A Brief History of Rent Regulation in New York: An Update

This article responds to Michael Cavadias’s piece, A Brief History of Rent Regulation in New York.

Head to Rest One and Head to Rest Two by Lawrence Lemaoana

In late 2017, when I wrote the piece “A Brief History of Rent Regulation in New York,” New York City was hemorrhaging rent-regulated apartments. Fifty years earlier, nearly the whole city had been subject to rent control; now less than half the city’s rentals were regulated, and that number was continuing to plummet. Soon, it seemed, rent regulation would be a thing of the past.

Since the 1970s, the landlord lobby and their friends in the legislature have been successfully chipping away at tenant protections. They created loopholes in the laws that allowed landlords to permanently deregulate a rent-regulated unit when a tenant vacated–netting the property owner massive financial wins for years to come, and further incentivizing the ouster of longtime tenants. As a result, real estate speculators bought up buildings with the express purpose of harassing tenants out of their homes, and landlords used every tool at their disposal, from pursuing frivolous cases against tenants to using construction as harassment. Those methods were technically illegal, though the laws prohibiting them were rarely enforced. But tenants also faced the threat of perfectly legal harassment, like when landlords made improvements to a building in order to take advantage of lax laws that would allow them to jack up the rent suddenly (these are known as “Major Capital Improvement” increases). As a result, working-class renters lucky enough to have the protection of rent regulation were nonetheless in peril of being pushed out of their homes and neighborhoods.

I ended “A Brief History of Rent Regulation in New York” with a look toward the future, noting that the rent laws were up for renewal in 2019 and advocating a set of reforms that would improve this grim picture—from ending the loophole that deregulated newly vacated apartments, to restricting landlords from claiming more than one apartment in a building for personal use. Since then, a lot has happened: a wave of activism has helped consolidate popular power on the electoral level, the rent laws have been reestablished on a new footing, and a global pandemic has put the inextricable links between housing and healthcare into sharp relief. Now, in 2022, it’s high time we revisited each one of those goals to ask: what progress has been made?

* * *

But before we evaluate the state of rent regulation in New York today, we will have to catch up on the history that brought us here. In 2019, in spite of the immense power of the landlord lobby, tenants won the first substantive strengthening of rent regulations since the 1970s. What made this change politically feasible?

It depended on the election of a pro-tenant majority to the State Senate in 2018, which happened as a result of an intensification of political activism at the local level. Before the shockwaves that followed Trump’s election, many progressives in New York would have been surprised to learn about the political subterfuge that enabled Republicans to keep control of the State Senate in a state that votes overwhelmingly Democratic. Counterintuitively, the Democrat-controlled State Assembly and the Democratic governor, Andrew Cuomo, had an interest in keeping Republicans in power: it allowed them to trumpet the tenant agenda and other progressive legislation with full assurance that the bills they were voting for would die in the Senate and never become law. This was a win-win: the Democrats could hold onto their popularity without risking angering their real estate industry backers. To this end, they allowed Senate Republicans to wildly gerrymander their districts. And when that wasn’t enough to win a GOP majority, several corporate Democrats, led by Jeff Klein, formed the Independent Democratic Conference (“IDC”) and caucused with the GOP. These Democrats were rewarded by the Republican majority with larger offices, budgets, and staff and were made chairs of powerful committees.

But in the wake of Trump’s election, the fact that Republicans controlled the State Senate in a progressive state like New York could no longer fly under the radar. Activists mobilized to make New Yorkers aware that this bizarre situation was holding back progress on everything from criminal justice reform to environmental protection to tenants’ rights. As outrage built, organizations like NO-IDC formed to recruit primary challengers to the breakaway Democrats. Spooked, Cuomo and the IDC announced the end of the power sharing agreement with the GOP, but it was too late: six of the eight former IDC State Senators were defeated in primaries. Then, in November, Democrats were swept to a large majority in the State Senate.

