The Community Service Society of New York
04/24/2025 | Press release | Distributed by Public on 04/24/2025 06:16
Testimony: The Rent Guidelines Board’s Data Supports a Rent Freeze in 2025
April 24th, 2025
Testimony: The Rent Guidelines Board's Data Supports a Rent Freeze in 2025
Samuel SteinOksana Mironova
Thank you for inviting us to testify before the Rent Guidelines Board (RGB) this year, as the Board considers a rent adjustment that will be both fair for tenants and sustainable for the city's rent-stabilized housing stock. Our names are Samuel Stein and Oksana Mironova, and we are senior housing policy analysts at the Community Service Society of New York (CSS). CSS is an independent nonprofit organization that has been addressing the most urgent issues facing low-income New Yorkers for over 180 years, including the city's chronic housing unaffordability crisis.
As data-driven researchers, we appreciate the thorough work done by the Board's staff to provide members with voluminous reports about long- and short-term trends for rent stabilized housing across the broad diversity of owners and tenants in New York City. There is so much data, however, that Board members may be justifiably overwhelmed by the sheer mass of facts and figures.
In our testimony this morning, we will highlight the most salient findings, drawing from RGB reports as well as from our own Annual Survey of Housing and Economic Security-which is the longest running scientific poll of a low-income community in the United States.
A Portrait of Rent Stabilized Households
Rent regulation is the backbone of affordability in New York City, protecting 1,020,600 apartments-41 percent of the city's rentals-from unchecked rent hikes. Rent regulated apartments house low-income tenants, as well as Black and Latino New Yorkers, at higher rates than other forms of housing. And, they provide tenants a stability not found in the unregulated rental market.
According to our analysis of the 2023 New York City Housing Vacancy Survey (HVS), 37 percent of low-income [A graph of different colored numbers AI-generated content may be incorrect.] households ( earning under 50 percent of Area Median Income, or AMI) live in rent regulated apartments-totaling 434,300 households. That is nearly three times as many as those living in public housing and subsidized rentals combined.
Forty-three percent of rent regulated renters were born in New York City, while 41 percent are immigrants, most commonly from the Dominican Republic, Mexico, and China.
Latino and Black New Yorkers rely on rent regulation more than any other racial or ethnic groups-and for these groups, it is the most common housing arrangement. Thirty-eight percent of Latino and 29 percent of Black New Yorkers live in rent-regulated apartments. While homeownership is more common among white and Asian New Yorkers, 19 percent of white households and 16 percent of Asian households are rent-regulated tenants.
Our 2024 Annual Survey of Housing and Economic Security found that 22 percent of rent-stabilized tenants were behind on rent-echoing findings from Columbia University's Poverty Tracker. Among rent stabilized tenants, 17 percent have been evicted or moved out of fear of being evicted in the past, while 13 percent experienced a formal or informal eviction attempt in the past year. In addition, the Columbia Poverty Tracker testimony before the Board showed that 17 percent of rent stabilized tenants ran out of money by the end of the month at least once in the past year.
Declining Incomes, Declining Affordability
According to the Board's Income and Affordability study, economic conditions for tenants are dire, and by many metrics are declining.
While the Board's Price Index of Operating Costs considers price increases for landlords, it is crucial to remember that inflation and price gouging are also hitting tenants, who have lower incomes, lower savings rates, and fewer financing options than owners.
New York City's Consumer Price Index rose 3.8 percent over the previous year, outpacing the national increase of 2.9 percent. Inflation so far in 2025 is running at 4.1 percent, compared to 3.0% at this point last year. The Income and Affordability report showed a particular alarming jump in electricity costs, which rose 12.3 percent in 2024, on top of a 4.7 percent increase the year prior-and with a 13 percent rate hike projected for this year.
Looking over the long term, the Income and Affordability study shows that from 1968 to 2024, the full span of our current rent stabilization system, rents went up 1,017 percent, while costs for all other measured goods rose 826 percent. We often hear that New York's housing affordability crisis is reflective of a nationwide housing crisis, but over the same period nationally, the gap between rent and other costs was notably smaller: 870 percent for rent compared to 801 percent for all else.
New York City rents have risen far faster than wages. As a result, today, 46 percent of rent stabilized tenants are rent burdened-five percentage points higher than market-rate renters. Among rent stabilized tenants earning under 50% of AMI, a staggering 84 percent are rent burdened.
