Study Reveals Negative Impact of 2019 Rent Stabilization Law
A report commissioned by the Real Estate Board of New York (REBNY) and the Rent Stabilization Association (RSA) delivers the needed data in support of the residential industry’s calls for amendments to the Housing Stability and Tenant Protection Act of 2019 (HSTPA), “which effectively capped revenues in rent-regulated buildings.” Since 2018, long-term vacancies have trended upward — 125% increase in 3-year vacancies, 97% increase in 4-year vacancies, and 65% in 2-year vacancies according to metric that “stem from annual rent registrations filed with the state housing agency and provided by RSA, which represent about 10% of the city’s approximately 1 million rent-stabilized units.” Among the 781 collected responses from landlords and managers that operate 240,000 units, or 11% of the city’s total rental stock, over a quarter of the respondents claimed “economic infeasibility of unit improvements” after a long-term tenant left as the cause of lasting vacancies. Prior to the 2019 law, “owners could permanently raise rents by up to 6% to offset the cost of repairs. Now the cap is 2% and the hikes are doled out over 12 or 12.5 years, depending on building size, after which they are rolled back.” Fewer rent increases for improvements while expenses such as property taxes, energy costs and insurance continue to rise has led to a lowering of net operating income (NOI). Furthermore, since property taxes are based on NOI, if the situation remains unchanged and NOI lowers 40% to 60% by the early 2030s as estimated in the report completed by HR&A Advisors, property taxes generated could fall by $1.3 billion to $2 billion annually — although a small fraction of the approximately $31 billion in property taxes collected by the city in 2023.
Source: https://therealdeal.com/new-york/2024/02/29/2019-rent-law-wrecked-rent-stabilized-buildings-report/