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Rent Guidelines Board Must Establish Commensurate Rent Increases:

April 19, 2022

Rent Guidelines Board Must Establish Commensurate Rent Increases:

The Rent Guidelines Board (RGB) has been suppressing regulated rent increases at historically low levels. Over the last 8 years, property owners in NYC only received a total of 6.25% in rent increases for stabilized one-year leases:

2014 – 1%
2015 – 0%
2016 – 0%
2017 – 1.25%
2018 – 1.5%
2019 – 1.5%
2020 – 0%
2021 – 1%

During the de Blasio administration, rent-regulated apartments, on average, were raised just under 1% for a typical one-year lease. This includes when the Rent Guidelines Board froze rents at 0% three times over this span.

These RGB rent increases are not commensurate with the rise in expenses associated with taxes, insurance, labor, and gas/oil.

Over the last 8 years, taxes increased 61% for a 10 unit building (with 3 rent regulated units) in the Chelsea neighborhood of Manhattan that is managed by Weber Realty.

Payroll expenses have also jumped for supers and administrators as minimum wage in NYC increased 88% from $8.00/hr in 2014 to $15.00/hr in 2020. Maintenance and repairs also rose higher as exterminators, plumbers and electricians charge more for labor.

For the same 10 unit Chelsea building, insurance premiums increased an average of 8.12% per year over the last 3 years. Higher premiums are due to rising building costs, supply chain disruptions, and greater losses from floods, hurricanes and wildfires in recent years. Property insurance is also 15% more expensive for landlords than a standard homeowner policy because insurers are taking on additional risk due to the presence of renters.

Heating oil prices jumped 77% in just 2 months for a 40 unit residential building in Morningside Heights. According to Weber Realty Management “It cost $6,034.00 to fill up their oil tank on 1/10/2022. Two months later, on 3/11/2022 it cost $10,653.86 to fill up the same tank (which needs to be refilled every 2-3 weeks).”

In addition, between 2020-2021, cleaning expenses rose 40% due to COVID concerns. The stay at home mandate also drove up water usage by 10% during the same time period. Also in the summer of 2021, many pre-war buildings suffered damage from Hurricane Ida that required thousands of dollars in repairs.

The annual inflation rate in the US was 7.0% for the 12 months ending December 2021 and rose again to 8% in February of 2022. That’s the highest hit since 1982, 40 years ago. Meanwhile the RGB only increased rates by 1% during the same period leaving property owners absorbing the losses. The RGB needs to impose a double digit increase to get back on track in 2022. Otherwise, affordable housing should be paid for by all taxpayers, not just one industry.

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