Streams

Ways to Lose Your Rent-Stabilized Apartment

Thursday, August 21, 2014

WNYC
East Village apartments (Echiner1/flickr)

Mayor Bill de Blasio set an ambitious affordable housing agenda, promising the city he would build or preserve 200,000 units of affordable housing over the next decade. The administration has made clear that a majority of those units will come from preserving the affordable stock that already exists, around 1 million rent-stabilized apartments.

But each year, some of those units convert to market-rate apartments. According to a report from the New York City Rent Guidelines Board, last year the city lost 7,597 rent-stabilized units.

While that number was lower than the number of apartments lost in 2012 — and there was actually an overall net gain in affordable units — the mayor has said that every unit of affordable housing must count.

Rent-stabilized apartments can become market rate in a variety of ways. Most typically this happens when the rent rises above $2,500 a month. At that point, if a tenant leaves or the combined household income is greater than $200,000 per year for two consecutive years, the unit can become deregulated and is no longer rent stabilized.

Getting to that $2,500 threshold can happen in different ways:

  • In any given year, most rent-stabilized units only see small yearly increases in rent that have to be approved by the Rent Guidelines Board. This year, the board approved a 1 percent increase for one-year leases and 2.75 percent for two-year leases.
  • Landlords can also try to increase rents by making one of 31 major capital improvements to buildings and then passing on a portion of those costs to tenants. These include: air conditioning improvements, aluminum siding, bathroom modernization, boiler and burner installation, elevator upgrades, new doors, chimneys or catwalks, rewiring or a new roof, to name a few.
  • Property owners can also make major renovations to individual apartments and then pass on some of those costs to tenants.

"Bear in mind that a majority of rent-stabilized buildings are over 75 years old and in need of improvement," said Jack Freund, vice president of the Rent Stabilization Association, a group that represents landlords.

The most common way that rents rise sharply for stabilized units is when people move, according to a report from comptroller Scott Stringer's office. Under a state law passed in 1997, vacancy deregulation allows landlords to increase rents by 20 percent when tenants move on, plus they may add on increases for improvements. According to the report from the Rent Guidelines Board, 4,801 rent-stabilized apartments fell out of the system in 2013 when this occurred.

Housing advocates accuse some property owners of harassing tenants so that they will leave. This would allow landlords to charge that 20 percent rent increase, combine it with increases from renovations, and then push rents above the $2,500 threshold so the unit can be removed from the rent regulation system. Advocates are pressuring the state to eliminate the threshold and keep units permanently affordable.

"We know that without having that number . . .  a lot of the harassment we see could be diminished quite significantly," said Katie Goldstein, executive director of Tenants and Neighbors, a renter's rights group.

According to data from New York State Homes and Community Renewal, of more than 2 million rent-stabilized tenants in the state, just 7,423 tenant complaints were filed in fiscal year 2012-2013, 91 fewer complaints than were filed the year before. 

The New York State Department of Homes and Community Renewal, through Gov. Andrew Cuomo, has created a tenant protection unit that takes actions against suspect landlords. Deputy Commissioner Richard White said the protection unit does not tally complaints, but has recaptured more than 30,000 rent-stabilized apartments. 

The Rent Stabilization Association, along with another property owner's rights group and individual landlords, have filed a lawsuit against the creation of the special unit. That complaint is still pending.

 

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Comments [17]

janet babin from brooklyn

Hey Marly from East Williamsburg: Any chance I could talk to you about your experience? please email me at jennababin@gmail.com. thanks!

Aug. 25 2014 10:36 AM
marly from east Williamsburg

It's a good time to get a buy out. I got a gross settlement of 275,000.00 this past spring. Yes, it was the heart of Williamsburg, but I am hoping to see landlords have to pay through the nose on a more regular basis.

Aug. 22 2014 04:45 PM
Marcos D

Let the city build it's own buildings, manage and rent them out at whatever rate they want and completely wash it's hands off private property... oh wait that would actually cost them money.

Everyone hates the landlords but it's usually people that don't own anything. There are as many bad tenants as there are landlords perhaps even more. One example a couple that has been together many years, have kids, and don't get married and of course the father doesn't live with them but... he does.

The distortions this creates in the real estate market make it worse for every one.

