Definitions

rent stabilized

Rent control in New York

Rent control in New York refers to rent control and rent stabilization programs in New York State, USA. Each city may choose whether to participate or not, and as of 2007, 51 municipalities participated in the program, including Albany, Buffalo and most famously, New York City.

New York's rent control program, which began in 1943, is the longest-running in the United States. From 1943 to 1950, it was administered by the Federal Government. It has been administered by state government since 1950, although state and city agencies shared administrative work from 1962 to 1984.

Rent control

Qualification

To qualify for rent control, a tenant must have been living continuously in an apartment since July 1 1971. When vacant, the unit becomes rent stabilized, except in buildings with less than six units, where it is usually removed from the program. In some cases a tenant living in a one or two family home may qualify for rent control if the tenant has lived there since 1953 , however once the apartment or home has been vacated the home or apartment (if in a 2 family) is deregulated.

In apartments within single and two-family homes, the tenant must have been residing in the unit continuously since March 31 1953 in order to qualify for rent control. Once the unit becomes vacant, it leaves the rent control program and is not eligibile for rent stabilization.

Terms

Rent control limits the price a landlord can charge a tenant for rent, and also regulates the services the landlord must provide. Failure to provide these may allow the tenant to demand a lower rent.

Outside of New York City, the state government determines the maximum rents and rate increases, and owners may periodically apply for increases.

In New York City, rent control is based on the Maximum Base Rent system. A maximum allowable rent is established for each unit, and every two years, the landlord may increase the rent up to 7.5% until the Maximum Base Rent is reached. However, the tenant may challenge these increases on grounds that the building has violations or the owner does not need to increase the rent that much to cover expenses.

Maximum base rent

In New York City, the maximum base rent (MBR) is calculated to ensure the rent from rent control units covers the cost of building maintenance and improvements. As set up in the New York City Local Law 30 of 1970, the formula reflects real estate taxes, water and sewer charges, operating and maintenance expenses, return on capital value and vacancy and collection loss allowance. The MBR is updated every two years to reflect changes in these expenses.

Rent stabilization

Qualification

The qualifications for rent stabilization have been changed over the years, to curb perceived abuses which allowed the wealthy to enjoy rent increase protection intended for the working class.

Since the passage of the Rent Regulation Reform Act of 1997, rent stabilization has been restricted to apartments where the legal, or stabilized, rent was under $2,000 per month. The unit would become deregulated once the rent goes above $2,000 and is either vacated or if the household adjusted gross income is over $175,000 for 2 years. If the stabilized rent is under $2,000 then income does not affect the rent stabilized status of the apartment. Although one has to use the stabilized apartment as their primary residence to qualify for rent stabilized status some tenants particularly wealthy tenants have bought summer homes and have traveled a lot and still take advantage of the rent regulated apartment status. However, in some instances tenants lose the "primary residence challenge" either by residing in another state and temporarily visiting or being unprepared to fight the landlord who may search for public records and deeds to attempt to prove that the tenant isn't using the apartment as his or her primary residence.

Tenants living in buildings built between February 1, 1947 and January 1, 1974, or who moved into a pre-1947 building after 1971, or who moved into certain post-1974 buildings that received tax breaks, qualify for rent stabilization if the other financial terms are met, and the tenant moved into the unit before July 7 1993. As part of city managed programs Some buildings become temporarily rent stabilized in return for a temporary reduction in real estate taxes when those buildings have been converted to residential use from another use group (i.e. commercial or industrial). Two of those programs, J-51 for renovated buildings, and 421-a for new construction grant temporary rent stabilization to tenants of apartments in those building, overriding other qualifications.

Terms

Rent stabilization sets maximum rates for annual rent increases, and as with rent control, entitles tenants to receive required services from their landlords and have their leases renewed. Violations may cause a tenant's rent to be lowered.

History

Federal regulation (1943–1950)

In 1942, President Franklin D. Roosevelt signed the Emergency Price Control Act into law. The goal of the act was to prevent inflation in the booming, fully employed wartime economy by setting price controls nationwide. In November 1943, the Office of Price Administration froze New York rents at their March 1 1943 levels. When the Emergency Price Control Act expired in 1947, Congress passed the Federal Housing and Rent Act of 1947, which exempted construction after February 1 1947 from rent controls, but continued that regulation for properties already completed by that date.

State regulation (1950–1962)

The State of New York took over when Federal regulation ended in 1950. Under the first permanent state laws in 1951, New York took a similar regulatory approach to the Federal Government. At the time there were about 2,500,000 rental units state-wide, 85% of them in New York City. The initial laws covered all rental units, and regulated all relationships between owners and tenants concerning rents, services and evictions.

Into the 1950s, a severe housing shortage prompted the first deregulation of rental units. In New York City, apartments in single and two-family homes became deregulated after April 1 1953. Cities and towns outside New York City were given permission to deregulate when ready. The most expensive luxury apartments in New York City began to be deregulated starting in 1958. By 1961, only New York City and 18 of New York's 57 other counties had rent regulation.

Mixed regulation (1962–1984)

New York City and the state government began dual administration of rent regulation in 1962, and 75,000 expensive apartments were gradually deregulated by 1968. In 1969, construction and vacancy rates slumped, causing non-regulated rents to rise nationally. This rapid increase in rents caused New York to pass the Rent Stabilization Law of 1969, which introduced rent stabilization to units built after the 1947 cutoff for buildings to be eligible for rent control, covering approximately 325,000 units in New York City.

The Local Law 30 of 1970 introduced a new method of rent control price calculation, based on the Maximum Base Rate, which adapted to the changing costs faced by landlords, allowing them to pass those costs on to renters.

State regulation (1984–present)

References

Further reading

  • Block, Walter Rent Control. The Columbia Concise Encyclopedia of Economics. .

External links

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