Rent Guidelines Board increased stabilized rent for a million apartments - what does this mean for New Yorkers?

McCarthy: Last night, the New York City Rent Guidelines Board voted 5 to 4 to back major increases to nearly one million rent stabilized apartments in New York City. This vote was just preliminary, but is expected to pass in the next two months bringing an increase as much as 4.75% starting October 1st. Joshua Harris is the Executive Director of the Fordham Real Estate Institute at Fordham University. I asked him - how will these proposed increases affect New Yorkers?

Harris:  New York is a very rent burdened place, meaning that people pay an exorbitant share of their income to rent as it is.  So it's kind of a rock and a hard place, and it certainly is gonna put a higher burden on an already burden populace, right?  I think the landlords would certainly argue the ability to even maintain these properties or keep them rent ready, is gonna be difficult to do without increases in the rent. The cost factor for landlords, for the cost of capital, the cost of maintenance, cost of operations has gone up substantially over [inaudible] years. 

 It's a compounding problem.  If you were to say hold prevents flat,  it might help that person individually for that year, for that period time, but it, it actually compounds worse to a loss of problem.  Solutions will be painful and unfortunately for tenants, it probably means they're gonna have to face. I mean, I don't see any way out of it. Candidly.

McCarthy:  No, absolutely. I think something you touched on is that both tenants and landlords are not satisfied with the rent increases. Um, obviously tenants sinking, it's too much and landlords saying they still can't really afford to do upkeep on their buildings.

But this is something for the last five years, it has continually been voted to increase. Do you think this percentage increase is this standard?

Harris:  It's probably larger than what you would normally expect in sort of more, call it stable inflation environments. But I mean, you know, we've had inflation running well north of 3%, even as high as 7%.  Um, I mean, it's in line with inflation and, and a lot of the services, a lot of the, you know, insurance costs, taxes, there's a  lot of area  Landlords face direct cost increases on. 

I doubt that the profit margins of most of the landlords. We'll increase substantially as a result of this, right? I mean, this is probably keeping pace, if even, I mean, it may not even keep pace with what you know.  Um, but, you know, costs have been rising a lot. If you think about salaries, think about the extra cost and benefits of people, materials, if you need HVAC boilers, all of these things have gone up dramatically, and this is all before.

Any of this tariff talk or this stuff in the last couple months. Right. Which could even, uh, put a lot more pressure on that going forward. Right.

And so, I mean, in fact, there's been a shocking number of units in Manhattan and, in New York across all the boroughs in New York City that had been essentially pulled off the market.

McCarthy:  I do, I don't have the number for 2025. I'm not sure if that's available, but in 2023, uh, there were 26,000 rent stabilized apartments that were vacant in New York.  

Harris: Well, that helps nobody, right? Landlords are refusing to rent them because they can't afford to rent them effectively or keep them maintained, no one's getting the housing benefit because they're vacant.

So that's like, to me, that's the worst type of market failure you could have. Um,  the reason New York has in this problem is just from decades and decades. Of, um, unwillingness to address the problem or to allow for more housing construction.

The recent city of Yes proposal that was passed earlier this year, I think is a huge step in the right direction in terms of actually getting more available land to be, um, higher, you know, built for higher density.

So add more housing, which will, will, which will naturally contribute and help, but that's not gonna happen quickly.

McCarthy: That was Joshua Harris, Executive Director of the Fordham Real Estate Institute. The Rent Guidelines Board is expected to pass a finalized rent increase percentage in the next two months.