This year's Income and Affordability study also showed a slight rise in unemployment, the first recorded since 2020. Unemployment filings today are five times higher than they were in 2019. One-in-five renters (20.5 percent) fall below the poverty federal poverty level, which itself is far below the true cost of economic security.
Perhaps most alarming of all, inflation-adjusted earnings for New Yorkers are down 0.4 percent, compounding last year's 1.8 percent decline. This year's drop in real wages amounts to $240 less in annual take-home pay for the median rent stabilized household, who must also pay $486 more in rent thanks to last year's one-year RGB rent increase.
Given all of the above, it is distressing but not surprising that personal bankruptcy filings jumped nearly 14 percent for New York City residents in 2024, representing the second straight filings have increased. Meanwhile, cash assistance cases rose for the fifth consecutive year, now exceeding half a million households-an alarming 66 percent increase from 2019. Emergency grants, including "one shot deals" for rent arrears, hit their highest level (135,470 households) since the 2008 financial crisis.
For many tenants, the end result of declining economic conditions and rising rents is homelessness. The New York City shelter population rose 8.6 percent in 2024, the third consecutive annual increase. This rise in homelessness tracks for long-term New Yorkers, as well as recent arrivals, and, at an average of over 87,000 people per night, more than triple the 1990s average.
A Record-Breaking Year for Landlords
If the past year saw worsening conditions for tenants, it also saw an improving outlook for landlords. According to this year's Income and Expense report, the most comprehensive look into the landlords' books provided to the Board, this year saw the highest increase in owners' Net Operating Income (NOI) on record, up 12.1 percent from the previous year-which was already up over 10 percent over the prior year. And while "Core Manhattan" saw the biggest boost-up 23.1 percent over last year-83 percent of the city's Community Districts saw rent stabilized NOI improve, with one of the biggest leaps coming from The South Bronx (Hunts Point/Longwood up nearly 20 percent). Rent collection rates rose 6.9 percent, reaching highs not seen since 2015, with increases in every single Community District in the city. The average rent stabilized building has a NOI of $338,000.
The increases in NOI are not just a year-to-year phenomenon. Since 1990, inflation-adjusted NOI has grown by 48 percent. Meanwhile, looking at historical Housing and Vacancy Survey data, tenants' real incomes rose just 19 percent during that same period.
It can be confusing to read these banner NOI headlines against the findings in the Mortgage Survey report, which showed declining sale values for rent stabilized buildings. These divergent trends represent two aspects of the multifamily real estate market in the wake of the 2019 Housing Stability and Tenant Protection Act (HSTPA). Pre-HSTPA, rent stabilized building prices were inflated by speculative purchasers and lenders, who gambled on how high rents might go once units were removed from rent stabilization. HSTPA helped realign sales prices with actual rent rolls. As the past two years of high NOIs show, buildings can still be quite profitable within the post-HSTPA rental market, without the incredibly inflated, and ultimately unsustainable, sales prices we saw in the first two decades of the 21st century. In the future, more reasonable building sales prices will mean more reasonable capital expenses, including lower debt service.
Why the PIOC Misses the Mark
Similarly, the Price Index of Operating Costs (PIOC) report can be mistaken for countervailing evidence against the Income and Expense report, but this is also not the case. As the RGB's Executive Director Andrew McLaughlin said during his presentation, in times of economic uncertainty, landlords often delay purchases, leading to a divergence between PIOC predictions and future Income and Expense report findings. This is a clear historic trend, and there is no reason to expect these chaotic times will produce a different result.
Last year's RGB rent adjustments were in line with the 2024 PIOC's "Net Revenue Commensurate Adjustment," which is supposed to approximate the adjustment necessary to keep NOI constant for a single unit. But instead, this year's Income and Expense report showed NOI rising a historic 12.1 percent. NOI growth was not "commensurate," it was explosive.
For several years, when introducing the commensurate rent adjustments, the RGB staff has dutifully stated that these are not recommendations for this year's guidelines. Nevertheless, the press-and particularly real estate publications-continue to report them as such. But "commensurates" would be very strange metrics to use as a benchmark for landlords' economics because they are premised on a pure hypothetical: the economics of a single rent stabilized unit. No landlord, however, owns just one rent stabilized apartment; the smallest operator owns six, and-as JustFix will attest-most rent stabilized apartments are part of portfolios larger than 1,000 units.
The largest single factor in the PIOC is taxes-a cost landlords cannot simply defer indefinitely. They can, however, apply for the newly revived J-51 R tax abatement, which is designed especially for landlords of low-cost rent stabilized housing, particularly as they seek to meet the climate requirements mandated by Local Law 97. We expect a great many owners of older rent stabilized buildings will use this important program to order to defray their biggest annual cost.
