The rent regulation law is set to expire on June 15, 2011. Currently, to deregulate an occupied regulated apartment, rent has to reach a threshold amount of $2,000. In addition to this threshold amount of $2K, the tenants must have an annual household income that exceeds $175,000 for two consecutive years. The total annual household income is based on the federal adjusted gross income as reported on NYS income tax returns. On the other hand, a vacated rent stabilized apartment that could be offered at a legal regulated rent of $2000 or more, as per current law, is no longer subject to rent regulation.
Approximately 40,000 apartments in New York are rent controlled and just over one million apartments are rent stabilized. There is no telling of how many tenants occupying regulated apartments actually need this “affordable” housing because there is no real system in place to determine eligibility. In addition, there is no telling of how many apartments are legitimately deregulated.
Governor Andrew Cuomo and the legislature have the power to 1. do nothing and let the rent regulation law expire which is highly unlikely or 2. simply renew the current rent regulation law or 3. work smart and find a way to revamp the rent regulation law for better or worse.
With the current rent regulation law in place, there is almost no incentive for a building owner to endure major capital improvements other than maintaining these buildings so that they are functional to the bare minumum in accordance with the law and free of code violations. It does not make economic sense for a building owner to sink money into a piece of property for a return of zero at best. There are some tax benefits and relief for some improvements like windows when desperately needed. With the absence of rent regulation, building owners would more than likely be forced to make major, expensive, and time consuming improvements in order to maintain their buildings up to par to compete with other rental properties in the free market. These market dynamics would significantly drive the unemployment rate down throughout the entire state by employing numerous contractors and laborers most of whom have been out of work since the demise of Lehman.