The annual Rent Guidelines Board vote generates so much spin you might need a neck brace.
But neck braces are uncomfortable, especially when the temperature hits the mid-80s, as it will today in New York City. And it will feel hotter for landlords, given what’s at stake when the RGB votes.
To gird yourself for the spin, here’s a virtual neck brace — some facts to prevent dizziness without resorting to an unstylish collar around your windpipe.
The first thing to watch out for is any references to a rent freeze saving tenants nearly $600 a month. The statistic, which activist groups have been using in their campaign for a freeze, is based on an analysis of what “aggressive” rather than zero increases would mean over four years.
The report, by the Community Service Society of New York, put the savings at $593 per month for a typical rent-stabilized tenant.
I reverse-engineered the $593 and calculated that it would require 7.2 percent rent hikes for four years in a row. What are the odds of that? Zero.
A 7 percent increase has not happened once this century. Neither has a 6 percent increase.
A 5 percent increase has only happened once in the past 25 years. A 4 percent increase happened twice. All the other increases have been lower. To game out four consecutive years of 7.2 percent increases is spin by any definition.
Let’s put 21st-century RGB increases — typically 1 percent to 3 percent — in context.
Many occurred in a low-inflation environment, which Covid then destroyed. The jumps in operating expenses, not to mention mortgage rates, in the past four years had not occurred in generations. So a 4 percent hike today — which tenants would spin as outrageously high — would be roughly equivalent to a 2 percent increase before 2019.
Moreover, the small increases of the 2010s occurred when landlords had other ways to raise rents, notably with individual apartment improvements, major capital improvements and deregulation of high-rent units.
In many buildings, those options compensated for below-inflation RGB increases. But the 2019 Housing Stability and Tenant Protection Act closed those avenues.
That fact, combined with inflation jacking up operating costs much more than it did in the 2010s, and the impending mayoralty of Zohran “Rent Freeze” Mamdani, make this year’s RGB increase more important than ever for owners.
In summary: Before 2019, many buildings could stay afloat with 2 percent or 3 percent increases because inflation and interest rates were low. Now they can’t.
Of course, the tenants’ side argues that renters are also being squeezed by the affordability crisis. But wages have generally kept pace with inflation, while rent-stabilized rents have fallen for 10 consecutive years when adjusted for inflation. The unemployment rate has been historically low since the Great Recession, even with the temporary disruption of the pandemic.
Make no mistake: The affordability crisis is real. But it’s primarily caused by the city’s high cost of market-rate housing. Tenants in rent-regulated units have been protected by the Rent Guidelines Board, which has kept increases below inflation for a decade, and since June 2019 by the HSTPA.
They also enjoyed lengthy periods of eviction protection by state and federal moratoriums, and many had their rent paid by taxpayers through the Emergency Rental Assistance Program.
ERAP ended in January 2023, yet cash payments for tenants kept increasing. In 2024 they climbed for the fifth consecutive year and now exceed 500,000 households — 66 percent more than in 2019, according to the Community Service Society. “Emergency grants, including ‘one-shot deals’ for rent arrears, hit their highest level (135,470 households) since the 2008 financial crisis,” the pro-tenant advocacy group reported.
These payments benefited landlords, too, but generally, all of these measures were taken to help tenants. It’s hard to find equivalent programs for multifamily owners. Article XI is one, but most don’t receive it. Other tax breaks, such as J-51 and a mysterious hardship program from the state, have been nearly useless.
I don’t expect the RGB to award a 4 percent increase, but if it does, it wouldn’t catapult owners with few or no market-rate units in their buildings to high ground. At best, it will leave them treading water, hoping for a real lifeline before a Mamdani rent freeze pushes them under.
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