Here’s the hard truth: The Rent Guidelines Board’s approval of a 10% rent increase over the past three years — and its expected endorsement of yet another hike next month — are based on need, not greed.
Tenants are not the only ones feeling the pinch; as much as no one wants to talk about it, the city’s property owners are also experiencing higher costs for everything they need to keep their buildings livable.
Yes, there are bad landlords across the city, but not every landlord is bad. There are large corporations that own rent-stabilized buildings across the city, but not every landlord is a corporation.
More than a quarter of properties in New York City are owned by landlords who possess five or fewer properties, and their rental income is make-or-break for many.
Tenants deserve a break, to be sure. They have no equity in the places where they live, but they pay higher prices year in and year out. Yet freezing their rents, while it would help millions of tenants in New York, would mean depriving landlords of the necessary financial resources to maintain and keep their homes.
The costs of a rental freeze are extraordinary, though not immediate.
The Citizens Budget Commission recently reported that many rent-stabilized buildings in New York City are in “poor condition,” and a growing number are “in financial distress” due to reduced rental increases and nonpayment issues. The deterioration will only grow if a rent freeze is imposed.
Increases in foreclosure rates are sure to follow. If more landlords are unable to maintain even basic property standards and begin losing tenants, they risk losing income. Without income, they won’t be able to make their mortgage or property tax payments.
We suspect many smaller landlords in financial distress will sell their properties before losing them. However, this increases the chances of large corporate landlords swooping in to buy them, expanding their portfolios and potentially their market-rate holdings, jeopardizing the future of rent-stabilized housing in New York itself.
Nobody wants a rent increase or to approve a rent increase. But doing so is not a matter of expedient politics but of hard economic reality.
Still, there are things the government can do to help tenants cope with rental increases.
Expanding the availability of housing vouchers and first-time homebuyer programs is a start.
Making a chunk of rent payments tax-deductible is another option the state and city should consider.
Encouraging greater incentives to build more housing in New York through programs already underway and beyond is still a step further.
Solving the city’s affordability crisis requires finding ways to lift the economic burden off each other together, rather than letting one side bear the full brunt.
