Analysis hints at a policy conundrum lawmakers face as they consider changes to rules expiring June 15.
Original article by Josh Barbanel.
The biggest beneficiaries of rent regulation in New York aren’t low-income tenants across New York City, but more affluent, white residents of Manhattan, an analysis by The Wall Street Journal found.
These Manhattan renters get a steep discount from market rents in the same neighborhood: about $1,000 a month per apartment, up to nearly $2,000 a month in Manhattan’s Upper West Side. In many less affluent working-class neighborhoods, regulated rents are no different than, or only slightly below, market rate rents in the same locale, providing little direct benefits to tenants, an analysis of U.S. Census Bureau data shows.
CHART – The Manhattan Discount – Median rent for rent stabilized and market rent apartments in New York City. Source: WSJ analysis of the Census Bureau’s 2017Housing and Vacancy Survey Note: Includes rent stabilized units built before 1974.
Manhattan Regulated Rent $1,000 Market Rent $2,000 – $3,000 (about 50/50)
Queens, Brooklyn, Bronx – $1,000 and very few above the Regulated Rents
The analysis suggests a policy conundrum that may surface as Gov. Andrew Cuomo and state legislative leaders agreed on legislation to strengthen rent laws to protect tenants: Changing some provisions could disproportionately help wealthy renters.
It challenges the view that the plight of tenants is constantly changing for the worse. A census survey put the apartment vacancy rate in New York at 3.63% a few years ago, the highest it has been in two decades, though below the 5% threshold that would lead to an end of rent regulation in New York. The same survey found that for all renters, incomes were rising faster than rents in the city.
State Sen. Liz Krueger, a Democrat who is a leader in the fight to toughen rent laws, agreed that there have historically been communities where regulated rents approximated market rents.
But Ms. Krueger, who represents a district on Manhattan’s East Side, said that the rent rules also protect tenants in these communities from evictions, and will grow in importance as gentrification expands to more neighborhoods where landlords might look for ways to push regulated rents higher or evict tenants.
“Rent regulation is not only about the dollar amount charged. It is about the stability of housing and your ability to stay in it,” she said.
In all of Manhattan, median regulated rents were 53% below median market rates in the borough. In Queens, 8.6% were below market rates; in the Bronx, it was 13.5%; and in Brooklyn it was 16.7%, the analysis found. Renters age 65 and older in Manhattan, many of whom haven’t moved for decades, have lower median regulated rents and therefore a bigger discount from market rents.
CHART – High Income Rent Break – The gap in rent is largest for the top income quartile in New York City. Source: WSJ analysis of the Census Bureau’s Housing and Vacancy Survey Note: Rent stabilized units built before 1974. Top quartile income = highest rent break.
More affluent renters also received a bigger discount from market rent. A typical renter with an income in the top quarter of all New York households paid about $1,650 in rent, compared with $2,700 in rent for a similar renter paying market rents, a discount of 39%. For a renter in the bottom quarter of income the difference was 15%.
White renters in rent-protected apartments benefited more than any other race group, the analysis found, with a discount of 36% from market rates, compared with 16% for black renters and 17% for Hispanic renters.
The analysis is based on the 2017 New York City Housing and Vacancy Survey, which is conducted by the U.S. Census Bureau for New York City every three years. It compared median market rents with median rents in regulated buildings built before 1974. This approach excludes new apartment towers with high rents that opt into rent regulation to be eligible for property tax abatements.
Tenant groups say New York City’s rent-stabilization system disproportionately benefits lower-income people, who make up the largest share of renters protected by rent rules, not the wealthy.
But building owners and the Citizens Budget Commission, a civic watchdog group, say that the program should be specifically targeted at the poor.
CHART – Rent Race Gap – Median rents for stabilized and market rate apartments in New York City. Source: WSJ analysis of the Census Bureau’s 2017Housing and Vacancy Survey Note: Includes rent stabilized units built before 1974. Stabilized Additional Market Rent White Asian Hispanic Black shows almost all equal n regulated rents but more whites on additional market rent.
Rent regulation in New York has been in effect in one form or another since World War II. Under the current system, a nine-member board appointed by the mayor sets maximum permitted rent increases for one- or two-year leases.
The governor on Wednesday said he would sign a 74-page bill backed by Democratic leaders of the state Senate and Assembly that strengthens and makes permanent rent regulations affecting roughly one million apartments in New York City. The current rent-regulation rules expire on Saturday. Legislators are scheduled to vote on the bills on Friday.
One of the bills would repeal vacancy decontrol, the process by which vacant apartments fall out of rent regulation when monthly rent crosses a certain threshold, currently $2,774.76 a month.
Nearly 18,500 tenants in older buildings had rents above that threshold. They had median household incomes of $150,000 a year and average household incomes of about $210,000 a year, the Journal analysis found.
Another rule that allowed owners to decontrol expensive apartments, if the owner reported income of more than $200,000 in each of two years, would also be repealed under the legislation.
“Many of the proposed changes will further benefit upper-income renters without providing relief to lower-income households most likely to be rent burdened,” the budget group said in a report in January. The group called for the elimination of rent protections for about 28,000 households earning more than $200,000, but continuing it for low-income renters. Building owners have called for the city to provide rent subsidies to low-income tenants.
“The major benefit of rent regulation for low-income people is the security against being displaced,” said Tom Waters, a housing policy analyst at the Community Service Society, an advocacy group for the poor. “The rent discount, the difference in rents, doesn’t necessarily capture that.”
The Journal’s analysis found large disparities in rent in prime Brooklyn areas, such as Brooklyn Heights, Fort Greene, Williamsburg and Greenpoint, but little difference in Kew Gardens and Woodhaven in Queens.
In Morrisania and East Tremont neighborhoods in the Bronx, the median regulated rent was $1,200 a month, $50 more than the median market rate of $1,150, the analysis found.
Shmaya Haskel, a broker at Bruma Realty LLC, said his company lists about 100 rent-regulated apartments in the Bronx and Upper Manhattan, some of which are newly renovated and will eventually rent below the maximum regulated rent permitted under current rules.
“The market is the market,” he said. “These units are rent-stabilized but they might as well be market rate.” Most of these units were listed under rent laws at “preferential rents,” a rent below the legal maximum permitted under the rent laws.
Anita Long, a technician at Verizon, has lived in a rent-regulated apartment on the Grand Concourse in Bronx for more than a quarter of a century, in a neighborhood where regulated rents are about 8% below market-rate rents.
She pays about $1,300 a month for a one-bedroom, and is a volunteer organizer with a local housing group that supports stronger rent laws, CASA, or Community Action for Safe Apartments. Still she has occasionally looked at other apartments in the neighborhood, but found that comparably priced apartments on the market were too small.
“I couldn’t fit my furniture there,” she said.