The New York state legislature passed sweeping rent regulation reform on Friday, dramatically limiting how landlords can increase rents on stabilized apartments and opening the door for rent stabilization to expand outside of New York City. Gov. Andrew Cuomo signed the bill almost immediately.
The bill includes the elimination of vacancy decontrol and new caps on the Major Capital Improvements and Individual Apartment Improvement programs, which respectively allowed landlords to hike rents on regulated apartments when a unit is vacated or renovations performed.
The bill didn’t go as far as tenant advocates had initially wanted. Earlier proposals sought to eliminate MCIs and IAIs altogether. One measure, “Good cause eviction,” which would’ve effectively limited rent increases on market rate apartments, ultimately didn’t make it into the package. Still, Friday’s vote marks the first time in decades that major reforms to the rent laws have been enacted. Though the state Assembly had repeatedly proposed similar changes to the law in the past, these attempts were always curbed by a Republican-led Senate.
The bill also includes a provision that allows municipalities in counties outside the city — that have a vacancy rate of less than 5 percent — to opt into rent stabilization. Also, for the first time, these laws were made permanent, meaning they won’t sunset after four years. This could change the dynamic in the years ahead because proposed changes to rent reform won’t be entangled with the potential expiration of the rent laws.
“We’ll be on offense rather than defense,” one real estate source said.
Real estate groups and landlords have called the changes “devastating” and predict they will result in the decline of the city’s housing stock and the flight of investors to other areas of the state and outside New York. Meanwhile, tenant advocates and state officials have indicated that they view the changes as a beginning to implementing robust tenant protections across the state.
“The construction of future affordable units will slow, if not end altogether, the housing vacancy rate will worsen and nothing will have been done to make it easier for those who struggle to pay their rent,” Real Estate Board of New York President John Banks said in a statement. “There was a path to responsible reform that could have protected tenants as well as owners, jobs and revenue, but Albany chose not to take it.”
The trade group did not immediately respond to requests for comment on what “responsible reform” would look like.
In a victory lap press conference before the vote, elected officials spoke in front of a crowd of tenant activists on the “Million dollar stairs” in the state Capitol. Sen. Michael Gianaris noted that he still supported the full elimination of MCIs and IAIs. Assembly Speaker Carl Heastie, standing in front of tenants who had just weeks earlier protested outside his office calling on him to act, struck a defensive note.
“I feel like people questioned the Assembly’s heart even though we’ve always been in the right place, on the tenants’ side,” he said. “In the dark ages, when there was a Republican governor and a Republican Senate, the Democratic members of the Assembly always stood strong. And I just hope in the future, on the same issues, that all you advocates give the Assembly members the benefit of the doubt. We’ve never failed you and we never will.”
He noted that he and the Assembly had voted in favor of rent reform in the past, when the Republicans controlled the Senate.
After the press conference, Andrea Stewart-Cousins told reporters that she hadn’t spoken to the governor since the Senate and Assembly announced an agreement over the rent reform law earlier this week. She said doesn’t read too much into that.
“We do what we do,” she said.
Throughout the week, we’ve broken down how the rent laws will affect various sectors of real estate. Check out our spotlight on the impact on: