Last year New York City experienced its largest loss of rent-stabilized apartments in eight years, while permits for new housing dropped 76.2% in 2023 compared to 2022 — declines both driven by the expiration of a tax relief program widely used by residential developers.
At a hearing Thursday morning, members of the Rent Guidelines Board sized up the final housing market reports produced by board staff this year as they weigh the size of a rent hike they are scheduled to vote on next month for nearly 1 million rent-stabilized apartments in the city.
The 2023 reports found at least 9,694 apartments left rent regulation, more than one-third of them in largely luxury buildings whose 421-a tax break had expired. Nearly all new rent stabilized housing added last year was under the tax relief program, known as 421-a.
Meanwhile, developers obtained permits for 16,348 units in 2023, well below the 68,668 permits issued in 2022 during a rush to construct in time to qualify for the tax relief before it ended.
Last month Gov. Kathy Hochul approved 485-x, a new tax credit meant to replace 421-a. How widely it will be used — given more costly affordable housing and labor obligations for developers — remains to be seen.
Of the nearly 10,000 total apartments that left regulation, the board research found that 554 units had been removed last year because landlords cleared buildings and renovated apartments, a rare remaining legal path to exiting regulation — the highest number in nearly 20 years. Last year THE CITY reported on a wave of such renovations in Ridgewood, Queens, where the number of units registered as regulated dropped sharply.
Also on the rise were apartments lost to demolition, combined “Frankenstein” units, and due to rules in the 2016 revisions to 421-a, which — unlike the previous law — allows apartments to exit regulation once they are vacated if rent exceeds a level currently set at $2,954.54 a month. The governor signed legislation in December closing the loophole.
Jay Martin, executive director of the Community Housing Improvement Program, which represents many small and medium-sized rent regulated buildings in New York, said the board “needs to make sure the existing buildings are properly maintained through adequate rent adjustments.”
“We also need elected officials to properly fund voucher programs so vulnerable New Yorkers are able to afford their homes, and they need to work to reduce costs they control like property taxes and water and sewer charges.”
The yearly dance to determine how much landlords will be able to increase rent for rent-stabilized units has become increasingly fraught amid the housing crisis in the five boroughs. The 2023 Housing and Vacancy Survey found that the vacancy rate of rent-stabilized units was 0.98%. For apartments overall, the vacancy rate plummeted to 1.4%, the lowest level since 1968. Meanwhile, 45.5% rent stabilized tenants who do not receive rental assistance were considered rent burdened, meaning that more than 30% of their gross income goes to rent.
In a preliminary vote on April 30, the board voted 5 to 2 in favor of a maximum rent increase range for one-year leases from 2% to 4.5%, and 4% to 6.5% percent for two-year leases. At that hearing, tenant board members Adán Soltren and Genesis Aquino voted in opposition, denouncing the yearly process.
“I know that the tenants’ voices and our voices here don’t matter,” Aquino said at the meeting. “I cannot vote on anything that would continue strangling working-class tenants to the point of displacement.”
Last year, the board approved a maximum rent increase of 3% for one-year leases, and rent increases for two-year leases were capped at 2.75% for the first year and 3.2% for the following year. During the preliminary vote, five City Council members with the Progressive Caucus stormed the stage at Cooper Union’s Great Hall in opposition to the rent hikes.
The board will host four public hearings in the coming weeks where members of the public will testify, starting with a May 30 hearing at the Jamaica Performing Arts Center in Queens. The board will then cast its final vote for this year’s rent increases at its June 17 meeting at Hunter College at East 69th Street.
Want to testify to the board? Learn more about their process in our guide on how the Rent Guidelines Board works.