Rent Regulation in New York State takes the form of rent control and rent stabilization programs. Each city in the state may choose whether to participate or not, and as of 2007, 51 municipalities participated in the program, including Albany, Buffalo, and New York City, where over one million apartments are rent-regulated.
In 1920, New York adopted Emergency Rent Laws, which effectively charged the courts of New York State with their administration. When challenged by tenants, rent increases were reviewed by a standard of "reasonableness." The definition of reasonableness was subject to judicial interpretation. Certain apartments were decontrolled beginning in 1926, and the Rent Laws of 1920 expired completely in June 1929, though limited protections against unjust evictions were continued.
New York's current rent control program, which began in 1943, is the longest-running in the United States. From 1943 to 1950, rent control was administered by the federal government but has been administered by state government since 1950, although state and city agencies shared administrative work from 1962 to 1984.
Rent regulation affects rent increases and prescribes rights and obligations for tenants and landlords.
Rent control exists in New York City and a small list of other municipalities in Nassau, Westchester, Albany, Rensselear, Schenectady, and Erie Counties.
In New York City, rent stabilization applies to all apartments except for certain classes of housing accommodations for so long as they uphold the status that gives them the exemption.
Qualification
Why Rent Control Hurts Renters - Nicole Gelinas of the Manhattan Institute shows why price ceilings on apartments hurt those it intends to help -- but also why rent control is here to stay.
To qualify for rent control, a tenant must have been continuously living in an apartment since July 1, 1971, or be the qualifying family member who succeeded to such tenancy. When vacant, the unit becomes rent stabilized, except in buildings with fewer than six units, where it is usually removed from the program. In apartments within single and two-family homes, the tenant must have been residing in the unit continuously since March 31, 1953 in order to qualify for rent control. Once the unit becomes vacant, it leaves the rent control program and is not eligibile for rent stabilization.
Rent control does not generally apply to units built after 1947.
In New York City, only buildings with six or more units can be rent-regulated.
Terms
Rent control limits the price a landlord can charge a tenant for rent and also regulates the services the landlord must provide. Failure to provide these may allow the tenant to demand a lower rent.
Outside of New York City, the state government determines the maximum rents and rate increases, and owners may periodically apply for increases.
In New York City, rent control is based on the Maximum Base Rent system. A maximum allowable rent is established for each unit, and every two years, the landlord may increase the rent up to 7.5% (as of 2012) until the Maximum Base Rent is reached. However, the tenant may challenge these increases on grounds that the building has violations or the owner does not need to increase the rent that much to cover expenses.
Maximum Base Rent
In New York City, the maximum base rent (MBR) is calculated to ensure the rent from rent control units covers the cost of building maintenance and improvements. As set up in the New York City Local Law 30 of 1970, the formula reflects real estate taxes, water and sewer charges, operating and maintenance expenses, return on capital value and vacancy and collection loss allowance. The MBR is updated every two years to reflect changes in these expenses. The owner must apply for the maximum base rent system for the tenants, but before the MBR, rents were annually determined by the city/state, which developed its own set of regulations.
Rent stabilization
Rent stabilization exists only in New York City, Nassau, Rockland, and Westchester Counties. It generally applies to building of six or more units built before 1974 and not subject to rent control (although owners of more recent buildings can agree to rent stabilization in exchange for tax benefits). Regulation and policies may vary by municipality as to which buildings qualify. In addition, certain buildings such as non-profit housing are not included in the program, but upon leaving programs such as the Mitchell-Lama Housing Program or Section 8, they may enter rent stabilization if built before 1974. Also, apartments that are converted into co-ops and condos and vacated after July 7, 1993 may not be subject to rent stabilization. In order for rents to be placed under regulation, the municipality must declare a housing emergency, there has to be a rental vacancy rate of less than 5% for all or any class or classes of rental housing accommodations, as demonstrated by a housing vacancy survey.
Qualification
The qualifications for rent stabilization have been changed over the years, reportedly to curb perceived abuses, which allowed the wealthy to enjoy rent increase protection that was intended to protect the working class.
From the passage of the Rent Regulation Reform Act of 1997 to the Rent Act of 2011, rent stabilization was restricted to apartments where the legal, or stabilized, rent was under $2,000 per month. The 2011 law raised that to $2,500. The unit could be deregulated once the rent went above $2,000 under the 1997 law, $2,500 under the 2011 Act, and is either vacant or the household adjusted gross income was over $175,000 under the 1997 act or is $200,000 under the 2011 law, for two consecutive years. If the stabilized rent is under $2,500, the residents' income does not affect the rent stabilized status of the apartment. A tenant has to use the stabilized apartment as their primary residence in order for the apartment to remain under rent stabilization.
