Three words may determine whether Albany can pass legislation to deal with New York’s housing crisis, say tenant advocates and their allies in the legislature: Good cause eviction. Pass a version of our proposal and we will support tax breaks and other steps to build more housing, they say.
But as the tenant groups ramp up their lobbying efforts and stage public demonstrations in support of the bill, the New York proposal differs substantially from similar measures elsewhere in the country — with Albany’s proposed rent hike limit less than half of the 10% increases permitted in California and Oregon.
And a new policy brief, published Wednesday by the Furman Center at New York University, argues that the New York proposal is essentially an effort at extending rent regulation to free market apartments and will have unintended consequences that could have negative repercussions for tenants, especially in buildings with only a few units.
That could include giving landlords a benchmark for raising rent prices annually for all tenants, and discouraging development of new housing, making it even harder for renters to find affordable places to live, according to the report.
“The discussion in New York has tended to focus on protections that look more like an extension of rent regulation than the anti-gouging protections some other cities and states have adopted,” said Vicki Been, faculty director of the Furman Center and author of the paper. Been headed the city’s Department of Housing Preservation and Development under former Mayor Bill de Blasio.
Advocates for the bill, sponsored by Democratic state Sen. Julia Salazar of Brooklyn, reject that characterization.
The New York proposal, intended to discourage rent increases above 3% annually or more than 1.5 the rate of inflation, would create a guideline, not a cap, said Cea Weaver, campaign coordinator for the tenants’ movement Housing Justice for All and a prominent advocate for the bill.
If it were in effect in 2024, the proposed formula would point to rent hikes of no more than 4.2%. Landlords can move forward with raising rents more than that, she notes, but tenants can then challenge the increase in Housing Court. “That’s why it too is an anti-gouging law,” Weaver said.
Good cause laws are designed to limit the ability of landlords to refuse to renew leases, and most elsewhere in the country list specific reasons landlords may decline to renew, which always include if tenants do not pay rent. They also seek to limit huge rent increases which tenants might be unable to pay.
Furman estimates the Salazar bill would cover 710,000 apartments in the city.
A study by the New York Housing Conference of the proposal came up with a higher number — of almost 1 million units — but noted that as many as 480,000 are in buildings with three units or fewer. The bill exempts such buildings if they are owner-occupied, but no one knows how many fall into that category.
The Housing Conference also notes that the law primarily helps better-off New Yorkers. Renters in unregulated units earn more money than the typical tenant, median income of $62,900, above the citywide median of $50,000. They also pay higher rents, with a median $1,800 a month, which is $300 more than the median rent-stabilized tenant in the city.
New York Vs. The Country
While the New York law would exempt owner-occupied buildings with three units or less, other elements are more expansive than many good cause laws elsewhere. It would cover co-ops and condos that the owners rent out, which could total as many as 140,000 units, according to Furman. And it would include institutional buildings like dormitories.
Deciding whether the plan is an anti-gouging law or rent regulation in disguise depends on three areas of controversy: the size of annual rent increases, the impact on owners of smaller buildings, and the possibility that already clogged housing courts will see soaring caseloads.
The difference in allowed rent hikes between New York’s proposal and other states’ laws is striking. This year, California’s good cause eviction law will allow landlords to raise rents by a little less than 10% at maximum because it sets the allowable ceiling by using local consumer price index (CPI) plus 5 percentage points or 10%, whichever is less.
Oregon landlords also will be able to boost rents by 10% because it uses CPI plus 7 percentage points, or 10%.
New Jersey’s law has no statewide cap on increases, instead saying only that “unconscionable” rent increases are illegal. The definition of that word is left up to the courts.
The same would, in effect, be true in New York; judges would need to decide whether a landlord has raised rent too much.
Ellen Davidson, an attorney at the Legal Aid Society of New York and another active supporter of the bill, concurs with Weaver that it’s not a cap but a guideline that housing court judges can use to determine if a demanded rent increase is excessive.
The bill is a deliberate twist on the New Jersey law, according to advocates. “We kept the unreasonable rent increase concept but added guidance of how to think about the increase,” she said.
But lawyers for property owners say there is little resemblance between New York’s proposal and New Jersey’s law. “New Jersey has an anti-gouging law that says rent increases cannot be unconscionable, and that’s a very high legal standard,” said lawyer Sherwin Belkin, an expert on rent regulation who works with landlords.
Since many economists say rent regulation discourages new housing construction, other states have taken steps to limit the reach of good cause. California, for example, exempts any new building for 15 years after construction. Other states also require tenants to have at least a year residency before taking advantage of the law.
The Furman report is particularly worried about the impact on tenants in smaller buildings where the rents and annual increases are lower than in larger buildings and non-renewals less frequent. Given the limitations imposed by the law, small landlords might adopt the intensive screening of prospective tenants now used by almost all large landlords, and start to use the increase-limit guideline as a target for annual hikes, the Furman report says.
The report also suggests that the structure of the new law will further burden the city’s housing courts, where cases already drag on for months.
“Evictions and housing instability cause enormous harm to renter households,” said Been. “Proposals that require landlords to prove good cause for evicting a tenant or refusing to renew a lease are well-intentioned efforts to limit those harms. But they also simultaneously pose risks by discouraging investment in housing, raising costs for all tenants, and making it even harder for tenants to find a suitable home.”
Limited Research
One problem with the debate, experts say, is that the laws in other states are either new or their impact has not been extensively studied.
“There are such a small number of places that have implemented these programs we just don’t know much,” said Peter Hepburn, a sociologist and data scientist at Princeton University’s Eviction Lab. He noted that with the exception of one small study in California, there is no data on whether such bills actually reduce evictions.
And while the bills could help some tenants, he adds, the vast majority of eviction cases are for non-payment of rent, which every state allows as a legal cause.
Weaver says tenant advocates remain willing to negotiate a middle ground.
“We have been very clear that we are willing to have conversations in good faith about changes in the law and most laws that pass are a product of compromise,’’ she said.
But landlords, who say their finances have been devastated by pro-tenant provisions passed in 2019 sharply limiting increases in a million rent-regulated apartments in the city, contend that bringing good cause to New York would be a Trojan horse opening a path to further restrictions.
“There is a great fear and tremendous lack of trust of what the legislature will do,” said Belkin. “They pass an anti-rent gouging bill and somehow it morphs into a rent control bill.”