Many moons ago, there was an episode of Night Court in which Dan was trying weasal his way into a rent-controlled luxury apartment on Central Park. How does rent control work? Is it still in use today? IIRC, Rudy (may have been him, I’m not sure) was trying to do away with it a few years ago. Just how hard is it to get a decent apartment in NYC?
Basically, it means that the rent for an apt. can only be increased by a specified amt. each year. For instance, my rent currently increases at 4% each year. What this means is that I can still afford to live in my neighborhood after 3 years–I pay $865 for a 1-bedroom apt, but, if I had to find a new place now, it would probably run me $1500 or more. This keeps ordinary joes like me (and especially the elderly or those on fixed incomes) from being driven out of their homes.
The other side of rent-controlled apts. is that the landlord is only allowed to raise the rent between tenants by a specified amt. (20%, I think…) So when old Mrs. Tenant A dies, and she’s been living in her Upper-East-side apartment since 1920, and is only paying $450 a month in a neighborhood where 1-bedroom apts. commonly go for more than $2500 a month… you can see the advantages of getting a rent-controlled apt. In a non-rent-controlled building, the landlord could jack that rent from $450 up to $4500 for the next tenant, if he felt like it.
That’s my understanding of it all, anyway. Any other NYers?
Once a rent-control (or more accurately these days, a rent-stablized) apartment is vacated, it can pretty much be rented for whatever the martket will allow.
There is a difference between rent-control and rent- stablization; I forget just what it is, but I’m fairly sure that only rent-stablization is still available.
Well, not quite.
New York rent regulations are enforced by the New York State Division of Housing and Community Renewal. In most cases, though not all, the city and state rules are the same. The state rules do not apply to every part of the state, rather to a specific list of municipalities, including New York City.
Rent control is the older of the two systems of rent regulation. It dates back to the housing shortage following World War II and generally applies to buildings constructed before 1947. Rent stabilization generally covers buildings built after 1947 and before 1974, and apartments removed from rent control.
In order for an apartment to be under rent control, the tenant must have been living there continuously since before July 1, 1971. When a rent controlled apartment is vacated, it either becomes rent stabilized, or completely removed from regulation.
Rents charged in controlled apartments are set and adjusted on the basis of registrations filed by owners when Federal rent control was imposed in 1943. The rent control law allows DHCR to determine how much rents can be increased based on an assessment of what it costs landlords to operate their buildings plus a reasonable profit.
In New York City, rent control operates under the Maximum Base Rent system. A maximum base rent is established for each apartment and adjusted every two years to reflect changes in operating costs. Owners who certify that they are providing essential services and have removed violations are entitled to raise rents up to 7.5 percent each year until they reach the MBR.
In New York City, apartments are under rent stabilization if they are in buildings of six or more units built between February 1, 1947, and January 1, 1974. Tenants in buildings built before February 1, 1947, who moved in after June 30, 1971, are also covered by rent stabilization. A third category of rent stabilized apartments covers buildings with three or more apartments constructed or extensively renovated since 1974 with special tax benefits. Generally, these buildings are only subject to stabilization while the tax benefits continue or in some cases until the tenant vacates.
The Rent Guidelines Boards set maximum allowable rates for rent increases in stabilized apartments. These guideline rates are set once a year and are effective for leases
beginning on or after October 1st of each year. This year, the increase is 4% for a one-year lease and 6% for a
two-year lease.
In most cases, regulation remains in effect for rent stabilized apartments upon vacancy. They cannot just be rented for market value. The new rent is based upon a 20% increase over the last legal regulated rent for a two-year lease. This was 18% for vacancy leases between 1997 and 2001, and is based upon the difference between the percentages set annually by the Rent Guidelines Boards. There are also several very specific rules about additions to this rate, based on the previous rents and when the apartment was vacant last. Owners may also increase the rent in an amount equal to 1/40th the cost of improvement made to the apartment while vacant.
Since 1993, controlled and stabilized apartments with a lawful rent of $2,000 or more are deregulated upon vacancy. Owners may also petition for deregulation of apartments renting for $2,000 or more occupied by a household with a combined Federal Adjusted Gross Income of $250,000 or more for each of the two preceding calendar years.
Most of the above is from http://www.tenant.net/DHCR_info/pubs/dhcrp-ra.txt
More than you wanted to know, I’m sure.
How hard is it to find a good apartment in New York City? In 1994-95, it took me six months to find a rent stabilized apartment in Manhattan that I could afford that was bigger than a shoebox. I’m picky though, when it comes to neighborhood and facilities. My next door neighbor has a smaller apartment than mine, yet she pays almost $500 more than I do. This is because I have had my apartment for six years, and the person before me lived there for eight years. There are also peopel in my building with apartments much larger than mine who are paying hundreds less than I am.
Wow, nice job, lurker b. Thanks for de-lurking!
