The laws regarding rent stabilization are clear: those lucky enough to live in a below-market rate apartment must use it as their primary residence. Yet one archetype in city folklore centers on the renter who sublets his or her apartment illegally and pockets a hefty profit.
Now, landlords are fighting back by installing surveillance cameras and issuing electronic keys that can track tenants’ movements. In May, a civil law judge upheld the use of coded keys, which may spur landlords of the city’s 1.04 million apartments subject to rent stabilization to devise other creative ways to catch cheating tenants and return the apartments to the free market.
“Landlords are getting more aggressive,” said Jenny Laurie, director of the Metropolitan Council on Housing, a tenants’ group. “We are seeing more evictions and threats to bring tenants to court.”
Frank Ricci, director of government affairs at the Rent Stabilization Association, which represents landlords, said that cameras and electronic key systems are being installed solely for security reasons. Still, he added, “landlords are always trying to get apartments out of stabilization.”
Every year around this time, the debate over rent stabilization laws and the exact increase allowed by the city’s Rent Guidelines Board features a predictable but pitched battle between tenants arguing that they are being priced out of their protected apartments and landlords claiming that the increases do not adequately cover their rising costs.
This year, the landlords came away the winners. Last month, the city’s Rent Guidelines Board tentatively announced that two-year leases in rent stabilized apartments will have rent increases of 5 to 8.5 percent. One-year leases will see an increase of between 3 and 6.5 percent. Naturally, tenants sought lower rate increases, but landlords cited high operating costs and rising energy prices.
The fight, always bitter, is tinged with greater urgency as landlords attempt to reap the benefits of skyrocketing real estate values. Brokers also stand to benefit as apartments are removed from stabilization, since their commissions are pegged to an apartment’s rent.
The number of stabilized units represents around half of the city’s total rental housing stock. The law also applies to thousands of apartments in Nassau and Westchester counties. Rent control covers 43,000 units in the city and applies to apartments built before 1947 and occupied by tenants who moved in before 1971.
Rent stabilization strictures are applicable to buildings with more than six rental units built before 1974. Under a 1993 amendment to the law, applicable apartments are removed from rent stabilization when the monthly rent exceeds $2,000, a process known as luxury decontrol. Rents reach that threshold through yearly percentage increases and a 20 percent boost to the existing rate when an apartment is vacated.
The state’s Division of Housing and Community Renewal’s Office of Rent Administration does not routinely release figures of apartments that are poised to come off the rent stabilization rolls, but a Freedom of Information Law request filed by The Real Deal reveals that 73,232 rent-stabilized apartments in the five boroughs carry a rent of $1,670 a month or greater. The vast majority, 56,015, are in Manhattan.
Few brokers specialize in representing rent stabilized apartments, since there is no readily accessible repository of specific apartments that are due to be deregulated, said Gordon Golub, senior managing director at brokerage Citi Habitats. “Developers generally have relations with a broker, but rent stabilized units are often passed on to family members or friends,” said Golub. “When they are offered to a broker, it’s usually done quietly, since owners want to find a good, solid tenant, but don’t want 50 people applying.”
In general, he said, brokers represent rent-stabilized units primarily to promote themselves, develop relations with landlords and gain future referrals, he said.
Many New Yorkers might be surprised to learn that rent stabilization also applies to new apartments that have been granted special tax breaks or other benefits, like allowing a developer to add floors onto a new building above what the zoning allows in return for setting aside a number of apartments as rent stabilized units, said Golub. “These apartments can run from three, four, or five thousand dollars a month,” he said. “They’re not your typical walk-up.” Brokers make no money on these units, since they are usually offered by lottery and referred to as affordable housing.
Despite the existence of government-imposed rent regulation in the country’s center of capitalism, few experts think the law will disappear any time soon. “People can’t afford market rates in most neighborhoods and politicians are not going to allow people to be displaced,” said Laurie of the Metropolitan Council in Housing. “Even Mayor Bloomberg, a billionaire supporter of free-market principles, supports renewal of rent laws on a city level.”