NYC Board Proposes Hikes on Rent-Stabilized Apartments

Inflation—and the Fed’s campaign of rate hikes to combat it—may be winding down, but its lasting impact is about to be felt by apartment dwellers in rent-stabilized units in NYC.

Aiming to give building owners who have been dealing with spiraling operating costs in the past year some relief, the city’s Rent Guidelines board has proposed increases of 4% to 7% for two-year leases and hikes of 2% to 5% for one-year leases.

If approved in a final vote next month, this would be the second consecutive year the board has enacted rent increases for the nearly 1 million rent-stabilized apartment units in NYC, which are occupied by an estimated 2M people.

Protesters erupted during the board’s meeting this week, demanding a rent rollback and shouting “shame on you” at board members, Bloomberg reported.

Mayor Eric Adams—who has previously signaled support for small landlords who are struggling with rising costs, while also saying he wants to help renters–issued a statement on Tuesday saying the high end of the board’s proposal is “beyond what renters can afford.”

“While we are reviewing the preliminary ranges put forward by the Rent Guidelines Board (RGB), I want to be clear that a 7% rent increase is clearly beyond what renters can afford and what I feel is appropriate this year,” said Adams, who also is a landlord.

“I recognize that property owners face growing challenges maintaining their buildings and accessing financing to make repairs; at the same time, we simply cannot put tenants in a position where they can’t afford to make rent,” the NYC mayor said.

If approved next month, the board’s rent increases would begin taking effect as tenants renew leases starting on October 1.

During the pandemic, the rent board froze rents multiple times. Last year, it increased rents in stabilized units by 3.25% on one-year leases and 5% on two-year leases.

Earlier this year, the RGB issued a report that indicated that rents would have to rise by as much as 8.35% for one-year leases and 15.75% on two-year leases to maintain net operating income at current levels for landlords.

“The data clearly shows that 100-year-old buildings in the outer boroughs are struggling with skyrocketing costs. When revenues don’t increase at the same rate as costs, then buildings are defunded and they begin to deteriorate,” Jay Martin, executive director of the Community Housing Improvement Program, an association of rent-stabilized property owners and managers, said in a statement.

Zachary Rothken, an attorney with Rosenberg & Estis, a law firm that represents landlords, told GlobeSt. the board’s proposed increases are not high enough to offset cost increases hitting landlords.

“Once again, the RGB has ignored its own data and willfully rejected reality at the expense of New York City property owners. The cost increases of operating rent stabilized buildings far outpace the rent adjustments being proposed,” Rothken said.

According to one of the RGB’s surveys, about 40% of rent-stabilized apartment dwellers spend more than half their total income on gross rent (which includes fuel and utilities).