The rent cap system’s broken
Are the members of the city’s Rent Guidelines Board aware that inflation is now at 8.6%? If so, what were they thinking Tuesday when they limited rent hikes to just 3.25% for one-year leases and 5% for two-year leases?
Indeed, the caps — which apply to the city’s 1 million rent-stabilized apartments — are so out of line with real-world market conditions that they’re liable to do significant harm, to both tenants and landlords.
The RGB’s five-member majority might’ve thought it struck the right balance: Tenant activists wanted lower caps, while landlords sought higher ones. But that was a political calculation, not one that took into consideration the economic fallout.
After all, how are landlords supposed to make ends meet when their costs are rising faster than rent revenue, thanks to such limits? And this comes after the de Blasio years when rents were actually frozen or limited by minimal rent hikes, and after months during the pandemic when owners went with no rent income at all, thanks to the eviction moratorium.
Yes, big corporate landlords may be able to weather this latest hit (though don’t count on them to sink much new money into new affordable housing, especially after Albany let an important tax break meant to spur such housing development expire this year).
But mom-and-pop owners won’t. They’ll struggle along, hoping for relief — meanwhile, perhaps, forgoing repairs or upgrades. It recalls the ’70s and ’80s, when landlords let buildings decay or even abandoned them.
Progressives had ludicrously sought more rent freezes and now gripe that the hikes are too high. Never mind tenants’ generous COVID unemployment benefits and stimulus checks and the higher wages being paid now given the tight labor market. And that many rent-regulated tenants are actually quite wealthy, since there’s no means-testing for these apartments.
Even Mayor Eric Adams, who bragged of his “success” in pushing down the proposed hikes, nonetheless expressed “disappointment”: Higher rents will “be a burden to tenants,” he lamented.
At least Adams also acknowledged the hardship for mom-and-pop owners and the likely consequences for tenants: “Small landlords are at risk of bankruptcy because of years of no increases at all,” threatening “the quality of life for tenants who deserve to live in well-maintained, modern buildings. This system is broken.”
He’s right! Gotham has had rent regulation for 80 years but has never gone a day during that time without a housing shortage. Fair-market rents, on the other hand, encourage housing development and assure sufficient revenue to properly maintain buildings. Alas, in 2019 Albany rescinded even modest attempts to phase out some high-end rent-stabilized apartments.
Don’t expect that broken system to get fixed any time soon.