New York State has enacted a new law expanding rent control in New York City and giving every municipal government in the state the authority to regulate housing.
Gov. Andrew Cuomo (D) signed the Housing Stability and Tenant Protection Act of 2019 into law on June 14. It replaces the now-expired Emergency Tenant Protection Act of 1974.
The new law will do long-lasting damage, says Seth Barron, associate editor of City Journal and project director of the NYC Initiative at the Manhattan Institute.
“New York State has strengthened, made permanent, and expanded its rent control laws in such a radical fashion that the effects will be felt for decades to come,” Barron said. “Rent regulation was imposed during the First World War as an emergency measure. It has never gone away, and the rental market in NYC has never been tighter or more critical.”
Tough on Renters
The rent-control law will make life much tougher for renters, says E. J. McMahon, founder and research director of the Empire Center of New York.
“New York’s new, permanent rent control law is going to harm the long-term rental market in New York City, mainly by discouraging capital improvements and encouraging more building owners to convert their buildings to condos and co-ops,” McMahon said.
“The new legislation also strips landlords of the ability to pass much of the cost of capital improvements on to their tenants,” Barron said. “This will lead property owners to defer repairs and upkeep, and degrade the city’s housing stock.”
‘Artificially Cheap Rents’
The new law benefits people with higher incomes, says Barron.
“The legislation eliminates rent decontrol provisions, meaning that hundreds of thousands of regulated apartments will never return to market pricing,” Barron said. “This will favor existing tenants, typically older and better off, at the expense of younger people.”
Permanently controlled rental prices will reduce the mobility of tenants, Barron says.
“Rent regulation deforms the rental market by disincentivizing people from leaving apartments that they may no longer need, tying them to artificially cheap rents,” Barron said.
In addition, owners will find it much harder to get unsuitable lessees to leave, McMahon says.
“In the name of increased ‘tenant protection,’ the law also imposes statewide regulations that will, for example, make it much more difficult for landlords to evict tenants who are not paying rent or otherwise violating their leases,” McMahon said.
‘Struggling Upstate Communities’
The new law authorizes all municipalities in the state to declare a housing emergency if occupancy rates are too high, and it allows them to regulate residential rents for some or all of the different housing types, McMahon says.
“Under the new law, every city, town, and village in the state will have the option of regulating rents on larger apartment buildings, if their vacancy rates are no higher than 5 percent—which is the case in dozens of places,” McMahon said. “It will also have a chilling effect on multifamily housing development elsewhere, especially in economically fragile and struggling upstate communities.”
Jake Grant ([email protected]) writes from Alexandria, Virginia.