What If New York Had No Rent-Regulated Apartments?


Update: 5:17 p.m.
Mayor Bill de Blasio tried to instill a sense of urgency today in Albany, telling reporters (and indirectly, Governor Andrew Cuomo) that “this is a moment where we need that leadership” in order to get his agenda items passed. Regarding rent regulation laws set to expire on June 15, the mayor said, there are “a million rent-regulated units — over 2 million New Yorkers who live in them. Their fate is hanging in the balance. Whether we’re going to have a steady supply of affordable housing in our city, or whether more and more people are going to be displaced. More and more people — unable to live in their neighborhoods, unable to live in the city they love. That’s what’s hanging in the balance on rent regulation.”

De Blasio also said he talked with new Senate Majority Leader John Flanagan on the phone, but didn’t meet him in-person.

The mayor seemed to take a passive-aggressive tact when asked about how he would get his rent-regulation proposals approved by the state Senate: “I think people all over the state are disappointed in Albany,” De Blasio said. “And it’s a chance for Albany to turn the page and do some things that will actually restore faith and energize people again.

“The numbers speak for themselves — 2 million-plus renters in New York City, 1.2 million school children. Let’s think about their parents and extended family. That’s going to be two, three, four million people easy. I don’t know many leaders of the executive or legislative branch anywhere that ignore millions and millions of people and think it will not have a consequence. So, I believe we are in a functioning democracy. And the voices of the people will be felt very intensely here.”

Original story is below:

Mayor Bill de Blasio will be in Albany today to nudge state legislators about a few of his agenda items, including extending and strengthening rent regulations. But a report released Tuesday by the Citizens Budget Commission — “Five Myths About Rent Regulation in New York City” — pushes in the other direction. What if they got rid of rent-controlled and -stabilized apartments altogether?

“To start from the beginning, if we had a perfect situation, we probably wouldn’t create this bifurcated housing market,” the CBC’s Rahul Jain tells the Voice about his report. “We need to slowly phase it out for households that can afford market-rate units.”

Jain says that bifurcation — established in 1947 to keep rents low during the postwar population boom — is hurting the housing market as a whole. Landlords see no benefit to making repairs or improvements to their rent-controlled units, which has caused many buildings to fall into disrepair. And having rock-bottom rents in New York City also creates hyper-competitive markets for those 1 million or so rent-regulated apartments that make up about half of the city’s housing stock.

See also: The Ten Worst New York City Landlords of 2014

The CBC report coolly dismisses widely held opinions about the city’s real estate market — that it’s too expensive and often soul-crushing — as vacancy percentages are slim: just 2 percent for rent-regulated spaces and 5 percent for everything else.

The CBC, a watchdog group that researches government spending and economic policy, is officially nonpartisan, but Jain’s findings amount to a tidy conclusion for real estate developers and Republicans in the state senate who want to see less government interference in their business dealings.

Below are the five myths Jain attempted to bust. We asked him to expand on a few of them.

Myth: “A majority of tenant households in New York City are rent-burdened.”
Fact: “Thirty-eight percent of tenant households in New York City are rent-burdened.”

Jain defines “burden” as a household that spends more than 30 percent of its monthly income on rent. This is the case for 56 percent of New Yorkers. But that percentage doesn’t subtract all the people who receive government assistance to pay rent. After that, the percentage of New Yorkers putting more than 30 percent of their monthly pay to rent falls to 38. Still a high number, but it’s not 56.

Myth: “Market-rate units in New York City are not affordable to most tenants.”
Fact: “In market-rate units, 54 percent of tenants have affordable rent.”

“Market-rate housing is doing its job,” Jain says, adding that “the idea that rent-regulated housing is equatable with affordable housing is not the case.” In the report, he goes on: “[W]hile market-rate units may be costly for low-income households, a majority of tenants in market-rate units have affordable rents.” There are a lot of wealthy people in New York ready to pay what might seem like insane rent — until you look at their income, of course.

Conversely, that brings Jain to the next “myth,” which he says backs his assertion that “rent regulation is essentially inefficient.”

Myth: “A rent-regulated housing unit is an affordable unit.”
Fact: “Among tenants in rent-regulated units, 44 percent are rent-burdened.”

The maximum a landlord can legally charge for a month’s rent in a regulated apartment is $2,500 a month. Anything above that and the apartment automatically becomes market-rate. However, Jain speculates to the Voice that state legislators might bump that number up to $3,500 a month in order to keep the number of rent-regulated apartments at current levels.

“Keeping regulation of units that are over a certain amount is not an effective use of public dollars,” Jain says. Either way, it’s still a lot of money to many people.

And if you think there’s nowhere affordable to live in New York, you simply need to look outside Manhattan:

Myth: “Middle-income households cannot find affordable housing in New York City.”
Fact: “Outside of Manhattan, 96 percent of middle-income tenant households are not rent-burdened.”

Wondering who qualifies as “middle-income”? Here’s a chart. Jain asserts that “market-rate units are doing what they need to do for middle-income households.”

And finally:

Myth: “The number of rent-regulated units is rapidly declining.”
Fact: “The number of rent-regulated units is stabilizing.”

Jain says the number of rent-regulated apartments is not dropping as quickly because of de Blasio’s 421a plan, which is the tax compromise he made with developers to include more affordable units (enter through the “poor door”!) in new, sometimes luxury, often a mixture of glass and brushed steel, buildings. It’s not without controversy of its own, and, along with this current set of rent rules, expires on June 15.

Hovering over all of this is former State Senate Majority Leader Dean Skelos and his son’s arrest earlier this month. The duo face federal corruption charges relating to alleged bribes they received from real estate developers. Previously, Skelos and de Blasio battled as the Democratic mayor attempted to loosen Republican control in the state senate. De Blasio will meet with new Senate Majority Leader John Flanagan today as well.

Here’s the full text of the CBC report: