Vacancy Decontrol Means The End Of Rent Regulation

Vacancy Decontrol Means The End Of Rent Regulation

Vacancy decontrol in New York State has set in motion a process that, unless it is repealed, will ultimately lead to the complete dismantling of our rent regulation system, destroying housing and neighborhood stability for over a million New Yorkers. In many New York City and suburban neighborhoods, virtually all apartments are deregulated upon vacancy, leaving new tenants without any rent or eviction protections. For most recent and future renters the system has already been destroyed, and many who cannot afford market rates stay doubled-up with family members or strangers.

When New York Tried Vacancy Decontrol
In the spring of 1971, the New York State Legislature enacted full vacancy decontrol, applicable to all apartments that became vacant on or after June 30, 1971. This law resulted in an immediate, massive crisis in the downstate housing market. In only 2 1⁄2 years, 300,000 rent-controlled units and 88,000 rent-stabilized units were deregulated. In its 1974 report, the Temporary State Commission on Living Costs and the Economy appointed by Governor Rockefeller found that vacancy decontrol had resulted in average rent increases of 52 percent, while operating costs for landlords increased by only 7.9 percent. The Commission also found that deregulation led to disinvestment in the housing stock: there was a 30 percent drop in renovation expenditures, since the supply of affordable housing was so small that landlords were able to impose massive vacancy rent increases without making improvements.

The impact of vacancy decontrol was clear.The Legislature was persuaded to reverse course by enacting the Emergency Tenant Protection Act of 1974. Ninety-nine percent of the apartments that had been deregulated since 1971 were put back under regulation through the ETPA.
New York State’s housing emergency is as severe today as it was in 1974, and our current vacancy decontrol provisions are causing just as much destruction as the 1971 laws did, over a slightly longer period of time. The current vacancy decontrol loophole, enacted by the Legislature in 1993 and 1997, has already led to the deregulation of 200,000 to 300,000 units, and hundreds of thousands of apartments are at risk of imminent deregulation.

When Boston & Cambridge Tried Vacancy Decontrol
Massachusetts instituted a rapid phase out of rent regulation in 1994, applicable to the only three regulated municipalities: Boston, Cambridge, and Brookline. A January 1998 Atlantic Marketing research study commissioned by the City of Boston showed that in formerly rent-controlled apartments, rents increased by 54 percent.

Despite claims by the real estate lobby that rates across the entire rental market would balance out, average rents in Boston rose 14 percent the first year following decontrol, as reported on July 21, 1996 by the Boston Globe. Reports from the Community Development and Human Service Departments of Cambridge showed advertised rents doubling for apartments of all size. Evictions in the city housing court went up almost 50 percent by 1996. Of those evictions, the majority were in housing units formerly protected by rent control.

When Santa Monica Tried Vacancy Decontrol

The California State Legislature instituted a form of vacancy decontrol in 1999, mandating that landlords be allowed to re-rent all vacant units at market rates – though unlike in New York, such future renters still have eviction protections and continue with regulated increases once new market rates are set (this is known as “decontrol / recontrol”).

A report by the Santa Monica Rent Control Board in March of 2009 showed the effects of ten years of allowing market rate increases on vacant apartment. In deregulated units, prices rose in 1-bedroom apartments by 90 percent, in 2-BR apartments by 97 percent, and in 3-BR apartments by 104 percent. A household that could afford the median rent for a regulated apartment would need to make an additional $24,576 to $49,284 per year, depending on the apartment size, in order to afford the same sized unit in a deregulated apartment. Median rents in deregulated apartments of all sizes are now unaffordable to households making 100 percent of the median area income, and deregulated 1br, 2br, and 3br apartments are unaffordable even to those at 120 percent of median area income.

With rent regulation, 46 percent of units were affordable to a family of four making $37,900 per year. After deregulation, only 4 percent of apartments were affordable to these households. With rent regulation, 81 percent of units were affordable a family of four making $59,800 per year. After deregulation, only 13 percent of apartments were affordable to these households. Sixty-three percent of deregulated units are affordable only to families making over $71,760 per year.

Repeal Vacancy Decontrol Now!
The 1997 laws instituting vacancy decontrol in New York State law were considered a gradual phase-out of the entire rent regulation system. Then Senate Majority Leader Joe Bruno expected the laws to largely dismantle rent-regulation within 12 years. Now, 12 years later, his predictions are right: rent-regulation is on the brink of extinction, and our affordability crisis is as severe as ever.

Sources: NYS Division of Housing and Community Renewal,“Rent Regulation After 50    Years,” 1993 “The Impact of Market Rate Vacancy Increase Ten Year Report”, Santa Monica Rent Control Board, March 2009
Vote for S2237-A —The bill to REPEAL VACANCY DECONTRO