History of NYC Rent Stabilization & Rent Increases
There are approximately 1 million rent-regulated apartments in the most populous city in the United States. Dating back to World War II, rent-controlled and rent-stabilized residences have defined the New York City housing market. The debate between an individual's right to affordable housing and a landlord's right to turn a fair profit continues unabated to this day. Essentially, rent-control policies establish price ceilings and prescribe landlord responsibilities on properties covered by the law.
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Origins of Rent Control
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World War II was a period of high inflation. The federal government borrowed and printed money to fund the war effort, which adversely affected prices on goods and services. With new domestic housing starts largely put on hold during wartime, apartment rents were likewise caught in the inflationary spiral.
To address a budding housing crisis, President Franklin Roosevelt signed into law the Emergency Price Control Act, which spawned the Office of Price Administration. In autumn 1943, this fledgling governmental entity retroactively fixed New York City residential rents at their March 1, 1943, levels. Landlords could not raise rents without violating federal law.
The Housing and Rent Act of 1947
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With service personnel returning home in droves and seeking places of their own to live after the war, a genuine housing shortage occurred in all parts of the country, but notably in densely populated urban centers. A rising chorus of economists and politicians affixed blame on federal rent controls for stifling investor initiative in new housing construction. Responding to the housing shortfall and capitalist concerns, President Harry Truman signed into law the Housing and Rent Act of 1947, which excluded all new housing structures from rent controls.
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Federal and State Administration
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From its origins in 1943 through 1950, New York City rent-control policy was exclusively the federal government's responsibility. In 1950, managing the city's rent regulations became the sole province of the state of New York. Since that time, the state has choreographed rent-control minutia, although from 1962 to 1984 New York City government assumed a considerable role in the policy's day-to-day administration.
In fact, the state requires the City Council to regularly assess whether there is a housing emergency that necessitates the maintenance of rent regulations. State law defines such an emergency as a vacancy rate of 5 percent or less of available housing stock. New York City's low vacancy rate--2 percent to 3 percent--continues to pass muster as a housing emergency.
Maximum Base Rent
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The rent-control formula established by government policymakers is known as the maximum base rent system, a calibrated number based in part on real estate taxes, water and sewer fees, and losses incurred by vacancies. Landlords are permitted to raise rents by as much as 7.5 percent every two years until they reach the maximum base rent.
Who Qualifies for Rent Control?
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Rent-controlled and -stabilized apartments are not accessible everywhere and to everyone in the city's five boroughs. Rent-control recipients must have been living--uninterrupted--in qualifying domiciles since 1971. And rent-controlled units can only have passed to one relative in a lifetime before they lose their distinction.
How Is Rent Stabilization Different From Rent Control?
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Passed in response to rapidly rising rents on non-rent-controlled properties, the Rent Stabilization Law of 1969 regulated many properties built after the 1947 federal rent-control exemptions. In addition, it enabled most vacated rent-controlled apartments to assume a new status: rent-stabilized. Like rent control, rent stabilization establishes ceilings on rents and requires landlords to provide certain upkeep.
The Rent Regulation Reform Act of 1997
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New York state's Rent Regulation Reform Act of 1997 significantly altered the trajectory of the city's rent-controlled and rent-stabilized apartments. Now, when apartment rents surpass $2,000 based on maximum base rent calculations and are vacated for any reason, they automatically become deregulated---no longer subject to governmental edicts. Also, if the adjusted gross income of tenants in rent-regulated units tops $250,000 for two years consecutively, their units, too, become deregulated. This law also insists that rent-controlled or -stabilized apartments be primary residences.
Today, approximately 50 percent of New York City apartments are rent-regulated, with only 2 percent rent-controlled. New York City rent controls are the longest-running, uninterrupted laws of their kind.
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