Thanks, lurker b, and welcome to the boards. That certainly answered my question! Just how do people afford such enormous rents! What’s the pay scale like? And I’m sure you pondered this before, how much would the “Friends” apartment rent for (assuming you could find such a place)?
for an explanation of why rent controls are bad.
I’ll just open Reisman’s Capitalism, and try and list some.
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Rent controls reduce the supply of available housing (as it becomes unprofitable to rent at the controlled rate) starting with housing for the poor because the cost of such housing is initially so low that they leave relatively little room for ecomies. p. 222
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RC’s cause conversion of rental properties to Co-ops and condominiums. p.226
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RC’s break the harmonious union of the self-interest of the buyer and the seller in a free market. The buyer is held hostage to bad service, the seller comes to view customers as a nuisance instead as a source of livelyhood.
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RC’s inc rease the cost of uncontrolled housing, p. 250
How incredibly confusing, but what does it all mean? I live in a small town (pop. <5000) and pay about $1300 per month for the mortgage on a 3000 sq. ft. house. I live in a nice subdivision in one of the largest houses on the block. It sounds like my $1300 wouldn’t get me anywhere in New York (and I’d be renting instead of buying).
So, if I suddenly ended up in New York, how long would it take to find a place for my four-member family? How much would it cost?
djbdjb, if rend contol is so bad, why do they do it?
Great post, lurker.
I think all would agree that the difficulty in getting an apartment in NYC depends on the obvious: how much money do you have to spend?
But to find an inexpensive apartment in the NYC area is a real challenge.
The effect of rent control is obviously an area for debate, but I would point out that, as a general matter, rent control favors incumbents over new-comers. Thus, it seems likely (to me) that rent control, on average, makes it more difficult to find an apartment in NYC.
Like most places NYC has the highest rents the closer in you get. If you want to save money you can live in NJ or on Long Island.
You’re kidding, right?
For $1300 you could get a decent sized one-bedroom apartment in Manhattan. Outside Manhattan, expecially in upper Long Island, Westchester, or New Jersey, you could probably get a two bedroom apartment for $1300.
I realize that this question is addressed to someone else, but I’ll take a crack at it.
Rent control protects renters from the risk that real estate prices will go up and their rent will skyrocket, forcing them out of their apartments.
This is a serious risk in areas like Manhattan, where neighborhoods can become “hot” really quickly.
A more cynical view is that rent control represents a wealth transfer from landlords to tenants and is therefore common in places like NYC where renters are in the majority. Certainly if you had a cheap, unregulated apartment in NYC, it would be in your economic interest for rent control to be instituted.
Um, speaking of kidding, friedo, have you been in the market lately? I rather suspect not… 
If you’re lucky, $1,300 may rent you a tiny studio - at least below 96th Street. My non-doorman co-op building on a completely unglamorous block of Chelsea comprises mostly studios and one-bedrooms. People who’ve rented their studios out (they range from 375 to 450 square feet) get about $1800-$2000. Slightly larger one-bedrooms go for about $2200-2400. Now, my neighborhood has been “hot” for several years, plus I have three subway lines you can stumble drunk into. But prices lower than this usually mean living far away from the subway, and/or on a high walk-up.
no thanks! im happy living in the middle of nowhere in my cave…
well i dont know about living in NYC but in washington dc $1300 will get you a one bedroom or studio in virginia nowhere near the subway. in order to get closer in, its $1500-$3500 for a one bedroom.
A pitty then that we are so “vulnerable” to potential increases in the price of Lucky Charms breakfast cereal, Palladium, Steel belted radial tires…
In other words, this bad argument could be made for any good. A place to live is not that much different than breakfast cereal; there are a lot of substitutes. Another protection for the renter is a long-term contract (lease).
djbdjb, the difference between uncontrolled price swings in rents and in boxes of Lucky Charms is if the price of Lucky Charms doubles overnight, you don’t have to take a week off work to find another suitably-priced box of Lucky Charms and move all your stuff into it.
I live in a rent stabilized one bedroom apartment on the Upper East Side. When I moved in several years ago, the rent was about $1,750. The neighborhood is always attractive to young single professionals and young families. These days, it would be rare to find an apartment the size of mine for under $2,700. If my landlord jacked up the rent to the $2,700 - $3,000 range, it wouldn’t be cost-effective to live here anymore. Without rent stabilization, I’d find myself moving from neighborhood to neighborhood every year or so.
Imagine what your life would be like if you weren’t able to plan for your rent past your next lease renewal. How would you save for retirement? “Well, gee, Mr. Benefits Administrator. I’d sure like to participate in the 401K plan, but my rent could go up $1,000 a month next year…” How would you buy furniture? “Well, I’d like to buy this sectional couch, but will it fit in my next six apartments?” How would you keep from driving yourself crazy switching the cable, phone, broadband Internet, power and other utility accounts from place to place every year?
I trust I’ve made my point.
I wasn’t trying to defend rent control - somebody asked why we have it, and I supplied some reasons. I agree that price controls of any nature are, more often than not, a bad idea. Feel free to start a thread in Great Debates about this.