Dealing with Distress
While landlords on the whole are doing quite well, we do not dismiss the fact that some buildings are financially distressed: according to the Income and Expense report, just over 9 percent of buildings with at least one rent stabilized unit are classified as such. This, however, represents a nearly 10 percent decline from last year, and falls at the historical median for financial distress over the past 35 years, from a low of roughly 5 percent in 2016 to a high of nearly 14 percent in 1990.
The geographical locus of financial distress in the rent stabilized stock is Manhattan-and this year Manhattan also saw the greatest decrease in its share of distressed buildings.
The primary driver of distress in rent regulated housing is unsustainable debt levels. This is a large part of the reason why the greatest levels of distress are found in some of the city's hottest residential markets. As discussed earlier, rent-stabilized buyers were, for a long time, willing to pay much more for their buildings than the rent rolls commanded because they-and their banks-assumed they could engineer ever-rising rents and could always find new tenants willing to pay more to live in the locations they controlled. In these cases, landlords banked less on RGB increases than compounding vacancy bonuses and overpriced Individual Apartment Improvements, which would eventually push rents past the deregulation threshold.
With those loopholes in the rent laws now closed, some landlords find themselves operating at a loss and confronted with the options of selling for less than the purchase price or paying their banks and neglecting their buildings. This is not an issue that RGB rent increases will ever resolve. It must instead be dealt with through mass debt restructuring, state and city subsidy programs, and/or preservation purchases by mission-driven nonprofits, landlords, and tenants.
In the kinds of rent stabilized buildings we believe Board members are most concerned about-those where the source of distress is a mismatch between rents and costs-another RGB rent hike is still not the solution. In such buildings, rents may seem low compared to citywide asking rents, but they are often in line with market rates for unregulated apartments in the same (or nearby) buildings. The rents for these units are what they are because tenants-rent stabilized or market rate-cannot afford to pay more, and those who can pay more are not seeking to live in these locations or buildings. Recall that more than one in five rent stabilized tenants have already fallen behind on rent at the current rent levels. Raising the rents will not solve the problem of poverty and segregation; it will only lead to more evictions and homelessness.
Fortunately, landlords have many options for investing in their buildings that don't involve rent hikes. Both the city and state offer a menu of low-interest loans, grants, and tax incentives to help owners retrofit and operate their rent stabilized buildings. These programs are accessible to non-profit and for-profit landlords alike. They include:
The soon to be relaunched Landlord Ambassador Program, which in the past provided technical assistance, vacant unit repair assistance, and up to $50,000 per project at 3 percent interest per year to complete emergency repairs or pay back municipal arrears.
The aforementioned J-51 R program, which offers an as-of-right real property tax abatement for rehabilitation of rent stabilized properties.
The Participation Loan Program (PLP), which provides 30-year below market loans, with a partial to full tax exemption, for rental building rehabilitation. Depending on the terms of the agreement, PLP subsidies range from $40,000 to $90,000 per unit.
The Multifamily Housing Rehabilitation Loan Program (HRP), which provides rehabilitation loans (up to $35,000 per unit) for the replacement of major building systems in multifamily buildings, including roof and window replacement, building envelope work (Local Law 11 and pointing), and upgrades to the heating, electrical, and plumbing systems.
The New York State Multifamily Energy Efficiency Program (MFEEP), which provides incentives for the installation of energy efficient equipment and technology.
The NYC Accelerator Property Assessed Clean Energy (PACE) program, which finances energy efficiency and renewable energy projects in rental buildings. It offers long-term, fixed-rate financing, covering up to 100 percent of project costs with no cash upfront from the owner.
The Multifamily Buildings Low-Carbon Pathways Program, which incentivizes energy upgrades to major building systems, with incentives ranging from $700 per unit for heating and water systems to up to $5,300 per unit for upgrades to the building envelope.
The Data Support a Rent Freeze
The data presented to the Board members so far is capacious, and it is not yet complete. Taken together, however, the data paint a clear picture of improving conditions for landlords and declining conditions for tenants. Net Operating Incomes shot up at a historic pace, while real wages fell. In these chaotic times, tenants simply cannot afford a rent increase, and landlords do not need one. For these reasons, we recommend that the Board institute a rent freeze.
Thank you for your time. If you have any questions, please reach out to us at sstein@cssny.org and omironova@cssny.org.