The Real Deal New York

Rent regulation splits Manhattan’s rental market into two separate ecosystems

July 24, 2013 01:30PM

Despite Manhattan’s reputation as a playground for the well-to-do, half of the borough’s rental units are under rent regulation, public housing or some other type of government program, effectively creating two different rental markets, the New York Times reported.

For example, in the East Village, only 20 to 30 market-rate units are available in the entire area in any given month, according to a real estate expert quoted by the Times.

However, if Manhattan were completely rid of rent regulations and other housing subsidies, it would become an island solely occupied by the rich and middle class, according to several housing analysts cited by the Times.

The problem is exacerbated by the fact that a majority of the people in rent-regulated Manhattan apartments make far above the poverty level, according to data from NYU’s Furman Center for Real Estate and Urban Policy, cited by the Times.

Advocates for continued rent regulation and those who oppose it agree on one thing: were such programs to be eliminated, it would be great for landlords and the middle class, but awful for people who benefit today. Those living in such apartments would have to leave, the landlords of the units would invest in upgrades and charge higher rents, and the subset of apartments that had previously been at market rate would see their rents fall – because there would suddenly be twice as many apartments on the market.

Even so, rent-regulation programs are unlikely to go away. “We can’t just say, ‘Let’s get rid of rent regulations and replace them with the optimal system,’” Vicki Been, director of NYU’s Furman Center, told the Times. [NYT]Julie Strickland

  • Chris

    Where is this article that there are only 20-30 market rent apartments available in the East Village? That’s possibly the most laughable thing that I have read all day. Did you bother to even do a search on OLR, Street Easy, ect? I’d propose the exact opposite. There are more than likely less than 20 rent stabilized units available to rent in any given month at best. Whoever your “real estate expert” is, is sadly mistaken.

  • noclist

    “the fact that a majority of the people in rent regulated Manhattan apartments make far above the poverty level”

    Of course they do. The law says they can make up to $250,000 per year, up from $175,000 just a few years ago.

    • HughGass

      $200k, not $250k

      • noclist

        Yep. You are correct. $200,000 of AGI, which is usually less than gross. But still, $200k is far from impoverished.

  • Eric

    I recommend to learn about the possibility to invest in the Barcelona (Spain) real estate market.

  • cobblehillite

    There are many different potential solutions to keeping some units affordable in NYC. the problem is that the incentives in rent stabilization are horrible. there is no incentive to rent to needy people even when units dont come out of rent stab. it is the only affordable housing program that does not have income requirements….