It's already been a banner week for Mayor de Blasio, who's dominated headlines with the long-awaited announcement of his $41 billion, 10-year plan to tackle the city's massive, much-discussed affordable housing crisis. The ambitious proposal is a landmark for New York real estate, to be sure, but has left a lot of New Yorkers (including us!) with a slew of follow-up questions, and ended up burying the week's second major housing story: yesterday's Rent Guidelines Board vote to potentially freeze rent increases for stabilized units. So, should we all start eagerly awaiting our new, bargain basement rents?
Not quite yet. De Blasio's plan centers on the creation or preservation of 200,000 affordable units city-wide, a large number of which are expected to come from a requirement that developers set aside apartments in new buildings for low- and middle-income renters and buyers. The exact details have yet to be determined, though, and indeed, the New York Times reported that "mayoral aides conceded on Monday that many of their ideas to create affordable housing needed to be extensively studied before they could be enacted."
In other words, de Blasio's looking out for renters, yes, but he's also playing a long game. In the meantime, what will change renters' day-to-day life--at least those lucky enough to live in a rent-stabilized apartment--is the outcome of last night's "raucous" meeting of the Rent Guidelines Board, the agency that oversees the city's thousands of rent-stabilized units and metes out the annual rent increases.
For the first time since its creation in 1969, the board recommended increasing the rent by as little as 0 to 3 percent on one-year lease renewals and 4.5 percent for two-year leases. During the Bloomberg administration, a standard increase clocked in at more like 4 percent for just a one-bedroom, according to the Times. The board is set to make a final decision on June 23.
What does this actually mean for the average renter? Dean Roberts, a real estate lawyer with Norris McLaughlin & Marcus and an affordable housing expert, put it bluntly, saying, "Neither of these two events will have any short-term effect on rental housing, except of course for the increase issue [with stabilized units]. The structural problem between supply and demand in New York City is so large that these two issues will simply have no effect over the short term."
Even the specter of rent freezes might be good news for tenants, though: "The Rent Board's comment was really a shot across the bow to let landlords know that there's a new sheriff in town," says Roberts. "With the threat of a rent freeze, landlords could then end up happily taking 1 percent increases as an alternative."
But one wonders if a total freeze on rent hikes in stabilized units could have unintended consequences, like higher prices on market-rate units in those buildings, or landlords cutting corners on other services. After all, people don't just rent out apartments for kicks or out of the goodness of their hearts—and lest we forget, Manhattan is the "worst" place in the entire U.S. to make a profit on rentals.
As with the rent increases, the minimums on affordable apartments in new developments are another change that won't have clear effects any time soon, and might come down mostly to a numbers game.
"That's the whole negotiation point," says Roberts. "What will the market bear? What makes sense on the Upper East Side is different than what makes sense in Canarsie, and even if the city sets a hard minimum percentage for affordable units, it depends on how that breaks down. Developers are much more willing to take on middle-income affordable units versus just extreme low-income."
For now, both the real estate industry and affordable housing advocates have been cautiously enthusiastic. Steven Spinola, the president of the Real Estate Board of New York, the industry's influential trade group, says that it "looks forward to working with the administration to implement these critical objectives." And with rents and home prices more than bounced back from the recession, Roberts says, "the economic landscape has shifted to where this just might work."
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