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Who Benefits?

eye on the news

Who Benefits?

And other questions to ask about New York’s new rent-stabilization law June 12, 2019
New York
Politics and law

It appears likely that New York State lawmakers will extend and make permanent New York City’s rent-stabilization regime—and even authorize cities and towns statewide to adopt it. Tenant advocates have made clear how they will measure the success of the law, and Governor Cuomo has promised to sign it: smaller rent increases, an end to the reduction of regulated units, and new barriers to eviction. But an objective assessment of the new law’s effects requires answering some inconvenient questions.

Who benefits from rent regulation? Unless one believes that rent should, unlike any other good or service, always be priced below market rate, we should want to know the answer to this question. That means tracking the incomes of residents of rent-regulated units. If those incomes are consistently higher than a municipality’s median income, the argument that property owners should settle for less in rent is questionable. Logic and experience tell us that rent regulations create disadvantages for low-income people: if twice as many people look for apartments as there are available apartments, landlords will rent to those with the higher incomes.

What is rent regulation’s effect on housing supply? Rent regulation is a sword that hangs over any new building, even those not touched by it at present. (The law will affect only pre-1974 buildings of six units or more, as well those built with specific city tax abatements.) Still, will new construction continue, as measured by new building permits—or will owners of regulated buildings be deterred from major renovations, which may be needed?

How does rent regulation affect housing conditions? This question is especially relevant for lower-income neighborhoods, where many rents are regulated. Will small property owners continue to invest in maintenance and improvements? It’s important to track building permits in rent-regulated units and by community district to answer this question, lest New York see less gentrification and more “shabbification.” We have learned what happens when rents are too low to cover maintenance costs—the essential problem underlying New York’s public-housing deterioration.

How will the new law affect housing turnover? Advocates emphasize the importance of ensuring that tenants don’t get forced out of their apartments. But there’s a related concern: do rent-regulated tenants stay in units larger than they need, blocking young families from moving into or staying in the city? Housing turnover in New York is already low, by national standards. With the new law, turnover and “over-occupancy”—a measure of empty bedrooms in an apartment—should be regularly tracked.

What happens upstate? The new law’s sharpest departure—next to its permanence—is its extension of the authority to adopt such regulation to all cities and towns in New York State. Even if Buffalo, Utica, Rochester, and Syracuse don’t act on that authority immediately, the potential will be there, and it may discourage real-estate investment. In that context, it’s worth tracking how many building permits and certificates of occupancy are granted in cities across the state. If rents rise but new building or renovation doesn’t follow, it may be that the new law will have had a “signal effect,” dampening potential revival upstate.

Rent laws are typically motivated by concerns about the share of household income being paid in rent, or by rent increases in suddenly fashionable neighborhoods. But a host of other questions should be addressed, whether by state or city agencies. The new law is ostensibly “permanent”—not keyed to a specific percentage of vacant units, for instance—but that should not stand in the way of a deeper public understanding of its effects. Even in Albany, minds can change.

Photo by Drew Angerer/Getty Images

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