MANHATTAN — Will the city’s rent-stabilized tenants see a rent freeze for the second consecutive year?
While housing advocates have been pushing for a rent rollback and landlords have been urging a rent increase, many experts believe the Rent Guidelines Board is leaning toward a rent freeze again for its final vote Monday night at Cooper Union.
At a hearing last month, when the nine-member board issued its preliminary vote, members said they planned to consider rent raises on one-year leases ranging between 0 and 2 percent. They also planned to consider raising rents on two-year leases between 0.5 and 3.5 percent.
The board based those parameters on a study that showed the price of operating rent-stabilized apartments decreased 1.2 percent this year, mostly due to the fact that fuel costs decreased 41.2 percent.
Meanwhile, another board study found that the city lost an estimated 8,000 rent-stabilized units last year.
There are an estimated 840,000 rent-stabilized apartments, according to an investigation from ProPublica.
The publication also found that 28 percent of these units — or about 240,000 — are subject to preferential rent, which is when landlords lease rent-stabilized units for less money than they are legally allowed to charge.
In these situations, a rent freeze could be moot since a landlord can take away the preferential rate — if the lease didn’t specify it would last for the duration of the tenancy — and hike up the rent whenever the lease is renewed.
Raun Rasmussen, executive director of Legal Services NYC, which represents low-income New Yorkers, said that “any rent increase is a bad increase for our clients,” most of whom earn under $12,000 for a single person.
But, he also said the Rent Guidelines Board vote was a “sideshow” to other, often legal tactics that landlords use to hike rents, thereby creating big threats to affordable housing.
Besides the pressures that giving and taking away preferential rent puts on tenants and results in increased vacancies, landlords often find other ways to harass or pressure tenants to leave, he said.
And a landlord can potentially hike up the rent 20 percent when a tenant leaves, Rasmussen said.
There are also continued issues with landlords raising rent by making capital improvements in buildings or in individual apartments. Many landlords will do the work when it’s vacant and then re-register the rent for an amount higher than legally allowed, he noted.
“The rent has been increased, but a tenant has no way of knowing unless they dig in and go to [the state’s Division of Housing and Community Renewal] and then can’t challenge the landlord unless they withhold rent and are sued in housing court, where the landlord would have to prove his case,” Rasmussen said.
These issues are especially significant when it comes to Mayor Bill de Blasio’s affordable housing plan, which includes the preservation of 120,000 units over the next decade, he noted.
Shaun Riney, a commercial real estate investment professional with Marcus & Millichap, who works with many landlords of rent stabilized properties, said the rent freeze and other housing policies have been spurring a lot of his clients to sell their buildings because they’re saying “enough is enough.”
At the same time, however, it’s been hurting their bottom line.
“The risk of buying a rent-stabilized property has increased exponentially,” Riney said. “Mom-and-pop owners who have been doing everything right the last 20 years are getting hurt. [The freeze] basically guarantees the city will be run by professional management and landlords. The small three-to-five building owner cannot compete.”
