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NYC politicians are taking aim at key rent control formula
Proposed law would change the way rent increases occur at rent-controlled apartments
Assemblywoman Linda Rosenthal and state Sen. Brian Benjamin held a boisterous rally with tenant groups on the Upper West Side Wednesday morning to support one of the many reforms Albany is considering making to New York’s rent laws.
Rosenthal and Benjamin spoke in support of a bill that would change the way rent increases take place for rent-controlled tenants. Currently, rent hikes are calculated using the maximum base rent system, which causes rents to go up by 7.5 percent biannually, according to the politicians. The system also factors fuel costs into the calculation, but rent-controlled tenants still have to pay an extra monthly charge for fuel, they said.
“I went to Harvard Business School, and it took me three days to figure out what maximum base rent meant,” said Benjamin, the former managing director of real estate firm Genesis Companies, “and then there are a few pass-along costs as well, right? That is way too complicated.”
Under the bill sponsored by Rosenthal and Benjamin, increases at rent-controlled apartments would be calculated by averaging the previous five years of rent increases for one-year leases decided by the Rent Guidelines Board. The bill would also eliminate the fuel pass-along cost.
“It could be 1 percent,” Rosenthal said of the size of the increase. “That is what’s fair, not 7.5 percent.”
The city has slightly more than 21,000 rent-controlled units, and the income of tenants in those apartments dropped by 5 percent between 2013 and 2016, according to Rosenthal and Benjamin.
New York’s rent laws expire on June 15, and this is one of many new laws that affordable housing advocates are calling for to help protect tenants. Others include bills that would eliminate individual apartment increases and major capital improvements, two techniques that landlords can currently use to increase rents.
The real estate industry has been bracing for reforms to New York’s rent laws since Democrats took full control in Albany for the first time in years. Deals for multifamily buildings have had a slow start to the year as potential buyers wait to see what will happen at the state level, and property owners are rushing to make major capital improvements while they still can.
“This is a matter of moral, must-do legislation,” Rosenthal said of the rent control bill. “It’s the right thing to do. It’s a humanitarian thing to do because the last thing that people standing here need to do in the days when they should be out here enjoying life is worrying about how they’re going to make that rent increase.”