New York City's Rent Guidelines Board voted this week to consider increases ranging from 2 to 4.5% on new one-year leases, and 4 to 6.5% on new two-year leases, for NYC's 1M rent-controlled apartments.
The nine-member board will determine the final rates, which will be effective on leases signed after Oct. 1, at its meeting on June 17.
The RGB has a track record of splitting the difference on the preliminary range. In 2023, the board allowed increases of 3% on one-year leases; for two-year leases, the board approved increases of 2.75% on the first year and 3.2% on the second year.
During the pandemic, the board froze rents in 2020 and during the first half of 2021 before allowing a 1.5% increase for the second half of 2021. In 2022, the board allowed increases of 3.25% on one-year leases and 5% on two-year leases.
Landlords of rent-controlled apartments in NYC say these increases, including the proposed hikes for 2024, are far less than what they need to keep pace with rising costs—a claim that was supported by a report issued by the RGB last year.
The RGB report 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 for landlords. Earlier this year, a survey conducted by two landlord trade groups found that many owners of rent-controlled apartments are unable to cover the cost of necessary repairs, leading to higher vacancies.
After the RGB vote this week, representatives of building owners warned that without relief in the form of higher rents owners of older rent-controlled apartment buildings, particularly in the outer boroughs of NYC, are "at a breaking point."
"Older rent-stabilized buildings are at a breaking point, and without help, we will see massive losses in this housing supply," Jay Martin, executive director of the Community Housing Improvement Program (CHIP), told The City. Martin said that pre-1974 buildings outside of the core of Manhattan "have been defunded to a point of severe distress."
According to an attorney at Rosenberg & Estis, a law firm that represents landlords, a majority of the city's rent-stabilized housing owners are facing "a slow demise."
"Once again, the RGB has presented proposals that are wholly inadequate and clash with reality," Zachary Rothken told GlobeSt. "The majority of the city's rent stabilized housing owners are enduring a slow demise that will ultimately eradicate not just the maintenance of their buildings, but also New York's remaining affordable homes."
The annual debate over rent increases for rent-stabilized units in NYC comes amid signs of increased distress in the city's multifamily sector.
In a Q1 2024 earnings report this week, New York Community Bancorp—one of NYC's leading multifamily lenders—reported $798M in nonperforming loans, almost double the amount of distressed loans the bank said it had in December.
Loans backed by multifamily properties make up 45%, or nearly $37B, of NYCB's portfolio.