June 24 (Bloomberg) -- New York City’s Rent Guidelines Board voted to raise rents by 1 percent for one-year lease renewals at regulated apartments, implementing a historically small increase while stopping short of freezing rates.
The board, which sets rent adjustments for homes under the city’s stabilization law, voted five to four for the increase at a meeting yesterday attended by hundreds of New York City residents. For two-year leases, rents will rise 2.75 percent. The rates are for renewals as of Oct. 1.
Almost 1 million apartments are affected by the board’s guidelines. The decision fell short of the freeze in rates proposed by some tenants and supported by Mayor Bill de Blasio, who has made home affordability a tenet of his administration. Landlords argued that rising prices for major components of rent-regulated housing, such as taxes, insurance, fuel and city fees, made increases necessary.
“In recognition of the imbalance between the demand for and supply of housing, the board must promulgate rent guidelines that do not further exacerbate this imbalance,” Magda Cruz, a board member representing property owners, said at the meeting.
There are about 987,000 rent-stabilized apartments in New York, making up 45 percent of all rental units, according to a New York City housing survey by the Census Bureau in 2011, the most recent report available. Rent increases have typically been 3 percent to 4 percent historically.
Tenants crowded the rental board’s meeting at the Great Hall at Cooper Union, carrying signs advocating a freeze. Steven Flax, a board member representing the general public, called the decision a “nightmare” and apologized before voting in favor of the increase.
De Blasio yesterday said he supported a rent freeze because of an “unfair pattern” of tenants overpaying relative to actual costs for landlords.
“We need a course correction, a one-time action to clearly rectify the mistakes of the past, and a course correction that will actually provide fairness to tenants who have been charged more than they should’ve,” de Blasio said at a press conference in Queens before the vote.
Since his election, de Blasio has appointed or reappointed five of the Rent Guidelines Board’s nine members. Two members represent tenants, two represent owners and five represent the public.
A price index of operating costs for rent-stabilized apartment buildings increased 5.7 percent in March from a year earlier, according to the rent guidelines board. In 2013, the index rose 5.5 percent.
“We avoided zero, which is good,” Jack Freund, vice president of the Rent Stabilization Association, which represents 25,000 landlords who own rent-regulated apartments, said in an interview. “The bad news is we got 1 percent and 2.75, which is just totally inadequate based on the increased costs that owners are facing.”
New York market-rate rents have surged as the city’s economy has grown and tight mortgage standards limit homebuying. The median monthly rent in May was $3,300, a five-year high, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. In Brooklyn, the most populous borough, the median monthly cost was $2,800.
Randy Dillard, a Bronx resident who attended the meeting, said he can’t afford to pay his rent, utility bills and help support his five children, aged 16 to 23.
“If a person cannot maintain to pay his rent with his weekly check, he will not be able to survive here in this state,” Dillard said.
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