By New York State Senator Brad Hoylman
As T&V recently reported, I had the honor of giving the keynote address at the Eighth Annual West Side Tenants’ Conference. The event may have had “West Side” in its name, but my remarks were just as applicable to tenants from the East Side, or anywhere else in the city for that matter.
I spoke broadly about the challenges tenants and their advocates face in Albany, where Republican State Senators from far flung parts of the state, with weak housing markets and no need for emergency tenant protections, have control over housing legislation. I noted that most members of the Senate Majority Coalition do not have any rent-regulated tenants in their districts, and yet their campaign committees cash big checks from the real estate industry. That’s why the only way to put tenants on a level playing field and get our priority bills – from vacancy control to MCI reform to restoring home rule over our city’s housing laws – through the Senate is to make Campaign Finance Reform the first bill on the tenants’ agenda.
Taking the money out of politics is absolutely critical, but so is changing the prevailing narrative around rent regulations. We need to fight back against landlords’ domination of the conversation and go on the offensive with the facts.
There are many misperceptions out there about rent regulations – many of which have been purposely fostered by the real estate industry. If you read the New York Post, you can be forgiven for thinking that rent regulated tenants are all wealthy individuals freeloading while putting their landlords in the poor house and stifling new development, but that’s simply not true. The statistics show that the median income of rent-controlled households was only $29,000 in 2010, and the median income of households in rent-stabilized units as a whole was only $37,000. Moreover, one third of renter households in the City (33.6 percent) pay 50 percent or more of their household income for rent. Meanwhile, as our economy recovers from the great recession, we’re seeing unprecedented levels of development in our city. Unfortunately, it is unprecedented levels of luxury housing that is being developed.
Recently even the New York Times has gotten in on the act, running a Sunday Magazine essay claiming that rent regulations force landlords to raise prices for unregulated units to make up for lost income. But if we look at the facts, from 2010-2011 the most recent year data is available, landlords’ income after all operating and maintenance expenses are paid – known as the Net Operating Income (NOI) or “profit” – increased by 5.6 percent. That’s the seventh consecutive year they saw increased profit. So not only are landlords making money, they are making more money year after year.
It is these kinds of distortions – as well as deep pockets when it comes to campaign contributions – that help landlords when they go to Albany. The landlord and real estate lobby have sold many legislators on the notion that the free market can solve our housing shortage. Just suspend rent regulations, the free market argument goes, and the market forces will fix everything. The housing stock will increase. Rents will decline. Well, this was already tried once. And it failed. Miserably. In 1994, rent regulation was ended in Boston and Cambridge, Massachusetts. Within a just a few years of deregulation, rents were way up. Middle and lower income residents were forced out of the city centers and into the suburbs. Neighborhoods around Boston and Cambridge quickly gentrified. Yes, landlord investment increased in about 20 percent of the buildings, but at what social cost?
As we make our voices heard, we need to remember the Massachusetts example, and also remember the reasoning behind our rent laws. All too often I hear people speak about rent regulations as if they were a subsidy, gift, or charity taken from the hands of landlords and given to a select lucky few. And I also hear the argument that rent regulation should not be tied to individual apartments and should instead only be granted to means-tested tenants. If you know the history of rent regulations, you know these arguments are misguided.
Just to give you some context, the first rent regulations were established during World War II by the Federal government to prevent price gouging during the war. The price controls at that time covered everything from milk to coffee to nylon for stockings. The problem was – and is – not simply high rents, but the profiteering that comes with a shortage of a critical good. We should no more condone price gouging on rents in the midst of our city’s extreme housing shortage than we should condone price gouging on groceries or gasoline in the wake of a hurricane.
In this squeezed real estate market, where everyone is desperately competing for every inch of space, tenants in unregulated units are forced to pay significantly more than that apartment would otherwise be worth. Left unchecked, as high-income families are forced to take homes that would otherwise have gone to middle income families, who take homes that would otherwise have gone to low-income families, we all end up accepting less than we should. This is the race to the bottom that rent regulations stand against, and why rent regulations cover not just price, but housing quality.
We all know unregulated tenants who have had to find a new home after they asked their landlord to repair a ceiling leak, to remove mold or fix a failing boiler – all of which violate the warranty of habitability, which guarantees tenants’ right to a safe and decent home. Unfortunately, it’s a risky proposition to complain about the lack of services or repairs in your building if you don’t have a legal right to a renewal lease or statutory tenancy, which are afforded by rent stabilization and rent control respectively unless the landlord can show cause for eviction.
Next time you hear someone – a neighbor, an elected official, anyone – repeating the lie that rent regulations go to the undeserving, or that those in regulated apartments are raising rents for everybody else, confront them with the facts. Along with campaign finance reform, changing the narrative on rent regulation is key to advancing the tenant agenda.