In an annual ritual that features protests, counterprotests, and the odd arrested demonstrators, the Rent Guidelines Board voted this week to increase rents at the city’s roughly 1 million rent-regulated apartments by 2.75% for one-year leases and 5.25% for two-year leases.
The body, formed of mayoral appointees representing owner, tenant, and general public interests, is tasked with studying costs and burdens on both tenants and renters to determine the appropriate level of increases to satisfy both. It never does. Meanwhile, the City Council is now one vote short of a veto-proof majority for a bill that would make landlords pay dreaded broker fees instead of allowing these to be put on renters themselves, a second attempt after a similar state-level measure was struck down.
With stubbornly high rents a big part of current doom-and-gloom public economic sentiment — in contrast with an economy that is on paper soaring — these costs are front and center as Mayor Eric Adams looks to his troubled reelection bid and Democrats think through how to reverse state and congressional loses.
As far as brokers are concerned, I don’t necessarily take the tack that brokers don’t do anything and are simply leeching off the system, but it’s hard to defend their business practices even conceptually when horror stories abound. These range from the true outliers like the now-infamous case of a broker asking for a $15,000 fee essentially as a payoff to secure a cheap rent-stabilized apartment, to more quotidian cases that renters routinely vent about on Reddit and X (formerly known as Twitter), of brokers doing “virtual tours” and then sending their invoice for $4,000.
Even when asked directly in interviews, brokers sometimes stumble on describing what exactly it is they do, often defaulting to platitudes like “managing listings,” which certainly entails some work, but which doesn’t seem to most people like it’s worth thousands of dollars per listing. That’s especially true given that the would-be tenants have not actually hired the brokers, but are instead expected to pay the brokers the landlords hired.
Brokers themselves often respond to this by saying that you can’t expect the landlords to pony up for their services without offloading the costs elsewhere, which in this case would mean rent increases. I don’t find this argument particularly compelling given that it would apply to literally every aspect of managing a property: Should you have to replace your own broken fridge because, if you don’t, the landlord would build that cost into your rent? At least you need the fridge. If landlords decided that the added cost of brokers isn’t worth it when they can’t offload it, they might just do without, and I’m not sure the renters would mind much.
As has become customary under the Adams administration, the Rent Guidelines Board vote managed to infuriate groups representing both tenants and landlords, obviously for the exact opposite reasons, though rooted in some of the same economic phenomena. Specifically, both have pointed to the runaway inflation of the past couple years, which has stabilized over the prior six months but still leaves prices at higher levels. Renters are buying food and household necessities and paying bills; landlords are buying fuel, materials, and labor. Both have been affected by higher costs, but the issue is obviously that what helps one hurts the other.
That’s where the RGB’s balancing act comes in, but I do want to stress that this isn’t an equal balance. As much as property owner groups try to put forth small-time landlords forward as the prototypical NYC landlord — struggling with debt-weighted mortgages and repairs, fighting the city’s admittedly nonsensical property tax laws, battered by utility costs and tenant protections, to the point of precarity — this is not true.
An analysis of Department of Housing Preservation and Development data done by the pro-housing group JustFix a few years ago found that the majority of units in the city were controlled by very large landlords, those owning more than 60 buildings. The average unit was owned by an organization with about 900 units. Larger landlords were also likelier to evict tenants and own rent-regulated buildings.
These trends are likely to only have accelerated as private equity has gone on a buying spree of units around the city, scooping up apartments in formerly affordable outer-borough neighborhoods like Bedford-Stuyvesant and Ridgewood. Unsurprisingly, tenants of some of these buildings have experienced noticeable fall-offs in landlord responsiveness and maintenance.
This isn’t to say that there aren’t real small landlords in NYC for whom the exact percentage of a rent hike can move the needle on their ability to keep the lights on, but this is by all objective measures a minority, and per the JustFix analysis, actually less likely to own rent-stabilized units than larger landlords. That means that the only thing a relatively limited increase is doing, is decreasing the rate of profit, and I’m going to guess most people will spill few tears over BlackRock ($10.5 trillion under management) making a little bit less hand-over-fist.
Renters, meanwhile, make up the majority of the city’s population, with rent-stabilized units making up about half of all units. Increases have a marked material impact on hundreds of thousands of people, though I also want to emphasize that not every single person in every single rent-stabilized apartment is a 2.75% rent increase away from insolvency. To be fully transparent, I have lived in my current rent-stabilized unit for a bit over five years now, and while I’m certainly not rolling in it, I’ve strung together enough jobs and freelance work to be comfortable for now.
The increase will not tank my finances, and there’ve been some analyses suggesting that it ends up benefiting those in wealthier areas more (though I take some umbrage with using the metric of a “discount,” because of course parts of the city where rents skyrocket will see stabilized units have bigger “discounts” over market rent, even if that doesn’t actually make those tenants any wealthier). At the risk of not satisfying anyone, I have to say that given the constellation of factors here, including the fact that the RGB under de Blasio issued years of zero or near-zero increases, the board’s ultimate decision is somewhat reasonable, insofar as it is working under the constraints of a deeply broken sector.
At the end of the day, the problem is the same as it ever was: people want housing in NYC, and there is far fewer available and market-ready housing than would fill that need. Preventing the alleged stockpiling of off-market rent-stabilized apartments and instituting pied-à-terre taxes and fees for secondary homes, among other things, are worthwhile policies that we should embrace, but at the end of the day it’s nibbling around the edges.
We need housing at all income bands to be built, fast, with a mix of axing cumbersome and unnecessary zoning and housing code regulations, as the mayor is attempting to do with the City of Yes housing proposal, and providing a mix of incentives and requirements for developing housing at price points that will be accessible. No amount of policymaking can actually fix the rent issue if it doesn’t discretely create more housing.
