Rent Regulation -- Beyond the Rhetoric

Rent Regulation -- Beyond the Rhetoric

In New York City more than one million housing units, representing more than half the private rental market and one‐third the total housing stock, are subject to rent regulation. This scale of regulation is unique among American cities and is highly controversial.

Proponents claim rent regulation protects affected tenants from otherwise likely excessive rent increases in New York’s tight housing market and helps make housing affordable for low‐ and middle‐income households who otherwise could not live in their own home in New York City. Critics claim the regulations give substantial benefits to upper‐income households who could afford unregulated rents, cause rents to be higher among unregulated units than would otherwise be the case, encourage some families to stay in apartments longer than they otherwise would, curb construction of new housing, discourage landlords from properly maintaining regulated units, and lower property values of buildings with regulated units, thereby depriving the City of New York of property tax revenue.

Current rent regulations trace their origins to federal price controls imposed on the city’s rental housing market in 1943 during World War II. The federal rules applied to housing built before February 1947. In 1951 New York State opted to assume the controls on the pre‐1947 housing stock on grounds that the local housing market continued to experience a low vacancy rate. In 1969 rent regulation in a modified form (rent stabilization) was applied to housing built after 1946. The rules that applied to both older and newer housing have been altered several times since, with periods of full or partial vacancy decontrol and other modifications. Nevertheless, the justification for all rent regulation remains the tight local housing market. The legal basis for current rent regulations is the continuation of a vacancy rate of 5 percent or below as an indication of a housing “emergency.”

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