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1.25 Percent Hike on Rent Stabilized Apartments Approved by Board

By Amy Zimmer | June 28, 2017 7:12am
 Tenants and advocates called for a freeze or rollback for rent stabilized units.
Tenants and advocates called for a freeze or rollback for rent stabilized units.
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DNAinfo/Allegra Hobbs

MANHATTAN — The city’s roughly 1.6 million rent-stabilized tenants will soon see modest rent increases — which are more than what tenant advocates hoped for but less than what landlords wanted.

The Rent Guidelines Board voted 7-2 Tuesday night to raise rents by a 1.25 percent for one-year leases and 2 percent for two-year leases.

The vote affects leases renewed on or after Oct. 1.

These increases marked the end of two unprecedented years of rent freezes on one-year leases.

“Taken together, the past four years have seen the lowest guidelines in history — including the first two freezes ever,” mayoral spokeswoman Melissa Grace said in a statement. “We will never go back to the days when the landlord lobby got big rent hikes regardless of what the data said.”

Housing advocates and landlords expected the board would approve an increase given its preliminary vote in April, recommending to raise rents for one-year leases between 1 percent to 3 percent, and 2 percent to 4 percent on two-year leases.

Still, housing advocates had called for a rent rollback, or at least another freeze on the city’s roughly 1 million rent stabilized units. During Tuesday’s public meeting at Baruch College, many chanted, “How low can you go?”

Many claimed that landlords are making a profit because of previous rent hikes, including an 8.5 percent increase approved during the height of the recession in 2009.

Landlords, on the other hand, wanted a bigger increase.

The Rent Stabilization Association, which represents landlords, called for a 4 percent increase on one-year leases and an 8 percent hike on two-year leases. The group said that landlords needed bigger increases to keep up their buildings’ maintenance, especially as taxes, water rates, fuel and other costs increase.

A report from the Rent Guidelines Board showed, for instance, the price of operating costs for rent-stabilized buildings jumped last year more than 6 percent, with fuel costs rising nearly 25 percent.

Matt Engel, President of of Community Housing Improvement Program (CHIP), which represents more than 2,500 apartment-building owners in the city, called the vote “a very, very small step in the right direction to freeing property-owners from the burdensome costs incurred from the last two years of rent-freezes, but it is not enough to reverse the damage.”

He said that with the recent freezes and modest increase, many small-scale landlords will likely opt to sell their buildings to institutional equity firms, which tend to look at this kind of real estate as an investment for about three to five years. 

“With municipal taxes as the largest percentage of a building’s operating costs, I hope the city will address the need to lower long term property tax rates and assessments levied on multi-family building owners in order to preserve the long term stability of the housing market,” Engel said. 

Harvey Epstein, director of the Community Development Project at the Urban Justice Center and a Rent Guidelines Board member, believed that tenants needed a rent rollback to make housing more affordable.

But he saw a silver lining in tenants speaking out.

“While the votes weren’t there to support a rollback, tenants — through their testimony and protests — did succeed in keeping the increase to a minimum,” he said.

Many tenants didn’t buy landlord claims of needing rent hikes.

“We understand that landlords need to maintain the buildings and make a profit. But their profits continue to increase, meanwhile tenants can't keep up with increasing rents and other expenses,” said Gloria Moreno, a Queens resident and member of the Rent Justice Coalition, which is made up of legal services and tenant advocacy groups.

“If landlords treated us fairly, it would be a different story,” she added. “But not only do they keep making profits, they keep squeezing our pockets by charging us for repairs, appliances fees, increases for major capital improvements and individual apartment improvements and through other loopholes.”

For instance, roughly 28 percent of rent stabilized units — or about 240,000 — are subject to preferential rent, according to Pro Publica.

In these cases, landlords lease rent-stabilized units for less money than they are legally allowed to charge, and often can take away the preferential rate and hike up the rent upon lease renewal to what’s legally allowed — which may be significantly more than the Rent Guidelines Board’s parameters.

Housing advocates believe landlords use preferential rent to increase turnover since they can raise rents more when units are vacant, as many hope to move units from rent stabilized to market rate when they meet the $2,700 a month threshold.

Upper West Side City Councilwoman Helen Rosenthal, who supported a rent rollback, noted that 43 percent of New Yorkers in homeless shelters are coming from rent stabilized apartments.

“We will continue to fight to keep this city affordable, and build on an important platform that helps to protect New York families,” mayoral spokeswoman Grace said, “including funding free universal legal services for all low-income tenants facing harassment or eviction and advancing the most new and preserved affordable housing in a generation.”