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We Need to Know How the New Rent Law Hurts New York

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We Need to Know How the New Rent Law Hurts New York

Crain's New York Business July 24, 2019
Urban PolicyHousingNYC

The passage of the stringent new state rent regulations may seem like the end of a long saga—but it should be the beginning. Responsible lawmakers should set out to monitor the impact of the law on New York’s housing market supply and the condition of its buildings. If advocates of the law believe in evidence, not just anti-landlord ideology, they should want to know the answers to some inconvenient questions—answers which, in all likelihood, will make clear that this is a law that benefits the few at the expense of the many.

Here are some questions which the Rent Stabilization Guidelines Board, for instance, or the Independent Budget Office, might ask.

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. Will new construction continue, as measured by new building permits? 

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 insuring 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 counties 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. Who knows? Even in Albany, minds—or at least who holds office—can change. 

This piece originally appeared at Crain's New York Business

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Howard Husock is vice president for policy research and publications at the Manhattan Institute and author of the forthcoming book, Who Killed Civil Society: The Rise of Big Government and Decline of Bourgeois Norms.

Photo by Jitalia17/iStock

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