Tenants who live in buildings built between February 1, 1947 and January 1, 1974 or who move into a pre-1947 building or into certain post-1974 buildings that received tax breaks (such as the 80-20 housing program) qualify for rent stabilization if the other financial terms are met. As part of city managed programs, some buildings become temporarily rent stabilized in return for a temporary reduction in real estate taxes when those buildings have been converted to residential use from another use group (commercial or industrial). Two of those programs, J-51 for renovating buildings and 421-a for new construction, grant temporary rent stabilization to tenants of apartments in those building, thus overriding other qualifications.
Terms
Rent stabilization sets maximum rates for annual rent increases and, as with rent control, entitles tenants to receive required services from their landlords and have their leases renewed. The rent guidelines board meets every year to determine how much the landlord can set future rents on the lease. Violations may cause a tenant's rent to be lowered.
History
Federal regulation (1943â€"1950)
In 1942, President Franklin D. Roosevelt signed the Emergency Price Control Act into law. The goal of the act was to prevent inflation in the booming, fully employed wartime economy by setting price controls nationwide. In November 1943, the Office of Price Administration froze New York rents at their March 1, 1943, levels. When the Emergency Price Control Act expired in 1947, Congress passed the Federal Housing and Rent Act of 1947, which exempted construction after February 1, 1947, from rent controls, but continued that regulation for properties already completed by that date.
State regulation (1950â€"1962)
The state of New York took over when federal regulation ended in 1950. Under the first permanent state laws in 1951, New York took a similar regulatory approach to the federal government. At the time there were about 2,500,000 rental units statewide, 85% of them in New York City. The initial laws covered all rental units, and regulated all relationships between owners and tenants concerning rents, services, and evictions.
Into the 1950s, a severe housing shortage prompted the first deregulation of rental units. In New York City, apartments in single and two-family homes became deregulated after April 1, 1953. Cities and towns outside New York City were given permission to deregulate when ready. The most expensive luxury apartments in New York City began to be deregulated starting in 1958. By 1961, only New York City and 18 of New York's 57 other counties had rent regulation.
Mixed regulation (1962â€"1984)
New York City and the state government began dual administration of rent regulation in 1962, and 75,000 expensive apartments were gradually deregulated by 1968. In 1969, construction and vacancy rates slumped, causing non-regulated rents to rise nationally. This rapid increase in rents caused New York to pass the Rent Stabilization Law of 1969, which introduced rent stabilization to units built after the 1947 cutoff for buildings to be eligible for rent control, covering approximately 325,000 units in New York City.
The Local Law 30 of 1970 introduced a new method of rent control price calculation, based on the Maximum Base Rate, which adapted to the changing costs faced by landlords, allowing them to pass those costs on to renters. A 1971 law took away New York City's ability to regulate rents and gave the power to the state government, in Albany.
State regulation (1984â€"present)
In June 2011, the New York State Legislature in Albany enacted the Rent Act of 2011. It did the following:
- Limited vacancy increases to once a year
- Reduced the permanent rent increase in buildings of 35 units or more for individual apartment improvements to 1/60th instead of 1/40th of the cost
- Increased the minimum rent for deregulation of an apartment to $2,500
- Increased the household income to $200,000 for deregulating an occupied apartment with rent of at least $2,500
In June 2015, the New York State Legislature in Albany enacted the Rent Act of 2015. Rent laws were extended four more years through 2019.
- Increased the minimum rent for high-rent or high-income deregulation of an apartment to $2,700, which will be adjusted each year by the one-year increase allowed by the Rent Guidelines Board. The minimum rent for deregulation now is achieved following the prior lease and not as a result of a vacancy increase or improvements to unit or buildings after vacancy.
- Created a stepped vacancy increase for a two-year lease of 5% if vacant less than two years, 10% if vacant less than three years, 15% if vacant less than four years, 20% if vacant four or more years. The vacancy increase for a one-year lease is less by the approved percentage difference in lease increases between one- and two-year leases.
- Changed the amortization period for major capital improvements from 84 months to 96 months in buildings with less than 35 units and changed the amortization period for major capital improvements from 84 months to 108 months in buildings with 35 or more units.
Rental unit distribution
New York City
See "Rent Stabilization in New York City" by the Furman Center for Real Estate & Urban Policy for the 2011 figures.
See also
- Law of New York
Footnotes
Further reading
- Walter Block, "Rent Control" in The Concise Encyclopedia of Economics.
- Robert M. Fogelson, The Great Rent Wars: New York, 1917-1929. New Haven, CT: Yale University Press, 2013.
External links
- Evicting Tenants in New York
- Text of the Rent Stabilization Law of 1969
- Text of the Rent Regulation Reform Act of 1993
- List of rent stabilized buildings in New York City