A few years ago, the real estate industry decried sweeping changes to New York’s rent stabilization law as a “horror show” that would destroy the city’s rental market and drive landlords — and their money — to other states.
The world did not end in June 2019, nor did all investors flee the Empire State. But the legislation unquestionably changed the city’s multifamily market — and how The Real Deal covers landlords and tenant advocates, the latter seemingly having gained the upper hand with New York policymakers.
The law, which severely limits rent increases for stabilized tenants, now forms the backdrop of every discussion about housing policy, especially in the wake of the pandemic. Landlords argue that the restrictions have translated to a declining housing stock, forcing them to forgo repairs and keep unsafe units vacant. Many fear that the collapse of one of the city’s largest multifamily lenders, Signature Bank, could make it even harder for owners to secure financing for repairs and other investments in their properties.
Over the last decade, the real estate industry has gained national attention, in no small part because the country had its first developer-in-chief, Donald Trump. But housing policy is also making its way out of white papers, being debated by presidential contenders and prioritized by state and city leaders. Combating decades of exclusionary zoning is no longer just the purview of land use wonks, it’s the subject of everything from street protests to TikTok videos.
Tenants’ rights and a push for housing
In some respects, California is light-years ahead of New York on this front. Those pushing for greater density and railing against restrictive land use regulations have gained considerable influence in the state, which is in the midst of what YIMBY advocate Sonja Trauss has called a “natural experiment.” Across California, localities that fail to have their housing plans approved by the state are subject to builder’s remedy — a 1990s policy that is only now being put to the test. The law allows developers in those noncompliant localities to sidestep zoning rules if they are building housing where at least 20 percent of the apartments are below market rate.
Similar proposals in New York face considerable pushback from suburban lawmakers and tenant advocates, the latter arguing that measures encouraging new housing need to be accompanied by eviction protections. Still, housing advocates have been heartened by the fact that the governor and mayor have set housing growth as a priority.
“There is a broader recognition of the human cost of not having enough housing in the city and state,” Dan Garodnick, head of the New York City Planning Commission, said this year.
“That’s why these proposals have gained so much traction,” he added.
That recognition could help establish new alliances. In 2019, California approved a rent control measure that caps annual increases at 5 percent plus inflation. Tenant advocates in New York have been pushing for a similar measure that would allow tenants to challenge eviction if their rent is hiked more than 3 percent or 1.5 times the inflation rate, whichever is higher. YIMBY groups in both states have backed these protections, but have not yet managed to conscript tenant advocates in their cause.
YIMBYism goes national
While elected officials in New York and California are being pushed to the left, Florida has moved in the opposite direction. The pandemic raised the political profile of Republican Gov. Ron DeSantis, who resisted lockdowns and was among the first to allow restaurants, other businesses and beaches to reopen.
State officials there are advancing a bill that encourages affordable housing construction through tax breaks and zoning incentives. It would also prevent localities from blocking housing in any commercial or mixed-use zone if at least 40 percent of the residences are set aside as affordable for at least 30 years. Critically, it would also prevent local governments from passing rent control measures.
“This landmark legislation is the first of major consequence to help ensure affordable housing will be built,” said Keith Poliakoff, of Government Law Group. “It takes a lot of the handcuffs off the developers who develop this type of housing.”
These debates are starting to play out in TRD’s newer markets, too. In Chicago, mayoral candidates are sparring over a proposal to triple taxes on property sales over $1 million. One of the candidates, Brandon Johnson, has voiced support for some form of rent control. In North Texas, multifamily developers are facing off with NIMBYs, and in some cases, deciding that fighting such opposition is not worth their trouble.
Much has changed in our industry over the last two decades. We’re looking forward to documenting the next 20 years!