April 9, 2019

Assembly Continues Fighting to Protect Tenants and Strengthen Rent Regulation in New York

Speaker Carl Heastie and Housing Committee Chair Steven Cymbrowitz today reaffirmed the Assembly Majority's commitment to strengthen rent regulation laws and to enact new key tenant protections in New York State by announcing a comprehensive package of protections for renters. Rent regulations are set to expire on June 15 of this year and the Assembly will hold public hearings on May 2 and May 9 to discuss the proposals and how best to protect tenants in New York.

"The Assembly Majority has been a long time champion of expanding and strengthening rent protections," Speaker Heastie said. "In the state budget, we made the property tax cap permanent to provide stability to homeowners. Now we need to provide that same level of stability for tenants by reforming our rent and tenant protection laws. We have seen far too many families forced out of the neighborhoods they shaped because of the cost of rising rents and property speculators chasing profits over people. Displacement from one community means more competition for affordable housing in neighboring communities. For too long, old factions of New York State government ignored this fact and thought that by stifling reform to the New York City rent laws it would not have an impact on them locally down the line."

"More and more we are seeing increasing rents and stagnant wages, which are making it impossible for families to stay in their communities. Stable affordable housing is a key tool we must have to stabilize, and perhaps one day start closing, the income gap New York is experiencing," Assemblymember Cymbrowitz said. "This year, we will once again consider a comprehensive package bringing more transparency and accountability to the system and making housing more affordable for all New Yorkers."

The State of Rent Regulations in New York

The Assembly Majority has historically supported the legislative goals of fostering affordable, livable communities and protecting their residents through key changes to the state's rent regulation system. In New York City alone there are 5.5 million renters, which make up 66 percent of all households. About one third of those renting households are considered severely rent burdened, paying 50 percent or more of their household income toward gross rent.

With wages remaining stagnant, most families cannot afford rent increases that are often unexpected and can amount to hundreds of dollars per month. According to the Community Service Society's "The Unheard Third 2017," 50 percent of low-income residents they interviewed would not be able to afford a $25 per month increase in rent. While the laws governing rent regulated apartments have measures in place to moderate increases based on improvements, the system is often manipulated, leading to unnecessarily increased costs to tenants.

The current system of rent regulation was developed to protect New York City tenants from issues which at the time were, and still are, exacerbated by an extreme shortage of available rental housing across the five boroughs – about 63 percent of total housing stock are rental units, but as of the latest Housing & Vacancy Survey issued by the Rent Guidelines Board (RGB), only 3.63 percent of the total rentals were vacant.

Because the system has become so vast and complex, it can not only be difficult for tenants to navigate, but it is also easy for units to fall through the cracks and escape regulation altogether. This year's budget agreement included funding to support more staff and resources for the Office of Rent Administration ($8 million) and the Tenant Protection Unit ($5.5 million), which will help make sure the units that are supposed to be affordable remain affordable. Now, the Assembly will take a comprehensive approach to updating New York's rent regulations and strengthening tenant protection policies.

"I would like to thank the many members of our conference both past and present who have carried bills and fought for better housing laws on behalf of hard working men and women," said Speaker Heastie. "We are building on their work and advocacy and I look forward to enacting the strongest rent laws ever here in New York."

Eliminating MCI & IAI Increases

Under current law, landlord costs for maintaining or improving buildings and apartments are billed to tenants through an ineffective process and often-times without proper varification. One bill in the Assembly package would eliminate the major capital improvement (MCI) rent increase program, return rent for any tenant affected by an MCI increase to the pre-increase level and mandate that all pending rent increase applications be denied (A.6322, Barnwell).

"The major capital improvement rent increase program is a flawed system which has been overly complex for property owners to navigate, and has been a great disservice in our efforts to preserve the affordable housing stock," said Assemblymember Brian Barnwell.

Also included in the legislative package is a bill that would discontinue individual apartment improvement (IAI) rent increases (A.6465, Richardson). Under the current law, landlords are allowed to raise rent after making IAIs, which can range from cosmetic repairs to redoing various rooms.

"Landlords will often use any means they can to bring affordable housing units up to the highest rent possible, displacing tenants from their homes and communities," said Assemblymember Diana Richardson. "170,000 families have been displaced from rent stabilized apartments with the help of Individual Apartment Improvement increases, which invite landlord fraud. IAIs are the key factor that is gentrifying my community, and pushing tenants out of their homes across the City."