Aug. 22 2014 02:43 PM
inwoodite from nyc

It's already happened to me three times. The landlord replaces a boiler, redoes the roof (not that the improvements are real, in one case I think we got a "new" boiler, not an actual brand new boiler), then starts coming into your apartment, putting holes in the walls (that rats can come in through), but taking forever to do the actual "improvement," and if you move out in desperation, your 2BR will be transformed into a fake 3 or even 4 BR and the rent raised to over 2K, and goodbye!
If we were to stay in our current apartment, which has gone above 2K already, we would be paying, by the time we retired, all of our social security checks in rent. So, we're moving out of NYC. Buh-byeeee!

Aug. 22 2014 01:52 PM
imelda from NYC

Beekmanhill and RS Forever said it. I rent a stabilized apartment where the landlord gives me a "preferential rent" but the actual "legal rent" is supposedly $1,700. I researched the history of the apartment - the last tenant who lived here paid $860. How did they get from that amount to $1,700?

They very helpfully laid it all out in my lease. The vast majority of their $900/month increase comes from "Individual Apartment Improvements" (IAI) they supposedly made.

Now, due to the size of the building, they are allowed to increase the monthly rent by 1/40 of the total improvement costs. Which means, if $700 of the increase is due to IAI, they are claiming to have made $28,000 worth of improvements to my modest Queens studio apartment. Believe me, they did not.

I would love to do my part in busting them. But the only way to do that is by filing a complaint or suing them. I could do that, but they could then:

1) Harass the hell out of me (they are real dicks on a good day) until I move out;

2) Produce false receipts, maybe with the help of their usual contractor, indicating that they really did spend all that money;

3) Produce valid receipts, proving me wrong, in which case I am SOL;

4) Have much better lawyers than me, and find another way to get rid of me;

5) Produce valid receipts, indicating that they spent a portion of that money, but enough to jack the rent up beyond what I can afford; or

6) Not be able to prove their claim, thus getting rid of all their BS.

Most of those scenarios do not work out in my favor. I have no way of determining, before risking litigation, what they might have actually spent. Asking them would be sheer folly. It is therefore in my best interest to keep paying the BS "preferential rent," keep my head down, and let this corrupt system continue. So that's probably what I'll do.

Incidentally, when I requested my rental history, the good folks at the city offices told me that, in the event I did file a complaint, it would probably take years to be resolved. So, there's that, too.

Aug. 21 2014 11:37 PM
Lucy from Brooklyn from Brooklyn

I agree with beekmanhill from Manhattan, my landord guts pefectly new apartments the minute they become vacant, - ripping out brand new kitchens and bathrooms; redoing floors, from the last tenant who may have only been there a year, and replaces them - all to jump the rent, to bump it out of stabilization.

Aug. 21 2014 06:11 PM
Kate from Brooklyn

The amount of money that has been spent over the past years to build "affordable housing" under various schemes has been lost to the "affordable", abused by many corrupt political hacks and squandered in all directions. And all the time the press and politicians blame the private landlords of rent stabilization for the lack of affordable housing. As you do briefly waft over the rent stabilization system has been going on a very long time: too long! And these buildings all have OLD systems that are being taped together to keep them going....they have to get out of the RS system to survive.
Here is an example of tax payers money squandered: Atlantic Commons Houses in Fort Greene, Brooklyn. A complex of 3 family houses, all were supposed to be owner occupied by low & middle income owners with two tenants under rent stabilization. The construction was subsidized, sold out at subsidized prices and all have Real Estate tax abatements. Non of the tenants live there know they are supposed to be rent stabilized, very few are owner occupied and those that are selling are sold to the highest bidder.
De Blasio should be following up on tax payers money that has been spent to build low income housing and maintain that as low income housing. HDFC co-ops are another source to maintain for low income housing, instead of allowing them to be sold to trust fund kids. The amount of millionaires that there are in Mitchel Armer housing is a joke, especialy in prime locations.
Stop picking on the few private landlords of rent stabilized buildings and go after the (Politico) community groups that get billions to build and cannot follow up to see where the money has gone and who it housing a few years later.

