Rent control was a “temporary” rent freeze originally put into effect during World War II as a mechanism to protect those fighting overseas and those left holding the home front together from inflation from war that could have resulted in homelessness from sudden rent hikes.
It was never meant at that time to be retained as a continuing open sore to landlords after the war was over, and yet over the last 80 years there has never been a real government push to do away with it due to public pressure from housing advocates nationwide.
In New York City we have commonly heard stories of apartments with ridiculously low rents that not only do not even cover the tax portion or expenses of the apartment, but also do not address the income situation of the tenant involved who might have inherited a “rent control” unit from a relative back during those war years. Now 80 years later the same apartment is still rent controlled at a rent from 1942 or thereabouts.
Landlords and real estate groups have tried for years to get rid of rent controls through all kinds of lawsuits, to no avail. They have also tried to get the Supreme Court to take on their case, which up until now was refused by the court.
Prior to 2019, landlords were able to renovate or repair empty apartments and then pass the expenditures on to the next tenant by raising rents based on those expenses. When the rental on an apartment hit $2,744 per month based on rental laws at that time those apartments automatically became de-regulated to fair market rents, taking them off rent control guidelines.
But in 2019 new laws were enacted only allowing landlords to recoup the first $15,000 spent on renovations no matter what the circumstances with a maximum monthly increase of just $89. In addition, the old caveat of having apartments de-regulated when they hit a $2,744 month rental was no longer allowed.
As a result, because landlords were put in a position to incur big losses because of restricted below-market rentals, rather than continuing with renovations and repairs on empty units, they removed them from the market since it was cheaper to write them off as a loss than to rent them at great losses.
There are now tens of thousands of empty apartments while housing advocates and government officials decry the lack of affordable housing available across the country. Somehow instead of balancing out true costs of landlord expenditures and their right under the Constitution for fair compensation, between housing advocates and government officials trying to solve the problem of affordable housing—which should be addressed by government programs not the free market—they have dumped the burden of affordable housing on landlords, both small and large, wanting the landlords to subsidize affordable housing at personal losses to themselves rather than working on government solutions that balance both sides.
Landlords seem to be hopeful that this will be the year for the Supreme Court to finally take on this polarizing situation. We can be sure to be in for an eventful year as this plays out.
Anessa Cohen lives in Cedarhurst and is a licensed real-estate broker (Anessa V Cohen Realty) and licensed N.Y.S. mortgage originator with over 20 years of experience offering full-service residential, commercial, and management real-estate services as well as mortgage services. She can be reached at 516-569-5007 or via her website, www.AVCrealty.com. Readers are encouraged to send questions or comments to anessa@AVCrealty.com. Read more of Anessa Cohen’s articles at 5TJT.com.