June 19, 2008
THE Rent Guidelines Board votes today on what in creases it will allow for lease renewals in rent-regulated city apartments. But this year, New Yorkers should wonder why they even need the protection of rent regulations anymore.
Non-regulated rents are clearly going down. And rent regulations are disappearing - unless some city and state politicians get their way.
These politicians will probably fail to stop the progress this year - but they've got a good chance of success down the line, if Democrats take control of the state Senate.
Want to know what could happen to the Manhattan rental market over the next few years? Just look around.
In some neighborhoods, a dozen high-rise condo buildings are newly finished or under construction. But wait until dark and you'll see that few lights are on in some new buildings.
Developers are finding it hard to sell as the market tightens - so they're switching buildings to rentals.
On sites like Prudential Douglas Elliman, pages of "luxury" one-bedroom apartments, never lived in, are there for the taking. The market is in flux, with some owners thinking they'll get $4,000 a month and others hoping to get $2,700 for near-identical apartments.
With tens of thousands of layoffs working their way through the city's banking industry, and with permits to build 30,000 or so new residential units issued in each of the last three years, it could be a renter's market for middle-class and affluent Manhattanites for quite some time.
The winners wouldn't just be six-figure-earners, though, if New York really had a free market. If a state-of-the-art "luxury" apartment commands only $3,000, down from $4,000, then a less-nice apartment that might once have rented for $3,000 should rent for $2,000 - and so on down the line.
In fact, in a normal city - one with an unregulated market - this is how it would work all the time, even in a rising market. Apartments farther from Manhattan would cost less than ones in the city center; older apartments in Manhattan would cost less than newer ones.
Instead, the decades-old rent-regulation system prevents that from happening. These laws stop landlords from charging market rates to new tenants if the rent is under $2,000, and limit the rent hikes that landlords can charge tenants who renew their leases.