In considering these proposals and why they are necessary it is important to take into account a number of factors. According to the RGB, in nearly all stabilized buildings, revenues exceed operating costs, yielding funds that can be used for mortgage payments, improvements and/or pretax profit. On average, owners of rent stabilized properties spent roughly 59.3 cents out of every dollar of revenue on operating and maintenance costs in 2017. Looking at unaudited expenses, the cost-to-income ratio in 2017 was 64.6, a 1.2 percentage point increase from the prior year. The unaudited median cost-to-income ratio was 64 percent in 2017. It is also important to keep in mind that a majority of rent stabilized buildings are those with more than 20 units. With size differential there might also be rental income from commercial space that a bigger building might have and ownership by one of the select group of real estate companies which can bring systemic benefits and/or abuses to tenants and buildings across the city.

Protecting Preferential Rent Tenants

Landlords of rent regulated units currently have the authority to offer a preferential rent which is lower than the legal regulated rent. However, they also retain the right to adjust the rent charge up to the legal maximum upon lease renewal, leaving some tenants scrambling to cover the astronomical increase and pricing others out entirely. It has been noted by the RGB that at the borough level, the gap between collected and legal rent varies significantly. A contributing factor to this gap is preferential rents, usually offered when the legal stabilized rent exceeds the market rate for the area.

A bill included in today's package would require rent increases upon lease renewal to be based on the preferential rate which was charged to the tenant as opposed to the maximum legal regulated rent (A.4349, Cymbrowitz). Enacting this change would provide the opportunity for landlords and tenants to work on a more equal footing.

Eliminating Vacancy Decontrol & Bonuses

Vacancy deregulation allows a landlord to remove a unit from rent stabilization if it becomes vacant and the legal maximum is $2,774.76 a month or more in New York City. In other localities, the decontrol threshold would vary based on adjustments by the applicable rent guidelines board. Legislation to be passed would repeal that statute, and provide for re-regulation of certain units to rebuild the regulated housing stock (A.1198, Rosenthal).

"We are losing affordable housing at an alarming rate. With so many New Yorkers struggling to find an affordable place to live, we must do everything we can to preserve and protect existing units of affordable housing," said Assemblymember Linda B. Rosenthal, the sponsor of legislation to end vacancy deregulation and reform rent control. "My bills would help prevent the loss of thousands of units of affordable housing by making it harder to deregulate rent-stabilized units and reforming the way rent increases are calculated for rent-controlled units. This comprehensive package of legislation demonstrates that the New York State Assembly is committed to standing up for millions of renters statewide."

Under current law, landlords can impose up to a 20 percent rent increase upon vacancy. Legislation included in the Assembly's package would repeal this so called "vacancy bonus." Under the proposal, a vacancy lease would still be subject to RGB increases (A.2351, Pichardo).

"Housing costs are continuing to rise, speeding the erosion of affordable housing across New York City," said Assemblymember Victor Pichardo. "Eliminating the vacancy bonus increase would help slow the deregulation of affordable housing so that hardworking families and middle class residents can afford to remain in their communities."

Capping Rent Control Increases

Currently, rent-controlled rent increases of up to 7.5 percent per year are authorized for most units, causing rents to skyrocket for some of the city's most vulnerable tenants. The Assembly package includes a bill that would cap rent-controlled increases at the lesser of 7.5 percent or an amount equal to the average of the previous five RGB increases for one-year stabilized renewal leases, which are typically set at much a lower rate. It would also prohibit fuel adjustment or pass-along increases for rent controlled tenants (A.167-A, Rosenthal)

Reforming the Overcharge Lookback

For many rent regulated tenants, by the time they realize they have been overcharged by their landlord, they are past the four year statute of limitations to make a complaint. The Assembly's legislative package includes a bill that would hold landlords accountable for illegal behavior, and ensure tenants have means of legal recourse. This bill would extend from four to six years the statute of limitations for rent regulated tenants to file an overcharge complaint, and it would build an important exception into this rule, allowing the DHCR to consider a broader scope of rental history where necessary (A.5251, Dinowitz).

"For too long, the laws in this state have favored landlords over tenants, resulting in hardworking families being overcharged for rent," said Assemblymember Jeffrey Dinowitz. "Many times tenants do not realize they are being overcharged until it is too late. This legislation would reforms the statute of limitations for rent overcharge claims and allow tenants to seek remedy and recover overcharge penalties."

Preservation of Affordable Housing

Also included in the legislative package is a bill to support tenants of limited-profit housing, also known as Mitchell-Lama housing. The bill would protect tenants living in former Mitchell-Lama buildings that have undergone a voluntary dissolution (A.3851, Pretlow). Many limited-profit housing companies have exercised their option to pre-pay state subsidized mortgages and buy-out of the Mitchell-Lama moderate income housing program. Existing tenants who cannot afford the new market-rate rents will face eviction. This legislation would ensure tenants can continue to afford to live in their apartments.

