A new survey of CHIP members – property owners who own or manage one-third of all rent stabilized units in New York City (400,000) – has revealed the toll the state’s new rent laws are taking on tenants and the city’s affordable housing stock.
More than 90 percent of 170 property owners surveyed reported they would curtail non-essential improvements and proactive maintenance at their buildings.
A majority of owners said the rent laws have forced them to shrink their capital spending budget by at least $500,000 for 2019. Additionally, three-quarters of respondents said they would have to layoff at least one employee as part of the cutbacks.
In addition, the survey found that nearly 60 percent of respondents said it now makes more economic sense to keep a significant portion of units vacant rather than invest large amounts of capital into necessary repairs, because of the end of the vacancy bonus.
The results comport with a separate survey conducted by New York Multifamily, which found that 65 percent of respondents believe keeping some vacant units empty is the more financially feasible option. “Albany’s new rent laws aren’t just hurting tenants—they’re threatening the availability of affordable homes across the city,” said Jay Martin, Executive Director of CHIP.
“All of our members will provide safe and clean housing as required under the law, but most tenants want more. They want more than the bare minimum of finishes, appliances, and renovations, but because of the new rent laws, our members cannot afford to meet those demands. That’s going to lead to lower quality housing, more vacancy and a worsening housing crisis.”
The survey revealed that the elimination of luxury deregulation and vacancy bonus will be the most detrimental to property owners’ ability to maintain and improve their buildings.
When new tenants move into an apartment, a top-to-bottom refurbishment is typically expected, especially with the average rent stabilized tenant spending 13 years in their apartments.
Without the opportunity to raise sufficient revenue to cover such a significant revamp for new renters, NYC residents should expect a unit in a similar condition that the past renter left it in.
The findings are consistent with an April survey of CHIP members which found that nearly 70 percent owners would cut back on improvements if only the IAI program was restricted.
The vast majority of buildings owned and maintained by CHIP members are more than 50 years old, with roughly 20 percent of buildings at least a century old.
One-half of those surveyed said they will look to reposition or sell their real estate portfolios because of the inability to run a business under the new rent regulation regime.
Only four percent of CHIP members said the new rent laws will not impact their ability to make a profit.
CHIP is co-leading a federal lawsuit to challenge New York’s failed rent regulation policies, and forge a conversation about a better way to provide safe, clean affordable housing to New Yorkers.