Business

New York's rent regulation fight

Friends apartment Image copyright Getty Images

On Monday, laws which offer some of New York City's renters protection from large hikes are due to expire.

Many people associate the rent rules with the TV shows Friends and Sex and the City, which allowed the protagonists to live in Manhattan with relatively modest-paying jobs.

Tenants are campaigning for stronger rules that will keep homes protected by law, while landlords worry about squeezed incomes and legislation they argue favours high-earners rather than the less well-off.

Of the city's 3.2 million homes, 2.2 million are rented, about a million of which are subject to some rent regulation, mostly under rent stabilisation laws, according to the NYU Furman Center, which researches the city's housing.

For renters like Soni Fink, 91, the rules have meant she can keep living in the apartment she moved into in 1961. A move to market rate would easily eat up her retirement income, she tells the BBC outside her two-bedroom home towards the south of Manhattan.

Image caption Manhattan resident Soni Fink questions how payments for improvements stack up

Rent regulation

  • There are two types in New York: rent stabilisation, which covers the most homes, and rent control.
  • Apartments can be deregulated under rent stabilisation if they are vacated at a monthly rent of $2,500 (£1,600) or if they reach that rate and the occupant's income reaches $200,000.
  • A percentage of money spent by landlords on improvements can be added to the rent permanently. A vacancy means a landlord may increase rent by as much as 20%.
  • Rent increases are set by the Rent Guidelines Board. One-year leases were raised 1% last year. A rise of 3-4% has been typical previously.
  • Landlords may charge a lower rent than they are entitled to in order to attract tenants, but this can be raised on renewal of a lease.
  • Rent stabilised tenants have the right to renew their leases for one or two years.
  • Some landlords would like to see protections afforded only to those who need it.
  • Some tenants want to see the rules tightened to keep more homes regulated.

Ms Fink, who worked as a journalist for magazines and in public relations, retired in 1985, "when $40,000 a year was good money," she says. Rent currently accounts for about a third of her income. "If we didn't have rent stabilisation I don't like to think what I would do."

Ms Fink lives in the Stuyvesant Town-Peter Cooper Village complex, Manhattan's largest apartment development, built after World War Two to help house people returning from the conflict.

$4,100 fridge

One of her complaints, shared by other residents, is how rent increases are structured and how apartments in New York can be deregulated.

Landlords can only increase rent more than the rate set by authorities under strict circumstances, such as when an occupant moves out or if improvements are made to the apartment.

Ms Fink says this allows some landlords a lot of wiggle room. If, for example, a landlord puts in a new fridge, they can add a small percentage of the value of the appliance to the rent, in perpetuity.

Image caption Stuyvesant Town was built after World War Two to house families in Manhattan

For her, that meant a new fridge which cost the landlord $346 in 1988 ended up costing her more than $4,100.

Another means for landlords to raise rents is through a vacancy. When someone leaves an apartment, the landlord can increase the rent by as much as 20%. By filling the apartments with students who may leave after a year or two, these 20% increases can come thick and fast, says Kirstin Aadahl, a tenants association member who works in teaching and moved to the area in 2008 with her husband and daughter.

So fast, in fact, she says, that the rent - called the legal rent - can sometimes exceed the rate a tenant might pay for an equivalent home with no protection.

'Young families'

In that situation, landlords can offer what's called preferred rent - below what they may legally charge, she says. But hanging over the head of the tenant is the fact that after a one- or two-year tenancy is up, they may hike the rent up to the legal maximum should they so choose.

CW Capital, owner of the Stuyvesant Town complex, didn't immediately respond to a request for comment.

Rising rents through those quirks in the rules has meant "firemen, postal workers and young families", the groups the development was "built for" are being forced out, says Ms Aadahl.

Image caption Kirstin Aadahl (R) and Susan Steinberg are members of the local tenants association

For landlords, however, these rules protect the wrong people.

"Our problem is rent regulation creates a subsidy regardless of whether they even need it," said Jimmy Silber, co-president of the trade group Small Property Owners of New York, and himself a landlord in Greenwich Village. "There's no assessment from government."

The "subsidy" is also paid for by one group, landlords, rather than society at large, he says.

"You have people living in the finest parts of the Upper East Side and the Upper West Side who are professionals and in finance who have rent-stabilised apartments. They don't deserve it. It's unjust," he says.

'Abuse the system'

President of the Rent Stabilization Association, Joseph Strasburg, says that while the system of preferred rent isn't perfect, most landlords are savvy enough to want good tenants at a reasonable price.

And there are some tenants who "abuse the system", he says, for instance by subletting their apartments for a profit the landlord doesn't see. Another quirk he cites is the ability for a family member to claim a rent-regulated apartment if they live there for two years and the original occupant dies or moves out.

And as for the apartment improvement costs, landlords say they are necessary to pay for the financing costs on larger projects, and motivate landlords to upgrade, rather than just fix the homes they own.

Image copyright AP
Image caption New York City Mayor Bill de Blasio backs rules which strengthen regulation

"What's the point in putting in a beautiful kitchen for somebody and then next year they're only going to get 1% or 0% increases [in rent]?" asks Mr Silber. "If it's broken you can repair it. You don't have to put in new."

It also helps landlords balance the books when increases in tax, insurance and maintenance costs have risen faster than the 1% rent increase, says Mr Strasburg.

'City for everyone'

While the laws will be decided at state level in New York's capital, Albany, New York City Mayor Bill de Blasio has weighed in on the debate.

He wants to end deregulation for vacant apartments with rent over $2,500. He also wants to stop the 20% hike when a flat is left vacant and for the rent increases for improvements to end when they are paid off.

"Rent is the number one expense for New Yorkers. Unless we change the status quo, tens of thousands of hardworking families will be pushed out of their homes. This has to be a city for everyone. It cannot just be a city of luxury apartments out of everyday New Yorkers' reach," said Mr de Blasio.

As rents have risen while incomes have remained largely stagnant in New York City, the proportion of pay cheques given over to landlords has risen. Between 2005 and 2013, median rent rose 11.8%, while median household income rose 2.3%, according to the Furman Center.

Back at Stuyvesant Town, residents are focused on staying in an area they call their own, close to friends, schools or work.

"This is life, this is our home," says Ms Aadahl. "Just like everyone has a home and community, this is ours."