These wins set the stage for the titanic battle to come. For the very first time, the rent laws were set to expire in June 2019 under a unified Democratic state government. Since every year thousands of apartments continued to leave rent regulation, making the constituency of regulated tenants smaller and smaller, the 2019 deadline was in many ways a last stand for the tenant movement. Fueled by the new interest in state politics, disparate tenant groups had united to build a statewide coalition called Housing Justice for All. The final weeks were filled with intense organizing, huge rallies, and constant lobbying by tenant activists, as well as editorials laying out the case for “universal rent control.” Legislative leaders agreed to a strong package right before the laws expired, passed it through both houses, and dared Cuomo to veto it. The real estate lobby was apoplectic, but Cuomo was cornered. If he vetoed the bill, all rent regulations would expire, throwing millions into chaos. Rather than be exposed as the enemy of tenants he always was, he signed the Housing Stability and Tenant Protection act of 2019 into law.

The tenant movement didn’t win all of their demands, but what they did win was a historic strengthening of tenant protections, the first in over 40 years. Starting with the demands I laid out in the 2017 piece and moving on to other demands that have since been adopted by tenant activists, let’s explore what was in the bill and what was left out.

1. REPEAL OF VACANCY DECONTROL

A central goal of the movement had long been a full repeal of “vacancy decontrol.” Under vacancy decontrol, enacted in 1993, an apartment’s rent would be deregulated if a tenant left the apartment, whether “voluntarily” or through eviction. The regulated monthly rent had to exceed a threshold of around $2,700 for vacancy decontrol to take effect, but if the rent was under $2,700, the landlord had tools at his disposal for increasing it: the “vacancy bonus,” which granted landlords an immediate 20% rent increase as soon as an apartment was vacated, and “Individual Apartment Increases” to the rent, which were permitted in proportion to money spent on “improvements” to vacant apartments.

This was a partial win. Under the 2019 act, no more apartments can be deregulated, but no deregulated apartments will be re-regulated. In addition, the vacancy bonus—which provided a significant incentive for landlords to force tenants out of their homes all on its own—was completely eliminated. Lastly, Individual Apartment Increases were severely restricted. Repealing vacancy decontrol, eliminating the vacancy bonus, and restricting Individual Apartment Increases removed virtually any financial incentive to evict a regulated tenant.

2. ENDING THE “PREFERENTIAL RENT” LOOPHOLE

The tenant movement successfully reinstated protections for tenants with a “preferential rent”—that is, an actual rent that was lower than the rent the landlord was legally allowed to charge under rent stabilization. When market conditions changed because an area gentrified, the landlord could arbitrarily jack up the rent to the level of the legal rent, even if that amounted to doubling the actual rent.

This was a clear victory. Rents in rent-regulated apartments can only be raised according to Rent Guidelines Board increases for the duration of a tenancy, even if the legal rent is higher. When the tenant vacates, however, landlords can immediately raise the rent to the legal limit, creating an unfortunate incentive to oust tenants with preferential rents.

3. MAJOR CAPITAL IMPROVEMENT REFORM

Landlords can qualify to permanently increase stabilized rent when they make “Major Capital Improvements” (MCI)—renovations that affect an entire building.

In previous rent law renewal battles, the MCI reform on the table was making these rent increases temporary rather than permanent. By 2019, though, the new umbrella organization for tenants in New York State (Housing Justice for All) was debating advocating complete elimination of MCIs.

In the end, the new 2019 law did not eliminate MCI increases. However, it did make them temporary: after 30 years of MCI-increased rent, rents will go back down to their rent-stabilized levels. The law also lengthened the timeframe over which the MCI increases are phased into the tenant’s rent. Previously, tenants would have to pay massive “retroactive” charges for all the time the Housing Agency was determining whether to approve the MCI, and the increases would be phased in at 6% of the tenant’s rent per year on top of their regular increases. In the new law, retroactive charges were banned, and MCIs can now only be phased in at 2% of the tenant’s rent per year. Previously granted MCIs were not rolled back, though MCIs that were still being phased in would be phased in at 2% per year going forward. The upshot is that MCI increases are now less sudden and less punishing than they were previously, though they are still a very real stress for tenants who have to deal with them.

One important victory was that the law completely banned MCIs in buildings where less than 35% of units are stabilized. The thinking here is that if a landlord can raise rents with impunity on over 65% of the units, then why would increases be necessary for the tiny number of regulated tenants in the building? MCIs in these buildings are even more of a harassment tactic, since the units affected are so few and the rent increase negligible for the landlord but potentially catastrophic for the tenant.

