By Robert Tannenhauser
The New York City Rent Guidelines Board (RGB) met Wednesday, June 21, in Assembly Hall at Hunter College and approved by a 5 to 4 vote, rent increases for rent-stabilized apartments of:
- 3% for one-year leases commencing on or after October 1, 2023, and on or before September 30, 2024; and
- 2.75% for the first year of two-year leases, and 3.2% for the second year of two-year leases commencing on or after October 1, 2023, and on or before September 30, 2024.
The initital landlords’ proposal for a 5% increase for one-year leases and 7% for two-year leases was defeated by a vote of 7 to 2. Similarly, the tenants’ proposal for 0% increases for one-year leases, and 2% for two-year leases was defeated by a vote of 7 to 2.
On May 2, 2023 the RGB held a preliminary vote recommending increases of 2 to 5% for one-year leases, and 4% to 7% for two-year leases. Last year, the RGB approved increases of 3.25% for one-year leases, and 5% for two-year leases commencing on or after September 30, 2022.
To view the meeting, which was raucous, click here.
Co-op property taxes are set using the same formula as residential retail. The past few years of stabilized increases has been truly below the increase in actual costs, as anyone who lives in a co-op in this neighborhood can attest to.
Another year of increases that will be lower than inflation in property taxes, fuel and insurance. All the raucous shouting to defund our housing stock is not going to help any of us long-term.
Blame there goes to byzantine and archaic NYC property tax system that treats condos and co-ops as rentals.
Elsewhere in country they are classified as what they are, homes people actually own.
On flip side many co-ops and condos pay (or paid) far less in property taxes by virtue of being in close proximity to multi-family housing full of rent regulated tenants. More of such tenants who have (had) below market rent affects not just value of said rental building, but condo or co-op buildings near by who use former as basis for comparable rates.
Then you have fact many co-op or condo buildings actually pay more in property taxes because they are located in areas with rental multi-family that isn’t “cheap”. NYS created a carve out to that problem by coming up with a system of tax rebates that must be renewed periodically by Albany.
There should be an incentive to sign two year leases, and there really is not
Absent clear violations of lease (and not always even then), RS tenants cannot be evicted outside of very few major circumstances. They also are guaranteed automatic lease renewals, thus reasons a market rate tenant might prefer a two year lease largely do not apply.
What a two year lease renewal does offer RS tenants (in theory) is slowing of increases in legal rent.
Until BdeB began messing with things it was certainly sure each year rents would increase. RGB under BdeB and now Adams have introduced a measure of uncertainty. Between rent freezes and two-tiered increases people aren’t always exactly sure if a two year lease will work out cheaper.
For eight years of his administration BdeB’s RGB did the unheard of; froze or only allowed nearly nil increases in rent. That genie now out of the bottle each year people keep hoping (or demanding) it happen again.
Worse BdeB’s actions occurred while inflation and other costs were relatively low. Now that things have changed RGB doesn’t have much wiggle room. Inflation is running between 4%-7% currently, that means rents simply must rise by or close to those numbers by laws which govern RS.
Historically taking a two (or even three back when it was offered) RS lease renewal was a better bet in terms of stability.
https://rentguidelinesboard.cityofnewyork.us/rent-guidelines/apartment-loft-orders-explanatory-statements/
https://rentguidelinesboard.cityofnewyork.us/wp-content/uploads/2019/08/aptorders.pdf
Until Bill de B and his handpicked RGB began messing with things two year lease renewals generally were twice that of one year or maybe slightly below. This has benefit of slowing increases in legal rent for RS apartments, that is what truly matters.
Someone who took a one year renewal last year at 3.25% is now going to be faced with a renewal this year at either 3% for second year or some whacky formula that in end adds increase of almost 6%. Had they taken the two year renewal from last year their increase would have been a straight 5.25% (IIRC).
As others have said it’s really a gamble but if one studies history of RS increases there is a formula. Outside of years that B de B and now Adams has interfered it always comes out more taking two one year increases back to back.
The compound rate for a two-year lease is marginally lower than two successive one-year renewals, assuming the 3% one-year renewal rate is the same next year. That’s always the gamble.
To clarify, is it better to do the two-year lease then because the one year lease can go up?
It’s only slightly better if you sign a 2 year lease under these conditions alone. But depending on when a lease is signed after these laws go into effect, you run the chance of there being another hike in the interim and paying more should you want to sign a subsequent one year lease after signing a one year lease after Oct 2023
There is no such thing as “interim” increases for RS units.
RGB votes once a year in late June. Whatever numbers are passed affect leases commencing October 1 of that year through September 30 of following.
Only controlling factor is if tenant in question took a one or two year renewal previously.
Those who took a two year renewal for leases that expired 10/1/2022 through 9/30/2023 aren’t affected by this week’s RGB vote. OTOH those who took a one year renewal lease will.
copy thanks Janice.
I don’t understand why rent controlled/stabilized buildings don’t have their own property tax rate or maybe they do?
All multi-family housing (aside from 1-3 family homes) in NYC are taxed at commercial property rates. It doesn’t matter if property question is full of RS, RC or market rate tenants or any mix thereof.
Above is reason why NYS and NYC came up with various tax abatement schemes like 421-a. Taxes on rental buildings of all sorts are simply too high to justify providing affordable or even low income housing. So developers build either condos, co-ops or luxury rentals where they can be assured (hopefully) of ROI.
