Cost to operate rentals fell in last 12 months: Rent Guidelines Board
Landlords dispute finding, which could justify another rent freeze
Low fuel costs and a mild winter meant landlords’ costs actually fell over the last 12 months, for only the second time since 1969, at least according to the city’s Rent Guidelines Board.
The seemingly encouraging estimate, announced Thursday, could be a prelude to the board once again ordering landlords not to increase rent on stabilized tenants.
Building owners and their representatives are pushing back, saying costs are actually rising, and criticizing RGB’s methods.
The Rent Guidelines Board said its price index showed operating costs had fallen 1.2 percent since last year’s report, primarily because of an estimated 41 percent drop in heating costs, the Wall Street Journal reported.
That drop, the board said, counteracted a 7.5 percent rise in taxes on landlords over the same period, as well as a 3.2 percent increase in labor costs.
In these circumstances, RGB’s models call for a rent decrease of 0.8 percent or more for one-year stabilized leases.
Forest City Ratner’s Scott Walsh, representing building owners at the board’s meeting, said costs were actually up about 3.5 percent, the Journal reported.
“If costs went down 1.2 percent, it would have been in the conference calls,” he said, referring to the earnings calls of publicly-traded real estate firms focused on rentals.
Aspects of RGB’s estimation process are marred by data inconsistencies, the Journal reported. For example, income from commercial units and market-rate apartments is sometimes included with income from stabilized units. [WSJ] – Ariel Stulberg