4. RESTRICTING PERSONAL USE APARTMENTS FOR LANDLORDS

The new law also restricts landlords from claiming more than one apartment in a building for personal use, a tactic they would use to override the protections of rent stabilization to remove tenants from their homes. Now, even when a building has several owners, only one of them may claim a unit, and they must make that unit their primary residence for three years. Longtime, elderly, and disabled renters are further protected from this type of eviction.

5. REPEAL OF THE URSTADT LAW

The Urstadt Law is a 1971 state law that forbids localities from enacting stricter rent control than imposed at the state level. It is the reason that New York City’s rent regulation is governed by state law; NYC cannot bypass Albany’s input to make or strengthen its own tenant protections. Is it also the reason that counties outside NYC were not free to enact rent regulation, period—though the Emergency Tenant Protection Act (“ETPA”) of 1974 allowed localities in Nassau, Westchester, and Rockland County to opt into rent stabilization. The relationship between state and local law is complex and unintuitive: although rent regulations are imposed at the state level, they do not apply equally to the entire state but impose different rules on different localities.

Although repealing the Urstadt Law was once part of the tenant agenda, by 2019, it was not. The dynamic between city and state had shifted; it no longer seemed obvious that New York City’s political institutions, also beholden to real estate money, would be friendlier to tenants than New York State’s. Rather than fight to free NYC from the shackles of state-imposed limitations, tenant leaders focused on winning the strongest possible rent laws at the state level, making action by NYC unnecessary. They did, however, push to expand the ETPA to the whole state. This change in the movement’s goals was strategic in that it made the fight for stronger tenant protections a statewide movement, not just something associated solely with New York City.

Though it did not repeal Urstadt, the Housing Stability and Tenant Protection act did expand the ETPA, allowing localities throughout the state—not only NYC, Nassau, Westchester, and Rockland—to opt into rent stabilization. There is no mechanism for NYC to increase its number of rent-stabilized units, but now any locality outside of NYC with a vacancy rate under 5% is free to enact rent stabilization.

* * *

That covers the five demands I listed in the 2017 article. All in all, the 2019 law closed some of the loopholes that had whittled away at New York City’s stock of rent-regulated housing for decades. What’s more, the law has no “sunset” clause—no expiration date—relieving the tenant movement of the need to fight the same battle all over again.

It’s worth emphasizing, though, that more was at stake than closing the loopholes and protecting the existing stock of rent-regulated housing. In particular, the expansion of the Emergency Tenant Protection Act was more than just a defensive move: it opened new fronts for the battle for rent regulation throughout the state—though it has not yet resulted in concrete gains. In order to opt into rent regulation, the county or city in question must do a “vacancy study” to prove that the vacancy rate is less than 5%. It remains to be seen whether any city government outside NYC will be able to overcome the bureaucratic hurdle of prizing an accurate count of rental vacancies from their local landlords. When Rochester tried, its vacancy rate came back at 9%, though the data is questionable because very few landlords responded to the survey.

Because the tenant movement’s demands have evolved since 2017, “A Brief History of Rent Regulation in New York” did not anticipate the win that was the expansion of the ETPA. It also did not anticipate the biggest loss on the tenant agenda: the fight for “Good Cause.”

6. GOOD CAUSE EVICTION

“Good Cause Eviction” protections, sometimes called “Universal Rent Control,” would have protected all tenants, even those without rent-stabilized apartments, from arbitrary evictions and unconscionable rent hikes (defined as any increase above 1.5 times the Consumer Price Index for inflation that year, or above a 3% increase over the previous year’s rent—whichever is higher). It would not go as far as rent stabilization, which proactively guarantees a lease renewal at a predetermined level—it would only prevent eviction for non-payment of the jacked-up rent if the tenant challenged the eviction in court. (Court challenges are significantly more accessible to NYC renters than they would have been a few years ago, thanks to another, earlier win: In 2017, tenant organizers pressured the city to guarantee tenants the right to city-funded counsel in eviction court. According to the city, 78% of tenants with calendared eviction cases in 2020 benefited from full legal representation, compared to a shocking 1% in 2013.)