Aug. 21 2014 03:06 PM
Oscar Chase from Upper West Side

The best way to deal with the problem is for the state legislature to amend the law to end vacancy de-reg and the Topping out de-reg. The Governor and Shelly Silver should get behind this now! Oscar UWS

Aug. 21 2014 11:31 AM
RS Forever from NYC

Oddly, this print article doesn't mention a really big scam the law allows the landlords to pull. Those major capital improvements (MCIs)? And those individual apartment improvements (IAIs)? They're FOREVER--even after that roof or boiler or oven has lived its useful life and been replaced. The cost becomes part of the base rent, which means the tenant could ultimately pay for two roofs, two boilers, etc. There's no way to begin to calculate the potential profit to landlords because it never ends. Even better for them, they get to amortize the cost of the "improvement" (that's in the law). As for pursuing legal remedies, we all know who has the money for the legal guns. Manhattan could easily become a place owned only by foreign and out-of-town oligarchs who park their carcasses here for only brief periods. Maybe we could save a few pockets for real people as a living tourist attraction à la Williamsburg, Virginia: "Come see the tenants! They used to roam freely, but now they're almost extinct."

Aug. 21 2014 11:18 AM
Lena from Brooklyn

Landlords are not required to file with DHCR once their buildings are taken off rent-stabilization. That means DHCR takes the landlord's word for it that renovations, etc actually happened. The only way a landlord would ever get caught is if one of their tenants files a complaint. And tenants can only file a complaint for their own apartment. The entire system relies on self-regulation, and tenants who will research the history of their apartment after they sign a lease. Nobody should be surprised that sort of system doesn't really work.

Aug. 21 2014 10:30 AM
Tom Joad from Okjlahoma

they have clubbed us off the streets they are stronger they are rich they hire and fire the politicians the newspapereditors the old judges the small men with reputations the collegepresidents the wardheelers (listen businessmen collegepresidents judges America will not forget her betrayers) they hire the men with guns the uniforms the policecars the patrolwagons

all right you have won you will kill the brave men our friends tonight

there is nothing left to do we are beaten

"....they have built the electricchair and hired the executioners to throw the switch

all right we are two nations

America our nation has been beaten by strangers who have bought the laws and fenced off the meadows and cut down the woods for pulp and turned our pleasant cities into slums and sweated the wealth out of our people and when they want to they hire the executioner to throw the switch." -- John Dos Passos, "The Big Money"

Aug. 21 2014 10:09 AM
SCJ from NY, NY

if you can't afford where you live, then GTFO. when did society just ditch any and all personal responsibility?

Aug. 21 2014 08:18 AM
Uptowner from Inwood

The entire system is so messed up that is creates enormous distortion to the market and provides all sorts of incentives for both tenants and landlords to game the system. Let's not fool ourselves -- for every cheating landlord there is a cheating tenant.

Plus this system adds a layer of inefficient bureaucracy that simply wastes money. (Try dealing with DHCR and see what you think).

Most major cities in the world do not have such a system at all. Junk the entire thing, and the distortions will disappear from the market. Some housing will cost more, some will cost less, but everything will be fair.

Aug. 21 2014 07:58 AM
The rent is too high from NYC

How will this happen under this administration? When Deblasio was Public Advocate he ignored the issue and when housing advocates reached out to Emma Wolf she did NOTHING!!! Now, she's an over priced "progressive" staffer who is not very "progressive" when it comes to housing issues.

Aug. 20 2014 12:31 PM
Jacqueline Small

The Rent Regulated units in my Garden Apartment Complex in Springfield Gardens has been sold in Auction as TWO FAMILY HOMES. Each new owner has mads extensive changes to units,including apartments in the cellars. Since the C/O states that the buildings cannot be sold separately. Each group of buildings has one sewer system. All of the heating equipment has violations since installed by GROUP KAPPA CORP when they owned and managed the property. They have been convicted of MORTGAGE FRAUD,and sold each of the 28 buildings as TWO FAMILY HOMES. Tenants have been evicted or harassed out. Owners take no responsibility for property. Tenants must maintain property grounds and HPD removes emergency violations. Rents have doubled in most cases. Crooks have taken over to REMOVE UNITS from DHCR.

Aug. 20 2014 12:16 PM
jj from brooklyn

1 more about to go in my building. via vacancy and "improvements" ... improvements on an apartment to which NOTHING was done in over 30 years. I thought that was called maintenance. The landlords have figured out the game and they are winning.

Aug. 20 2014 11:53 AM
beekmanhill from Manhattan

There is no monitoring of the rent increases that landlord charges when a stabilized tenant leaves and landlord makes "improvements." That is the method my building used to remove most apartments from stabilization. Rents in small apartments have jumped from under $1K to over $2K after cursory improvements to bathroom and kitchen, and resanding of living room.

Liz Krueger has stated in her newsletters that the city does not monitor the validity of these rent increases when an apartment is removed from rent stabilization status.

Aug. 20 2014 09:43 AM

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