Curbed: Tenant advocates and real estate insiders react to New York’s rent law reform

By Zoe Rosenberg
June 14, 2019

A sweeping series of reforms that would strengthen rent regulation protections and extend them to renters across New York state have passed in the state Senate and are poised to do the same in the Assembly, one day before the state’s current rent regulation package is set to expire.

The deal, which was reached by the Democrat-controlled Assembly and Senate earlier this week, embodies long-held beliefs about the right to affordable housing by groups and politicians that call for a tenant-first approach. But it has also galvanized the city’s real estate industry, who largely rejects the reforms (explained at length here) as a short-sighted fix that will hurt landlords and lead to disinvestment in properties and a decaying housing stock.

Governor Cuomo has said he’s “ready to sign the bills if they pass.” Below, how specifically leaders on both sides of the debate think the reforms will help, or hurt, New York.

With this landmark deal, Albany has recognized that the rights of tenants to stable, affordable, and fair housing is an absolute necessity, and should be placed above landlord profits. Repealing preferential rent (which impacts about 30 percent of all rent regulated apartments), vacancy bonuses, and Individual Apartment Improvements (IAI), will empower and protect our clients and people across the state against landlord harassment as they can no longer drastically increase rents to push tenants out. Furthermore, eliminating 20 percent vacancy and reducing IAIs to $15,000 once every 15 years ($89/month or $83/month) will dramatically reduce housing court cases.

We have seen firsthand, through our clients and all low-income New Yorkers, how communities benefit when tenants are given the tools and resources to thrive and do not have to fear displacement. Their contributions are what enrich our City.

Scott Mollen, chairperson of the NYC Rent Guidelines Board under Mayor Ed Koch and partner in the Real Estate Practice at Herrick, Feinstein LLP:

This legislation provides instant gratification but in the long run, it sows the seeds for future significant housing problems for low- and moderate-income tenants, as well as problems for the entire city.

Most low- and moderate-income tenants live in very old buildings. These buildings have suffered from the most wear and tear and have antiquated building systems. They have the greatest need for upgrades of ancient bathrooms, kitchens, electrical wiring, and HVAC systems. Which investors will seek out opportunities to invest where their returns will be nonexistent or relatively minuscule compared to other alternative investments?

Furthermore, luxury decontrol is being eliminated. So, a multi-millionaire can remain in a rent-stabilized apartment and be subsidized by the building owner. These laws should protect the poor and middle class, the elderly, and the disabled, rather than people earning hundreds of thousands or more a year. Why should one group of investors bear the costs of providing the city with needed affordable housing, as opposed to all taxpayers paying their share as they do with respect to other citywide needs?

This bill is a huge step forward in reversing decades of weakening amendments to the laws that govern rent regulation in New York state, like ending vacancy decontrol, vacancy bonuses, making preferential rents permanent, expansion of the Emergency Tenant Protection Act, and moderating MCI’s and IAI’s. This is the culmination of years of tenant activism and advocacy, and a great day for all New York. We applaud Leader Stewart-Cousins and Speaker Heastie for this courageous and necessary piece of legislation that will save communities across the state, particularly communities of color, and save many from homelessness caused by escalating rents. Robert Nelson, President of Nelson Management Group:

This isn’t rent reform, this is punishing landlords 101. These bills have effectively turned the owners into a de facto social service agency of the city and state. In my more than 30 years in this business, I’ve never seen such irresponsible, one-sided legislation that at the end of the day will turn New York’s housing stock into something sub-standard, diminishing the region’s reputation as a wonderful place to live and work. State Senator Zellnor Myrie:

In New York City, rent-stabilized units house more poor and low-income families than all other forms of public and subsidized housing combined. Rent stabilization is a lifeline to millions of tenants in New York City, but this lifeline has been under attack for decades, resulting in the loss of hundreds of thousands of affordable housing units. With this bill, we finally put power back in the hands of tenants not only in New York City but across the whole state and take a step toward housing justice for all New Yorkers. Leonard Steinberg, chief evangelist and corporate broker for Compass:

Affordable housing is critically important to New York. When rent regulation is structured based on a political agenda, it’s bound to be poorly executed. We need practical—not ideological—governance. Passing the cost burden of affordability on to the landlord exclusively and arbitrarily seems foolish. An audit needs to be conducted immediately to be certain all those benefiting from rent-controlled apartments actually qualify. New York State would be in a much better position to absorb these costs if we weren’t being stiffed by the Federal government, who takes 10 to 15 percent of our Federal tax dollars and re-distributes them to other states. Those dollars should be spent here on affordable housing and infrastructure!

For decades, the real estate industry and the politicians in their pocket gutted the rules that let generations of working-class New Yorkers live and raise families in this city. But tenants activists and community organizations fought back. They built the Working Families Party, ousted the corrupt IDC, and made it impossible for Democrats to put real estate lobbyists ahead of tenants. This legislation is proof-positive that the days of big real estate running Albany are over. The end result will be a more affordable New York for all of us.

The progress made on vacancy decontrol, preferential rent and new targeted enforcement measures are all long overdue, important victories for tenants. However, I’m deeply disappointed that our elected leaders prioritized scoring political points by choosing permanently low rents over the financial and physical health of our regulated housing stock. When we don’t strike a balance that protects rents and also allows regulated buildings to generate enough revenue to pay for their maintenance, it’s the tenants and our communities who ultimately suffer because of it.