This year, the Rent Guidelines Board voted for the biggest rent hike in a decade, with a 3.25 percent increase on one-year leases and a 5 percent increase on two-year leases, but once again, both landlords and tenants walked away unhappy. It’s a dramatic annual ritual that always, no matter the increase or lack thereof, ends in universal discontent, lending at least the appearance of fairness to the proceedings. If everyone’s unhappy, then the board must be doing its job and balancing everyone’s interests, right?
So you’d think. But although the process of determining increases each year is based on so much financial and economic data — about landlords, tenants, and the economy in general, including but not limited to expenses, net operating income, unemployment, and inflation — it has no established guidelines for how to weigh the many different data points, all of which are supplemented by anecdotal evidence from tenants and landlords gathered at public hearings. Inevitably, the process comes down to the personal and political views of the nine board members. They’re all appointed by the mayor; the chair serves an unlimited term at his pleasure, is often but not always replaced early in a new administration, and tends to reflect his views. The Bloomberg years saw sizable annual increases during a time of low inflation, for example, whereas de Blasio’s Rent Guidelines Board voted for the first rent freeze ever and otherwise kept increases to a minimum. Even though many board appointees are still left over from de Blasio, this first decision under Adams has been widely taken as proof of the new mayor’s landlord-friendly inclinations, indicating a strong likelihood of future increases.
“The law is very vague as to what you’re supposed to take into account — affordability and the market. You look at landlord economics and tenant economics and they don’t give you the same answer, so somehow you have to reconcile,” said Mark Willis, the senior policy fellow at NYU’s Furman Center. Virtually no one agrees on how we should work out those numbers or even what data should be used to do so, so every year we get a repeat of the same performance.
“It’s a charade by design,” added Michael McKee, treasurer of the Tenants Political Action Committee, who has been a tenant activist for more than 50 years. “It plays out the same every year — the two tenant members vote against higher increases, and the two landlord members vote for them, and the five public members come up somewhere in the middle.”
Much as rent stabilization has been decried by the real-estate industry over the years, it was actually designed as a landlord-friendly alternative to another bill that would have extended rent control to postwar housing, McKee pointed out. At that time, in the late ’60s, rent increases on unregulated housing were (much as they are now) spiking to such outrageous levels that there was widespread support for new regulation; in 1969, when rent stabilization passed, a mayoral committee found that the median increase on unregulated apartments was 26.5 percent. “It was designed by the real-estate industry to be the weakest form of rent regulation, and some of it has been corrected by the state legislature, but the worst part, the Rent Guidelines Board, has not,” he added. McKee would like to see members confirmed by the City Council as a balance to mayoral control.
In its early years, rent stabilization was broadly popular. Landlords also thought it would be a temporary measure after a deregulation bill passed in the state legislature in 1971. “In five years, there will be very little left of rent stabilization,” a landlords’ association chairman told the New York Times in 1973. Instead, it’s become the imperfect means of preserving, mostly without subsidies, much of the city’s affordable housing stock. The problem is that the board’s increases, whether minimal or substantial, aren’t pegged to tenant incomes in any way. Rent-stabilized tenants are not, for better or worse, means-tested, and rents vary widely by how long the tenant has lived there, how often the apartment has turned over since 1969, and how aggressively the landlord has pushed up the legal rent. The idea of vouchers, which exist for seniors in some form, has been floated, but it’s a political impossibility because no one would pay for it.
That said, rent-stabilized tenants are not, despite a handful of Post stories over the years on millionaires in rent-regulated apartments, on the whole, wealthy. They have a median household income of $47,000 a year, as opposed to $62,960 for non-regulated units, according to the city’s 2021 Housing and Vacancy Survey, and more than half of all renter households citywide are rent burdened, meaning that they spend between 30 and 50 percent of their income on rent. And yet, says Andrea Shapiro, the director of programs and advocacy at the Met Council for Housing, the Rent Guidelines Board frames every discussion around preserving landlords’ profit. “They look at landlords’ income and revenue and costs and decide what to do from there,” she said. “We have a housing crisis, and they set it up as ‘We have to make sure that landlords continue to make money.’ They do look at tenant income, unemployment rate, and affordability, but that seems to be largely ignored in favor of how much landlords are making and keeping landlord income at a certain level.”
And what level should that even be? Rent Guidelines Board statistics show that, on average, an apartment in a building containing stabilized units generated $545 of net income per month in 2020 — that is, income after paying all the operating expenses. But the net operating income also fell by 7.8 percent between 2019 and 2020. Since 1990, when the Board first started tracking NOI, it has fallen in just four other years. Tenant advocates see these numbers as proof that landlords consistently make a good income on their units and that the shopworn claims that rent-stabilized buildings are falling into disrepair because landlords don’t have the money to maintain them are false. Landlord advocates see the numbers as proof that, at this time especially, increases are needed to offset falling revenue. Others, like Willis, argue that rent-stabilized NOI isn’t a reliable indicator because it includes buildings that have just one rent-stabilized unit and others that are almost entirely rent-stabilized.
It might be fairer to tie rent stabilization increases to the consumer price index, as Willis has proposed. That’s been done in other places with rent stabilization, making the decisions, if not necessarily more tenant-favoring, then at least less political. Or they can be pegged to tenants’ income levels, which are broadly, if not individually, tracked by the vacancy survey the city conducts every three years. Does a 3.25 percent increase protect mom-and-pop landlords and ensure that they can provide safe, modern housing stock, as Adams argued after the vote? Or does it push tenants from their homes to the benefit of huge ownership corporations? As the Times pointed out, we can’t even determine whether large or small landlords own the city’s rent-stabilized housing stock: The board says that, according to its analysis, more than 61 percent of stabilized units are owned by landlords with ten units or fewer, but a study by another group, JustFix.nyc, puts that number at less than one percent. (It also says that more than 60 percent are owned by landlords with more than 1,000 units.) All of which means that next year will almost certainly bring another raucous vote with handmade signs, hissing, and a rent increase no one is happy with.