real Estate Weekly
Image default
Debt & Equity Featured

For the first time in 50 years, a rent freeze is a possibility

For the first time in nearly 50 years, the city could freeze rents for over one million rent stabilized apartments when it meets next month.

The Rent Guidelines Board is contemplating the freeze as tenant advocates point to a minimal increase in landlord operating costs.

During a meeting held at CUNY’s Proshanky Auditorium last week, the nine-member board approved a range for one-year leases and two-year leases that essentially struck down a proposal for a rent rollback of as much as -4 percent.

However, a rent freeze remains on the table, as the panel settled on a middle ground between the competing proposals.

The board approved a range of zero to two percent for one-year leases and 0.5 percent to 3.5 percent for two-year leases. The figures essentially fall between the proposals of both landlord and tenant advocates.

The latest round of RGB talks took place last week.
The latest round of RGB talks took place last week.

Owner’s representative Sara Williams Willard and RGB member Scott Walsh called for a 4.2 percent increase for one-year leases and a 6.7 percent increase for two-year leases.

The duo justified their proposal by casting doubts on the accuracy of the Price Index of Operating Costs, which pegged the increase of landlord costs at 0.5 percent. That represents a 13-year low, and is mostly attributed to a drop in fuel prices. “Fuel went down 21 percent, but that is fuel prices. Every other category went up. I’m uncomfortable hanging my hat on the PIOC as reflective of owner expenses,” Willard said.

“When you don’t have revenue grow in lock step with expenses, the numbers go down into the negatives.”

Tenant advocates, meanwhile, argue that the cost of rent has outpaced wage increases, making it necessary to stall rates so that renters can catch up.

“The tenant burden is the highest ever recorded. We want owners to be insured that they have costs covered but according to the Projected Increase of Owner’s Costs, fuel prices went down dramatically and this is important to think about,” said board chair Rachel Godsil, who voted against the landlord proposal.

“We want what is a fair proposal to cover owner costs, but the increase proposal from the owner members is in no way consistent with any of the data.”

Harvey Epstein, who represented the tenant side, called for a range of -4 percent to zero percent for one-year leases and -2 percent to zero percent for two-year leases. “New York is growing… The question is what will it look like in 10 years? Who is this New York going to be for?” Epstein said.

The board eventually voted for Godsil’s proposal, which had a ceiling of 3.5 percent for two year leases. She justified the figures by citing an expected uptick in costs for landlords and the uncertainty of the future.

JonathanMiller
JONATHAN MILLER

Jonathan Miller, the president and CEO of real estate appraisal and consulting firm Miller Samuel, expressed doubts that there would be a rent freeze, however, he said that the momentum is pointing towards a series of low rent increases, similar to the situation during the ‘70s and the ‘80s. “The worry is that this is a long term trend,” he said.

Miller, who said that “both sides have legitimate concerns,” warned that if rent doesn’t keep pace with expenses, services like maintenance may suffer. “Eliminating rent growth does not eliminate the problem for both sides,” he said.

If a rent freeze pushes through, it would be the first since 1969, the year the RGB start deciding on rate increases. Every year since then, rent has gone up, reaching one of its highest points in 2008, when the board approved hikes of 4.5 percent for one-year leases and 8.5 percent for two-year leases.

The board is expected to vote on rent rates in June. Last year, the group voted for a one percent increase for one-year leases and a 2.75 percent increase for two-year leases. The rate hikes represent the lowest in half a century.

Angry tenants rally for a rent freeze.
Angry tenants rally for a rent freeze.

During the run-up to the vote, Mayor Bill de Blasio advocated for a rent freeze. This year, he expanded his campaign beyond rental rates.

On Tuesday morning, he called for more protections for rent-stabilized apartments. His proposal involved measures such as eliminating vacancy decontrol and vacancy bonuses and making improvement surcharges temporary.

“This is a vital priority for New York City. Our working families and our neighborhoods are depending on stronger rent laws. Rent is the number one expense for New Yorkers. Unless we change the status quo, tens of thousands of hardworking families will be pushed out of their homes. This has to be a city for everyone. It cannot just be a city of luxury apartments out of everyday New Yorkers’ reach,” de Blasio said.

(Visited 1 times, 1 visits today)

Related posts

Howard Hughes Corp. tops out historic Tin Building

REW

Brookfield unveils four-acre South Bronx development

REW

Hudson affiliate refinances Williamsburg rental

REW