Because Good Cause was not enacted in 2019, most tenants in New York have no protections against massive and unexpected rent increases.

* * *

Activists have continued fighting through the COVID pandemic. When the state and federal governments enacted an eviction moratorium at the beginning of the pandemic, it was a rare acknowledgment from the powers-that-be that removing tenants from their homes is enormously destabilizing and detrimental to community health. That moratorium was extended several times but finally expired on January 15 of this year. As the atmosphere of universally shared crisis seemed to recede, politicians turned a blind eye to the crisis of hundreds of thousands of tenants facing eviction. There was much hope that Good Cause could be enacted before pandemic eviction protections lapsed, a logical trade. But that date has passed and, as of this publication, Governor Hochul hasn’t said anything about the legislation. Good Cause legislation remains the top legislative priority of the tenant movement. But with the eviction moratorium expired, every day means more and more tenants losing their homes as though a pandemic never happened.

The 2019 rent law was the culmination of decades of organizing, much of it during the dark days of the 1990s and early 2000s, when the gospel of deregulation was ascendant and politicians in both parties continually sold out tenants, allowing protections to weaken while tens of thousands lost their homes every year. At last, many of the incentives landlords have to evict rent-stabilized tenants are gone. Since landlords must overcome much greater hurdles to deregulate the apartment or raise rents significantly upon vacancy, much of the pressure on tenants in rent-regulated apartments has lessened. However, rents are still too high, and getting higher every year. The damage of those decades was not undone: while half of all rental units in NYC remain rent-regulated, there is currently no mechanism for bringing new construction under regulation, nor for re-regulating older buildings. That means that New York will continually lose regulated units to attrition as they’re taken over for owner occupancy or replaced with new construction. Furthermore, millions of tenants still live in the roughly 900,000 unregulated units in NYC and 1.6 million across the state without any protections. Not to mention that affordable housing is nearly impossible to come by if you’re looking for a new place to live or just moving to the city. The state of public housing in New York is a disgrace, homelessness rates are skyrocketing, and the “affordable housing” being built is largely out of reach for those who need it most. Ultimately, access to housing is still controlled by private owners. This means that rent-regulated housing, with many opportunities for profit forestalled, will undoubtedly face increasingly dangerous neglect and disrepair as landlords seek to maintain their profit margins at the expense of New Yorkers’ health and safety. The affordable housing industry, also in thrall to private property, will face the upward pressure on costs that comes with a financialized, profit-driven development model.

Nationally, the greed of landlords and banks may spur a sea change in housing policy, as intertwined crises of housing affordability, evictions, and homelessness have increasingly spread beyond metropolitan areas to affect suburbs and small towns. That homeownership is permanently out of reach for large swathes of Americans is no longer a fringe opinion, and the rise of lifelong renters has perhaps contributed to a nationwide groundswell of autonomous tenant unions, anti-gentrification activism, and progressive coalitions centered on issues of renters’ rights and affordable housing. With any luck, New York tenants can build on our recent wins to insist that one of the world’s wealthiest cities must guarantee quality, affordable housing for every single resident. To that end, we must not only protect rent regulation, which builds tenant power and works to chip away at landowners’ profit motives, but also follow the lead of other countries and invest in large-scale public housing projects. A guarantee of safe, dignified homes for all is not out of reach if only we are willing to wrest housing away from the private sector.

We are indebted to Avi Garelick for his help with this piece.

The Hypocrite Reader is free, but we publish some of the most fascinating writing on the internet. Our editors are volunteers and, until recently, so were our writers. During the 2020 coronavirus pandemic, we decided we needed to find a way to pay contributors for their work.

Leave a Tip

Help us pay writers (and our server bills) so we can keep this stuff coming. At that link, you can become a recurring backer on Patreon, where we offer thrilling rewards to our supporters. If you can't swing a monthly donation, you can also make a 1-time donation through our Ko-fi; even a few dollars helps!

The Hypocrite Reader operates without any kind of institutional support, and for the foreseeable future we plan to keep it that way. Your contributions are the only way we are able to keep doing what we do!

And if you'd like to read more of our useful, unexpected content, you can join our mailing list so that you'll hear from us when we publish.