"The Mitchell-Lama dissolution process often causes panic for tenants and threatens to price vulnerable New Yorkers out of their homes and communities," said Assemblymember Gary Pretlow. "My legislation would protect these tenants by requiring that these precious affordable housing units are covered by rent stabilization laws upon dissolution."

Another bill would ensure rent-regulated units leased by not-for-profits providing housing to vulnerable residents will remain regulated under the not-for-profit lease. It also clarifies that the "subtenant," or the individual receiving the housing, shall be considered the tenant for the purposes of rent regulation law enforcement (A.7115, Joyner).

"It is notoriously hard to find affordable housing here in New York, and we need to ensure that rent stabilized apartments remain rent stabilized," Assemblymember Latoya Joyner said. "This legislation would make sure that the protections of the Emergency Tenant Protection Act extend to not-for-profits who are using rent stabilized apartments to do great work by helping the homeless or those at risk of homelessness find homes and better lives here in New York City and throughout the state."

Another bill would extend rent stabilization protection to low-income tenants living in former project-based Section 8 projects, regardless of when the buildings were initially occupied (A.7116, De La Rosa). Under current law, housing accommodations in buildings occupied on or after January 1, 1974 are not subject to rent stabilization. The bill would also prohibit landlords from increasing rents on these units based on "unique and peculiar" circumstances.

"Every New Yorker deserves to have secure affordable housing," Assemblymember Carmen De La Rosa said. "But for decades, buildings were excluded from rent stabilization, making it even harder for low-income New Yorkers to put a roof over their families' heads. I am proud that this legislation would help ensure that affordable housing remains available for New Yorkers into the future."

Protections for Manufactured Homeowners

Additional legislation would provide protections to manufactured homeowners facing unjustified rent increases (A.5247, Thiele). Manufactured homeowners do not own or control the land on which their homes exist, and under current law, have no legal remedy for an unjustifiable rent increase. This bill would allow municipalities to opt in and provide recourse for homeowners in manufactured home parks who are confronted with unjustifiable rent increases.

"Manufactured homeowners have no control over the land their homes sit on and are often charged unjustified rent and lot fees," said Assemblymember Fred Thiele Jr. "Manufactured homes are a critical source of affordable housing across New York State. This legislation would ensure manufactured homeowners have some legal recourse when faced with unjustifiable rent increases."

Statewide Option for Expansion of the Emergency Tenant Protection Act

The Assembly package also includes legislation to remove arbitrary geographic restrictions on rent and eviction regulations (A.7046, Cahill). Municipalities across New York State would then be able to opt into the system if it has declared a housing state of emergency, which is based on a vacancy rate of five percent or less. The Emergency Tenant Protection Act of 1974 currently applies the rent and eviction regulation system to New York City and municipalities in Nassau, Rockland and Westchester Counties.

This bill would provide an option to municipalities across the state to take advantage of this program if needed.

"Finding affordable housing is not an issue exclusive to our bigger cities and their surrounding areas," said Assemblymember Kevin Cahill. "Tenants need and deserve protection regardless of where they live. This legislation provides a common-sense opt-in tool for municipalities all over the state to deal with rent emergencies."

Also included is a bill to expand rent regulated tenant protections by limiting the landlord's ability to take possession of units for his or her personal use (A.5331, Cymbrowitz). Allowing a landlord to recover only one unit for personal use, would prevent a scenario where multiple rent regulated tenants are forced out of their homes for the purpose of converting the apartment to luxury units or one personal house for the landlord. It would also prevent landlords from improperly deregulating units and improperly raising rents while the unit is unoccupied or occupied by a relative.

Critical Tenant Protections

Included in the legislative package is a bill that would require residential landlords to mitigate damages to a tenant in cases where the tenant vacated the premises, ensuring that if a tenant has to break a lease, only actual damages are recoverable (A.1973, Zebrowski). In these cases, the landlord would be required to take reasonable steps to re-rent the property, but the tenant could still be liable for damages if the premises cannot be re-rented or due to market considerations had to be rented at a lower rent.

"Sometimes tenants are faced with difficult circumstances that require them to break a rental lease," said Assemblymember Kenneth Zebrowski. "These tenants need and deserve fairness in resolving lease disputes. By requiring landlords to show good faith and mitigate damages, these disputes can be resolved in a timely manner."

Protecting Tenants from Unscrupulous Landlords

Earlier this year, the Assembly passed legislation to protect renters from the actions of unscrupulous landlords seeking to force a rent regulated tenant out of their housing by creating or maintaining the housing in a condition that endangers safety or interferes with or disturbs the comfort, repose, or peace and quiet of the tenant (A.6188, Lentol).