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Rent Board Approves Larger Hike For Stabilized Units As Costs Squeeze Landlords, Tenants

Owners of rent-stabilized properties in New York City will be allowed to increase rents by as much as 5.25% this year following a heated final vote by the Rent Guidelines Board on Monday night.

Protesters with tenant advocacy organization Community Action for Safe Apartments outside Hunter College before the Rent Guideline Board's final vote on 2024's rent hikes for stabilized apartments.

Dozens of tenant advocates lined up outside Hunter College on the Upper East Side prior to the vote, chanting for rent rollbacks. But unlike previous years, tenants remained outside protesting as the board filed onto the stage indoors to begin the vote, objecting to the process itself.

Inside a comparatively quiet auditorium, the nine-member board — made up of representatives of both landlords and tenants — voted 5-4 to approve rent increases of up to 2.75% for one-year leases and 5.25% for two-year leases.

The hikes are slightly larger than either of the increases approved over the past two years. Two-year leases were capped at a maximum of 5% in 2022 and an unusual split working out at around 4.4% last year. They also follow years of a freeze in rent hikes, which former Mayor Bill De Blasio introduced during his tenure and which carried on into 2020.

The vote followed two months of increasingly heated hearings, with the penultimate meeting in Long Island City seeing two tenant members of the board march out in protest, along with a crowd of chanting New Yorkers.

The decision, which covers nearly 1 million apartments in the five boroughs, drew derision from tenant and landlord advocates alike.

Tenant members of the board proposed freezing rents entirely, a measure that was struck down. The handful of protesters inside the nearly empty theater shouted “Shame,” “Go home” and “RGB is a sham” at landlord members while they talked, drowning out their proposals.

The burbling tensions surrounding the decision, against the backdrop of a housing crisis and increasing costs for landlords, had both sides calling for changes to the annual process.

“It must change, and it must change soon,” Adán Soltren, a tenant member of the RGB, said at the hearing. “We need to make legislative reform of this process and this body.”

Landlord groups said the approved increases aren't nearly enough to cover rising costs from a combination of inflation, interest rate hikes and insurance premiums.

“The Rent Guidelines Board process is broken. It is driven by relentless political pressure instead of an honest assessment of the data available to the Board,” Community Housing Improvement Plan Executive Director Jay Martin said in a statement after the vote. “And the result is, like tonight, a rent adjustment that fails to cover inflation, nevermind the actual increases in operational costs, leading to lower quality housing for tenants."”

The combined cost of taxes, labor, fuel, utilities, maintenance, administrative and insurance costs went up by 3.9% between April 2023 and March 2024, according to the RGB’s most recent research report

Ann Korchak, president of the Small Property Owners of New York, said this year’s increase won’t be enough for owners to carry out repairs and make necessary investments to maintain their properties over the long term.

“Relative to how expenses are escalating, they’re low,” Korchak said. “Inflation is not easing. They're not enough. They haven't been enough for years.”

The nine members of the Rent Guidelines Board onstage in an almost empty theater at Hunter College, while protests continued outside the building.

But tenants facing increases also face income disparity that has shot up in NYC since the pandemic. Pay for New Yorkers making annual salaries of around $40K increased by $186 a year between 2019 and 2022, according to data from the Center for New York City Affairs reported by The New York Times. But those making around $217K in fields like tech and finance saw a pay bump of $5,100 per year during the same period.

That has made the city's sluggishness in producing more affordable housing all the more acute for low-income New Yorkers. Depending on the borough, the total number of housing permits issued in 2023 dropped by between 45% and 83% compared to a year prior, according to the RGB’s most recent report.

When applications for Section 8 vouchers opened for the first time in 15 years in NYC at the start of this month, there were more than 150,000 applications in less than 12 hours

The city’s apartment vacancy rate has fallen to its lowest level in 50 years, hitting 1.4% overall and 0.4% for apartments renting at $1,100 or less. 

“It’s shameful,” Rodrigo Camarena, former RGB member and director at immigration advocacy group Justicia Lab, said of the rent hikes. “It comes at a time when we’re experiencing record homelessness in New York, when people are really living paycheck to paycheck, and it’s just going to push more people out into the street.”

Protesters and police on the streets outside Hunter College ahead of the Rent Guidelines Board's final vote.

Inflation remains higher for New Yorkers than those in other parts of the country. It hit 3.8% in April this year in NYC, compared to the national average of 3.4%, Bloomberg reported. Last month, it increased again to 3.9%, according to the Bureau of Labor Statistics

“Rent stabilization is virtually the only thing that's keeping housing affordable to low-income and working-class people in New York,” said Cea Weaver, coalition director at tenant advocacy group Housing Justice for All. “The reality is that the RGB needs to consider many things, not just landlords’ bottom lines.”

But owners of rent-stabilized buildings have said that the reforms to rent stabilization passed in 2019 have dramatically reduced their ability to make repairs and pass along the costs to their tenants. 

With more loans backing these buildings coming due — and the failure of Signature Bank last year catalyzing distress among owners — there have been more examples of forced sales and foreclosure filings

“With having these bank failures, which are obviously the biggest lenders in the stabilized market, a lot of the people who were willing to work with the owners are no longer truly in the market,” Kelly Farrell, a policy analyst at landlord lobby group the Rent Stabilization Association, told Bisnow. “The financing part of this is becoming increasingly challenging for stabilized owners.”

The board is made up of nine New Yorkers appointed by the mayor: four members representing public interests, two for landlord interests, two for tenant interests and one chair. 

“I know how the sausage is made,” Camarena said. “It’s not based on facts or the material conditions of New Yorkers’ lives. It’s based on what the mayor thinks he should do to keep real estate interests happy with his work.”

Mayor Eric Adams weighed in earlier in the day, asking for minimal rent increases amid NYC's housing affordability crisis, CBS News reported.

“We are really hoping that there's a low end to any increase at all,” Adams said. “I share the concerns of advocates and others. You know, we need to make sure we keep the city affordable.”