New York City is famous (or infamous – depending on your perspective) for its rent control and rent regulation laws. There is a fine balance between making the city affordable versus profitable, and everyone has their own opinion on the matter. But the fact is this: for people to stay in New York, rent must be priced just right.
There is, however, a difference between rent control and rent stabilization. Rent control refers to caps in place limiting the landlord from increasing rent above a certain amount. Rent stabilization refers to rules where rent is increased only by a percentage, and that percentage is determined by the Rent Guidelines Board. Both systems are meant to prevent steep hikes in monthly rent.
Here, we discuss rent control and what its pros and cons are.
Pros of NY Rent Control
Rent control in New York guarantees tenants very minor monthly price hikes. This form of regulation allows tenants who have been in their homes since quite possibly the 1970s to remain in their homes even though their new neighbors may be paying twice the amount for rent. As you may suspect, rent control benefits renters, but there are also advantages of this form of regulation for landlords.
Pros of Rent Control for New York Renters
Apart from affordable rent, rent-controlled apartments offer the following related advantages:
- ability to save money or use money saved on rent for other purposes
- improved quality living
- risk mitigation of a steep hike in rent outside what's affordable
- reduced risk of eviction.
In addition, persons living in a rent-controlled home may be able to take over the lease (including the rent control conditions) in the event the lessee dies.
Pros of Rent Control for New York Landlords
Though all the benefits of a rent-controlled home may seem to belong to the renter, there is an important benefit to landlords. Rent-controlled homes are coveted, and as such, renters will do what they can to keep those homes. That means: timely rent payments. Lessees of rent-controlled homes may be more apt to pay on time and not cause problems, which can be a huge (money-saving) benefit to landlords.
Cons of NY Rent Control
Only two percent of New York rental units are governed by rent control laws, so that's a slim margin, and the numbers grow smaller by the year because once a renter dies or moves, the rent control restriction is removed and the landlord is allowed to increase rent in accordance with New York laws. But that's not the only con to rent control laws in New York.
Cons of Rent Control for New York Renters
As mentioned, the biggest disadvantage of rent control for renters is this: a good thing doesn't last forever. Once a renter moves, then that's the end of rent control for that unit and for that renter. Also, for other renters, rent control itself may drive prices up for everyone else. As the theory goes, when there are more renters than rental units like in New York, rent control further decreases the supply of affordable homes and drives prices up.
Cons of Rent Control for New York Landlords
The disadvantages of rent control for the landlord in New York is twofold:
- you cannot charge rent at its market value; and
- you cannot improve properties unless you want to take a double hit.
For example, what if the going rate of rent for comparable homes in the area is a fourth more than the units you rent under rent control laws. Further, imagine these units are suffering structurally, so you want to improve the property. To do so means you have to spend more on units that are not bringing you the income they otherwise could but for rent control laws.
The Key Takeaway of NY Rent Control Advantages & Disadvantages
Rent control has its purpose and its benefits, but there are also serious drawbacks for landlords and tenants alike. Because of the drawbacks for landlords though, they may want to push to get you out of the unit. If you have questions about your own rental space, always seek the advice of an experienced real estate attorney in New York. Get answers before you take action.