What if the City told you, that as an apartment building owner, you are NOT ALLOWED to raise rents?
Welcome to the NEW New York City; the de Blasio era.
On March 27, 2014, Mayor de Blasio announced that he had reshuffled the 9 member Rent Guidelines Board (RGB), the board that mandates how much you can raise rent regulated rents every year, and appointed 5 new members (without much news coverage). All of the new members are seen as “tenant-friendly”, in other words, anti-landlord. Board members have a seat from 2-4 years. In December of this year, the mayor gets to appoint the remaining four seats.
During his campaign for mayor, de Blasio promised to push for a rent freeze and called the 4% rent increase back in June 2013, “#Disgusting” on his twitter account.
Imagine a city, where as a multi-family owner, with rent regulated tenants, you are restricted from raising rents even one cent. At the same time, the NYC dept of finance has said taxes will rise significantly across the board. According to the RGB own report; Real estate taxes are up 5%, fuel oil is up 7.8%, utilities are up 8.4%, property insurance is up 9.3%, as well as rising repairs and payroll costs. Bottom line is your water/sewer, heating and operating expenses are growing exponentially, and you won’t be allowed to raise a rent stabilized tenants rent even 1%. We don’t need strong imaginations; this reality is just around the corner.
On May 5, just days ago, the rent guidelines board took its first step to voting for a rent freeze for the first time ever. The board voted to consider renewals with 0 to 3 percent rent increases on one-year rent-regulated leases, and 0.5 to 4.5 percent increases on two-year leases.
The final vote is set for June 23, 2014.
Mr. Jack Freund, who represents landlords as the executive vice president of the Rent Stabilization Association said “I believe there’ll be a 0 percent rent increase and a .5 percent rent increase for two-year leases. Every tenant in the city will then take a two-year lease. Owners will have no increase in income for two years.”
On the other side of the aisle you have Mr. Harvey Epstein, who represents tenants on the rent guidelines board, and he was thrilled. “I look forward to the next six weeks of tenants testifying, and talking about their struggle, and actually convincing everyone on the Rent Guidelines Board that we need the 0 to be the permanent increase this year.”
As reported by cbs news, some rent board members even hope for a more aggressive, rent “rollback”. As for vacancy allowance proposed, according to RGB: “No “vacancy allowance” is permitted.”
As a property owner, we should all be aware of what representatives in local government have planned for our pockets.
Alex Isak is a director of sales at Goldenwood Property Advisors and can be reached anytime via e-mail email@example.com