There is no special property tax rate. There is no cap preventing real estate taxes from increasing at a higher rate than the stabilized increase percentage.
Some newer buildings used to get rebates for putting apartments in stabilization for a period of time, but that doesn’t really apply to anything on the UWS.
And that’s why it doesn’t pay for developers to build something so that workers like myself who drive in and use UWS street parking can afford to live on the UWS where I work.
Given how much it costs to build in NYC, it’s really unreasonable to expect new construction units to be cheaper than existing units or appropriate for lower-income workers, unless of course there’s a significant tax break involved.
There you go! That’s why street parking for workers like myself is very important. You can’t make it harder to drive, make it harder to use transit to go outside Manhattan and Manhattan continues to be the economic center of a 4 state metro area while not building housing so workers can afford it and do the “right thing” and not drive.
Under 421-a if the developer takes the tax break then it can set initial rents but the units are subject to rent stabilization going forward and until the tax abatement expires.
They do not have a different rate but the building maybe assessed lower than a similar market rate building.
So can anyone clarify this? For 2 year leases, do they figure the second year’s increase on what it rises to after the first year? Or is it a 3.2% increase on what it is now?
If you sign a two year lease the rent amount stays in place for two years! A one year lease will end after one year and you’ll sign a new lease at whatever the following year will be offered at.
Usually so, but in this case that is not true … It’s a little wacky this time. For 2 year leases the first year has an increase of 2.75% and the second year increases an additional 3.2% based on the first year’s amount.
Never mind I answered my own question. If anyone else is interested, the 3.2% is calculated on the rent that includes the first year increase. So I think it averages out to about 4% a year.
This is a fair compromise.
Building owners are entitled to make money. I saw a tenant advocate on NY1 saying they should only be allowed to break even. That is ridiculous.
If the government feels they want to help renters more, raise rates and then find a way to subsidize them.
We already have voucher programs but most tenants wouldn’t qualify for them.
RGB once again is playing Solomon.
OTOH LL costs have risen are are rising still. Other side of
things you have a huge number of RS tenants who are basically rent poor. They are paying 1/3-1/2 or more of their monthly income towards rent.
RS and to some extent what’s left of RC mainly benefits those living in Manhattan, this especially below Harlem though that area and north to Inwood and Washington Heights is fast catching up.
Nearly everywhere else in city except outside of certain parts of Brooklyn and Queens legal RS rents are actually more than what free market will support.
When you look at that annual circus that has become RGB meetings there is a certain demographic pattern clearly visible. RS tenants who show up from Manhattan protesting increases are largely white middle aged or older persons. OTOH those from outer boroughs are generally persons of color and other minorities.
Democrats in Albany and NYC government keep trying to twist rent regulation into something it was never intended; to provide “affordable housing”.
RS tenants like market rate are only vetted once, before they sign a lease. What happens afterwards in terms of household income is their own affair.
RS rents generally go only one way “up”. Until BdeB interfered there never was such a thing as rent freezes either.
Long story short is you have huge numbers of households that simply cannot afford to live in NYC, rent regulated or not housing. What these people need is housing tied to income like NYCHA. Instead Albany and City Hall seem intent on compelling LLs into doing something against nature, providing a service or whatever at below cost.
This all goes back to the fact that when it comes to manhattan and to the UWS, in order for it to thrive and continue being the economic center, you need people willing to live farther out and commute in. Our government is clearly unwilling to build more NYCHA housing. Street parking is a small concession to make it more tolerable for workers like myself who live farther out where I can afford the rent and need to drive in.
It’s scary when the Government gets to decide what you can charge for your property.
Who’s responsable for taking down all those sheds I wonder! Are the low rents the reason why property owners can’t afford to enhance the appearance of their buildings? That’s crazy. When I lived in a rent stabilized building on WEA all tenants had to pay MCI’s to point the building thereby dealing with its safety, and certainly restoring its aesthetics. !
Lets make the UWS beautiful again!! Yeah!
After 40+ years in an RS apt. this is the first time I can recall a two-tiered two year renewal. What a joke. It should be one rate for the two-year term.
There is a proposal to make street parking even more impossible. Currently as long as you keep up with paying tickets you’re ok. Now they plan to tow any car with three alternate side tickets within a YEAR even if paid/current. I figured it was cheaper to just risk a few tickets. Finally got into a local garage (LONG waitlist), so now I “get” to pay almost $1,000 a month. I can’t take public transportation to my work. So my “rent” also includes the extra $1000. I make a good salary, but am basically paycheck to paycheck. I could live most anywhere else in US for 1/10 what I do here. Ahhhh, but it’s New York. And you KNOW you wouldn’t/couldn’t live anywhere else!
I kept a car in the city because I commuted every day to West Chester and needed it. But if I didn’t commute, there’s no way I’d keep a car in the city. I don’t know why people who rarely use their cars bother with the hassle of moving it and/or paying tickets.
A good number of those who drive their car to the UWS are workers like me. Let’s face it, there’s no confidence in our transit system and people who live outside of Manhattan and gentrified NYC feel the brunt of it while UWS residents have the privilege of riding citibike or using Uber or Lyft on the regular if the transit system doesn’t work for them.