(Bloomberg) — Tenants in New York City’s 1 million rent-stabilized apartments are on track to face the third year in a row of rent increases as renters and landlords grapple with rising costs.
The city’s Rent Guidelines Board on Tuesday endorsed potential rent hikes of 2% to 4.5% for one-year leases and 4% to 6.5% for two-year leases. Price increases in those ranges are likely to be approved at a final vote in June.
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New York City’s rent-stabilized apartment market has come under pressure in recent years. Landlords argue that the rental income from stabilized units has failed to keep up with steep inflation and higher costs as interest rates soared. A 2019 rent law aimed at protecting tenants has also made the situation tougher for property owners.
The challenges have started to raise concerns at banks including New York Community Bancorp Inc. The Hicksville, New York-based company and Signature Bank, which failed last year, were major lenders to the market.
The Community Housing Improvement Program, which represents property owners, said the ranges approved on Tuesday would not go far enough to fund improvements for rent-stabilized buildings.
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“A guideline near the highest part of the range is necessary in order to cause the least amount of damage,” Executive Director Jay Martin said in a statement.
Residents face a housing shortage that has pushed rents up in recent years
At the same time, residents face a housing shortage that has pushed rents up in recent years. Citywide, market-rate asking rents climbed 2.1% in February from a year earlier, according to StreetEasy. Rent-stabilized tenant advocates have been pushing for a rent freeze, arguing that it’s not the responsibility of tenants to help owners turn a profit.
“While the board has the challenging task of striking a balance between protecting tenants from infeasible rent increases and ensuring property owners can maintain their buildings as costs continue to rise, I must be clear that a 6.5% increase goes far beyond what is reasonable to ask tenants to take on at this time,” New York City Mayor Eric Adams said in a statement.
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The board has approved rent increases in recent years, a shift from when Mayor Bill de Blasio was in office. If approved this year, rent hikes for the roughly 2 million New Yorkers who live in stabilized units would take effect for lease renewals that begin Oct. 1 or later.
The Legal Aid Society, a tenant advocacy group, called on the board to reconsider its plans to raise rents.
“We urge the board to listen to the cries of tenants and take into account how any rent increase will inevitably lead to higher rates of eviction, displacement and homelessness for the more than 2 million New Yorkers who reside in a rent-stabilized dwelling,” the group said in a statement.
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