February 3, 2020

UNEXPECTEDLY: New York’s Progressive Rent Regulations Having the Exact Same Negative Consequence That Skeptics Predicted.

According to a January survey conducted by the Community Housing Improvement Program (CHIP)—a trade association representing owners of rent-stabilized buildings in New York City—69 percent of building owners have cut their spending on apartment upgrades by more than 75 percent since the passage of the state’s rent regulations. Another 11 percent of the landlords in the survey decreased investments in their properties by more than 50 percent.

The new law’s limits on recouping the costs of renovating apartments mean it is often more financially feasible to leave old apartments vacant.

“A big majority of our housing stock of stabilized units have been occupied between 40 and 50 years. These units require up to $100,000 and sometimes more, to complete a gut rehabilitation. You don’t need to be a genius to understand it makes no sense to invest that much only to get an $83.00 rent increase,” one survey respondent told CHIP.

CHIP, alongside the Rent Stabilization Association, is suing state and city officials over the new regulations.

The Commercial Observer reports that the new rent laws are encouraging small- and mid-sized landlords to exit the market entirely, writing that “many property owners have woken up to a world where their buildings are worth 30 to 50 percent less than they were a year ago.”

Easy prediction: Big, connected players will snap up these properties at a steep discount, at which point the city will grant relief and exemptions from the new regulations.

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