New York City tenants have long known that the rents are too damn high. Yet landlords and real estate organizations have repeatedly complained that rents are too low. Several are now in court challenging the rent freeze recently adopted by the city’s Rent Guidelines Board and scheduled to go into effect for leases being renewed after Oct. 1.
In the past landlords have lost such challenges. Nonetheless, they have been highly effective at portraying themselves as victims of a system that treats them unfairly, leading to great frustration among tenant advocates familiar with the plight of their clients.
The rent histories we have seen clearly demonstrate that past rent hikes have indeed been too high. That is why our organization, PA’LANTE Harlem, along with two tenant associations and five individual tenants, have intervened in the case. The five individual tenant intervenors live in rent stabilized apartments that have witnessed lawful rent increases from 282% to 936% since 1990.
Have owners been treated fairly over time? Based on numbers checked and updated by the staff of the Rent Guidelines Board, stabilized properties needed 241% in rent increases since 1990 to keep pace with increases in operating costs and to preserve the real value of their net operating incomes. During this same period the board authorized 247% in rent increases. Those rent increases do not even include various other increases permitted by law. When all sources of rent increases are combined, the board’s staff reported that, since 1990, average owner net operating incomes have risen 57% in real current dollars.
These are not mere statistical artifacts. At the time Mayor Mamdani launched his campaign, the board found that landlord income had risen 12.1% for the prior reporting period. This year, the board found that net operating income rose 6.2% for the last reporting period.
In setting rents, the board is required to consider a number of economic factors such as operating cost increases, the costs of financing and overall supply of housing. But there is no fixed formula and the board is permitted to consider “such other data as may be made available to it” — a catch all which broadens its discretion.
All of these factors suggest that the board should generally attempt to eliminate the ability of landlords to take advantage of the housing shortage.
How severe is the city’s housing shortage? Nationwide, vacancy rates have fluctuated around 5 to 11% since 1980 and now stand at more than 7%. In stark contrast, the overall rental vacancy rate in New York City was last measured at 1.4% with the typical rate being in the 2-3% range.
If the city’s vacancy rate were comparable to national figures there would be more than 100,000 additional apartments available for rent and rents would plummet to normal competitive levels. Such levels would allow owners to cover operating costs and, in stable times, produce operating returns which generally keep pace with inflation.
The board did begin tapping the brakes on rent increases about 10 years ago. But it was too little, too late. The consequences for the city’s tenants have been brutal. Rent burdens shot up to record levels for more than a decade and only recently have begun to decline. This period also witnessed a near tripling of the city’s homeless population.
In sum, this year’s rent freeze was both warranted on the law and by the numbers. It was long overdue.
Vásquez is the founding executive director of PA’LANTE Harlem. Collins served as executive director of the NYC Rent Guidelines Board from 1988 to 1994 and is currently a member of the PA’LANTE board of directors.