New York City’s Rent Rise Pits Owners Against Renters
- Jun 20, 2008
New York City’s rental market is legendary: Because buying a home within city limits is so expensive, the city has long been a renter’s market.
But now–thanks to new rent increases, which the board in charge of New York City’s rent-stabilized apartments passed yesterday–renters may find their cost of living is about to rise.
New York’s high housing demand has pushed apartment costs up to unbelievable levels in recent years–which renters are happy to pay.
With rents averaging $2,922, Forbes selected New York as the most expensive city in the country, noting that its 2.8 percent vacancy rate should keep the market moving.
There’s no question about it: New York is expensive. Its average rent is $1,000 more than America’s second most expensive city–San Francisco–where typical renters pay $1,904 a month.
Because the city’s rental market is so costly, the state of New York has taken steps over the years to ensure some affordable living is available.
- Some of New York’s buildings are rent controlled, mostly residential ones built before 1947. Renters must have been living there since before 1971 to take advantage of the cheaper rents, which are determined by the Maximum Base Rent system.
A maximum base is set for each unit and is altered every two years to make up for operating costs. Rents can only be raised 7.5 percent each year until the set limit is reached, according to the New York City Rent Guidelines Board.
- Other units in the city are rent-stabilized. Stabilized buildings typically include at least six units and were built before 1974.
The system may be helpful to some renters, but it certainly isn’t simple–even the board’s Web site describing the characteristics of a rent-stabilized apartment doesn’t fully say what the classification entails.
Because some buildings can have a few–but not all–rent-stabilized apartments, the board says to be rent-stabilized, an apartment must have had a rent of less than $2,000 for someone who moved in during 1993 or later.
However, it cautions, "there are many exceptions to these rules." To make things more convoluted, new buildings can be rent-stabilized because of a 421-a or J-51 tax exemption–even if the rent is more than $2,000.
Sound confusing? Things just got a whole lot more complex.
On Thursday night, the Rent Guidelines Board approved a maximum increase of 4.5 percent for one-year leases and 8.5 percent for two-year leases.
In addition, the board also voted to allow a rent increase option for any buildings that have had the same renters for six years or more–they can be charged either the new increases or a $45 or $85 monthly increase, depending on whether they have a one- or two-year lease.
The increases were the board’s biggest since 1989–and didn’t sit well with renters at the meeting, who the New York Times said shouted and booed.
Understandably, no one wants higher rents. The economy is tough right now: Unemployment is down, food costs have grown and many people have less to spend or save.
And the New York housing programs were established to help keep poor and working-class Americans in the city by giving them more affordable rent–keep raising that monthly amount, and they’ll be priced out, fast.
But some consideration needs to be given to the property owners, too, who–as energy and other costs rise–are also struggling.
The higher oil prices are making heating large buildings astronomically expensive. (Which is probably why, as Newsday reports, renters who pay for heat could see their rent increase less–4 percent for one-year leases and 8 percent for two-year ones).
Which is why some said that the increases weren’t enough, according to the Times; others said it would at least help some of the small-property owners who have had renters paying as little as $500 a month for years.
But who should get the bigger break? Renters who are trying to find a way to live in the country’s most expensive city? Or property owners who are getting squeezed by rising energy and maintenance costs?
Is there a compromise that might make both groups happier? What do you think? Tell us by posting below.