Rent Regulation Does Not Mean Neglect: Landlords Are Fearmongering to Gut Tenant Protections
Oksana Mironova and Samuel Stein
28 jun 2023
In 2019, the New York State Legislature passed the Housing Stability and Tenant Protection Act (HSTPA), which strengthened the rent regulation system by closing landlord-friendly loopholes. This law has acted as a stabilizing force during a pandemic-driven resurgence of speculation on multi-family properties. According to the latest data collected by New York City’s Department of Housing Preservation and Development (HPD), the median monthly rent in rent-regulated units was $1,400, $425 lower than in unregulated rentals.
In order to undermine the HSTPA, landlord lobbyists have recently resurrected the mythical connection between rent regulation and housing abandonment and neglect, grounding their arguments in fuzzy math and false readings of New York City’s history.
In fact, time and time again research has showed that rent regulation does not lead to property neglect. New Jersey is a good place to test the impacts of rent control policies, because the state has a range of municipalities with and without rent regulation. Using a sample of 161 communities in New Jersey, a 2015 study published in the journal Cities tested the impact of rent regulation (both its presence and its relative strictness) on housing quality and foreclosure rates (as a proxy for abandonment). It did not find any significant impact on the two variables when controlling for apartment size, income, race, and median rents.
Current data from New York City also does not show any relationship between stronger rent regulations and worsening building conditions. In 2021, the NYU Furman Center analyzed HPD complaint data through the beginning of the pandemic, and found that their seasonal pattern did not change after HSTPA’s passage. Last summer, the group we work for, the Community Service Society, polled New Yorkers about a wide range of issues, as part of our annual “Unheard Third” survey. We asked respondents if their rent went up in the past year, and, if so, whether the landlord had made any improvement to their apartment or building. We found that rent-regulated tenants who experienced a rent increase were 12 percentage points more likely to see improvements in their buildings compared to unregulated tenants (44 vs. 32 percent).
While these numbers should be far higher for any tenants experiencing rent increases, they point to an important fact: Rent-stabilized landlords seem to be more likely to invest in improvements than market-rate landlords. Counter to anti-regulatory arguments, rent regulation does not inhibit building maintenance. Instead, it incentivizes it, by making a portion of the rent increase contingent on apartment or building improvements.
Given ample empirical evidence to the contrary, why are landlords dredging up tired myths about rent regulation and vacancy? To bully State and local officials to undermine rent stabilization.
We know that landlords in some high-cost neighborhoods with large concentration of rent-stabilized units are purposely holding units off the market, either to combine apartments and set high rents (“Frankensteining”) or to wait out the existing rent regulation regime in the hopes that by willfully worsening the housing crisis, the Legislature will grow weary and relent to landlords’ calls to weaken tenants’ rights.
Vacancies, however, are far more prevalent in high-rent than low-cost housing. On the one hand, an over-production of luxury housing has led to a supply glut; on the other, many buyers of luxury apartments have no intention of ever really living in them, using them instead as pieds-à-terre or as pure investment vehicles.
Some in the real estate industry have said explicitly that they are not renting vacant units because, under current regulations, it costs more than they are willing to pay to upgrade them. If they are, in fact, admitting to withholdingotherwise affordable rentals from potential tenants, it reflects an act of politically motivated sabotage to further worsen the housing emergency and undermine hard-fought tenants’ rights in New York.
Landlords claiming that renovations of units held off-market would cost an average of $80,000 are significantly overstating the average costs of renovation at turnover. Responsible operators of rent-stabilized housing tend to average $15,000 in renovations at turnover, which matches the way the post-HSTPA Individual Apartment Improvement (IAI) guidelines are written. In rare cases where the need for rehabilitation is immense, renovation costs can reach $30,000. The only way that an $80,000 renovation pencils out is if the goal is to turn a formerly affordable unit into a luxury one.
Meanwhile, the City of New York has several programs available to landlords who need money to bring apartments up to code. For years, HPD’s Landlord Ambassador program has offered both capital and human resources to owners facing such a predicament. More recently, the City’s Unlocking Doors program offers landlords $25,000 for renovations in long-vacant low-cost apartments. In exchange, the landlords must agree to rent to a tenant holding a CityFHEPS (Family Homelessness and Eviction Prevention Supplement) voucher. Because the City already offers a $4,500 bonus to landlords who accept these vouchers, this payout is closer to $30,000.
This is a sensible way to approach the problem: landlords get the money they need to repair units; homeless households get a place to live; and the cost to the city for the voucher is lower than it would be if it were subsidizing a tenant living in a more expensive apartment. And yet landlord lobbyists have urged landlords to reject the payments and instead hold out for legislation that would deliver massive rent increases.
Rather than bending to landlords’ will, New York City legislators should:
Create a commercial and residential vacant property registry, with publicly available data.
Use the City’s existing code enforcement system to speed up inspections of vacant units and enforce habitability standards in those apartments.
Support the City’s commitment to match landlords who are truly struggling to afford repairs with renovation grants and voucher-holding tenants.
Support the State legislature in closing the “Frankensteining” loophole.
Housing neglect is a serious problem, but the solution isn’t gutting tenant protections; it’s getting serious about enforcing rent laws and building codes, and treating housing as a vital resource rather than a source of profit maximization.
Oksana Mironova and Samuel Stein are senior policy analysts at the Community Service Society of New York. This Urban Matters is adapted from their June 6th testimony to the New York City Council Committee on Housing and Buildings.
Photo by: Elvert Barnes