Manhattan rents reached yet another new high in March — a median of $4,175 per month — while prices in Brooklyn were the second highest on record, according to Douglas Elliman’s latest market report. And on Thursday, tenants of the city’s 1 million rent-stabilized apartments faced their own version of sticker shock: The Rent Guidelines Board is discussing increases of up to 15.75 percent on two-year leases, according to the New York Times.
The board met on Thursday morning and talked about a range of possible increases — from 5.3 to 8.25 percent for one-year leases and 6.6 to 15.75 percent for two-year leases — none of which is set in stone. This part of the board’s process focuses on landlord costs, one of many considerations in a potential rent increase. The uppermost figure “is one of the commensurate adjustments calculated by the RGB’s staff” and “not a RGB decision on how high rents should go up,” the Community Service Society of New York noted on Twitter. But this does seem like an indication that a hefty increase is coming, possibly the heftiest since 1979, if the board settles at the upper edge of the range. That year, spurred by the oil crisis, the board voted for increases of 20 percent on two-year leases in a meeting that, as the Times reported, “grew so raucous that police officers were called in.”
The Rent Guidelines Board considers a number of factors when determining increases — including landlord’s net operating income, unemployment, inflation, tenants’ income, and the economy in general. It holds several public hearings every year with input from tenants and landlords. But without any established formula to determine increases, the vote often comes down to the personal and political views of the nine board members, who are appointed by the mayor and serve at his pleasure. And the votes generally reflect the mayor’s views. Under Michael Bloomberg, the board voted for regular increases — though none this high. (The biggest was 4.5 percent in 2003.) Under Bill de Blasio, the board voted for historically low increases including several years of rent freezes.
Last year, the board considered increases of up to 9 percent for two-year leases before settling on 5 percent. It’s unclear what, exactly, pushed the possible increases so high this year, although some of it may be the inclusion of market-rate housing in the data for net operating expenses — particularly those for 2021, which were very much still influenced by the pandemic. A report from NYU’s Furman Center has argued that the inclusion of market-rate housing usually skews the data in the landlord’s favor.
There’s also inflation, of course, and the trend of landlords holding rent-stabilized apartments for ransom while insisting that they’d rather keep apartments vacant than rent them at stabilized rates, which they argue don’t cover basic repairs and maintenance. (This is definitely not a tactic to force a repeal of the 2019 rent laws.) Why ask for an increase that high? As Robert Ehrlich, a board member representing landlords, told the Times, there’s no “safety net” for landlords. Well, unless you count the $25,000 per apartment Mayor Eric Adams is proposing.