Battle over rent hikes turns to who’s
suffered more: Tenants or landlords?
Aaron Weber of Weber-Farhat Properties in one of their buildings in TriBeCa, May 27, 2021.
BY GREG DAVID
THE CITY
While Aaron Weber waits for
the city Rent Guidelines Board
to decide whether he will be
forced to freeze rents for the tenants in
the 40 buildings he runs at Weber-Farhat
Realty Management, he ticks off the higher
costs absorbed in the past year.
Among them: rising water and electric
bills as residents work from home during
the pandemic, along with insurance premiums
and property tax hikes. Then there’s
intensifi ed cleaning procedures required
due to COVID-19.
The overall jump in expenses: 15%.
“And all of these cost increases have
been paired with lower income because of
unpaid rent, vacancies and lower rents for
market-rate apartments,” Weber added.
The Rent Guidelines Board is slated
this month to announce its fi nal decision
on rent increases for leases beginning in
October or later after establishing a range
of 0% to 2% for one-year leases. A vote is
expected June 23, after two virtual public
meetings.
Rent Relief Applications are Open: What
Tenants and Landlords Need to Know
Landlords are making a last-ditch argument
that helping tenants in need is the
job of the government, especially now that
Albany’s federally funded $2.4 billion rent
relief plan is accepting applications. The
cost increases suffered by building owners
have been ignored for too long, they say,
and will lead over time to a deterioration
of the city’s housing stock.
“We are tremendously sympathetic to
tenants in trouble and that’s why we advocated
for aid,” said Basha Gerhards, senior
vice president at the Real Estate Board of
New York. “We know owners are in trouble
too.”
Tenant advocates agree that landlords
have faced steep challenges but contend
renters are in a worse situation.
“The scale of the hardships facing tenants
and landlords are in no way equivalent,”
said Sam Stein, a housing researcher
at the Community Service Society, in
testimony to the Rent Guidelines Board.
Last Year’s Pandemic Freeze
A combination of low rates of infl ation
and the appointment of more pro-tenant
members of the rent guidelines board
by Mayor Bill de Blasio has led to much
smaller increases in rents over the past
seven years than in times past.
Three times since 2015 the board has
frozen rents for one year-leases — including
last year. In the other years, the board
granted increases of 1.5%.
BEN FRACTENBERG/THECITY
For the fi rst part of the de Blasio administration
and reaching well back into the
Bloomberg era, landlords generated income
by both converting higher-rent apartments
into market-rate units when they became
vacant and by increasing rents after renovating
units.
But the 2019 renewal of rent regulations
ended so-called vacancy decontrol and
sharply curtailed the ability of landlords
to recover money spent on renovations by
raising rents.
A REBNY study found a 48% drop in
the number of fi lings for renovation fi lings
in rent stabilized buildings from 2018 to
2020. REBNY expects data on the number
of apartments deregulated in 2020, to be
released later this year, to show a precipitous
decline.
“Rent laws impact our ability to keep up
with expense growth,” said Marc Pollack,
director of asset management for Greenthal
Management Corp., which manages 2,000
apartments in Manhattan, half of them
rent-stabilized.
Landlords argue the Rent Guidelines
Board has for years ignored the cost increases.
Property taxes have gone up more
than 3% each year as the city increases
the assessment on buildings as have water
rates and labor costs since his buildings are
unionized, said Pollack.
The key this year is that the Rent
Guidelines Board, following tradition, is
using 2019 data for making its decision,
although members could take into account
the extraordinary circumstances of the
coronavirus pandemic.
“We ramped up our cleaning services,
contracted with new companies to professionally
sanitize on a weekly basis and
increased pay because the cleaners were
essential workers,” said Weber, citing one
pandemic-caused increase.
‘Sort of Injustice’
The fi nances of his owners have gone
south, he said.
In one case, the restaurant on the ground
fl oor of a building Weber manages in Tribeca
closed early last year. A problem with the façade
forced expensive repairs. With minimal
rent increases for six rent-regulated units, the
owner lost $200,000 in 2020, Weber said.
Stein of the Community Service Society
pointed out in an interview with THE CITY
that the board’s key measure of how landlords
are doing, called net operating income,
increased in 14 of the last 15 years, and 2.9%
in 2019. He believes that the $2.4 billion in
rent relief that became available starting June
1 will bolster owners’ fi nances substantially.
He also notes that any landlord who accepts
the rent relief will be obligated to freeze
rents for that tenant for the next year.
“A rent increase will only apply to those
who don’t get relief money and that’s sort of
injustice,” he said.
Real estate groups disagree. They note
that any increase will apply to tenants 12
months after the rent relief is received.
“The state’s rent relief program will
provide aid to eligible tenants and begin to
address the crushing debt facing struggling
property owners as a result of the pandemic,”
REBNY, the Community Housing Improvement
Program and the Rest Stabilization
Association said in a joint statement to THE
CITY.
“This is an entirely separate issue and has
no bearing on the Rent Guidelines Board’s
obligation to provide fair rent increases to
keep pace with rising operating expenses and
allow for maintenance of quality housing for
millions of New Yorkers.”
Meanwhile, landlords have their fi ngers
crossed that the board will at least authorize
a 2% increase.
“But it doesn’t help me to provide safe
housing with a certain level of safety and
service,” Pollack said.
This story was fi rst published on June
2, 2021 by THE CITY, an independent,
nonprofi t news outlet dedicated to hardhitting
reporting that serves the people of
New York.
12 June 10, 2021 Schneps Media