The Destructive Consequences of Rent Control
On June 14, New York State passed A. 8281 and S. 6458, also known as the “Housing Stability and Tenant Protection Act of 2019.” The package was signed by Governor Andrew Cuomo (D) and went into effect immediately. The omnibus represents the enactment of the strictest rent regulation laws ever established and contains a host of onerous provisions that will have significant effects on the quality and quantity of affordable housing in the state.
As part of the new law, rent boards will no longer adjust rent calculations for vacancies of regulated units. The law severely limits how much an owner may increase the rent to cover the costs of major capital improvements (MCIs) or individual apartment improvements (IAIs), and it eliminates vacancy decontrol and luxury exemptions to rent control regulations. These changes will have devastating effects in a state where over half of the housing stock was constructed before 1959, accelerating the primary consequences of rent control policies: deferred maintenance and supply reduction.
Other onerous provisions are as follows:
- Increases notice requirements for rental housing providers to renew, nonrenew, terminate a tenancy or increase the rent.
- Allows judges to stay the execution of an eviction for up to 1 year.
- Specifies that housing providers may only seek rent in an eviction action, excluding fees, charges and penalties.
- Prohibits housing providers from recovering attorney’s fees in default judgments.
- Places limitations on the requirement that the tenant in an eviction action must pay rent into escrow.
- Strengthens the rights of a tenant in an eviction action to affirmative defenses and counterclaims.
- Prohibits owners from evaluating an applicant’s prior rental history in the resident screening process.
- Caps application fees to $20.
- Caps late fees to $50 or 5 percent, whichever is less.
- Limits security deposits to 1 month’s rent.
NAA is working with the affiliate network to push back against similar policies being proposed around the country. Everyone must be vigilant. Please alert the NAA Government Affairs team at any indication that adverse measures like these are coming to your city or the state of Florida. WE MUST NOT ALLOW LEGISLATION LIKE THIS TO PASS IN FLORIDA!
In an effort to shine a light on the unintended consequences of rent control, the National Apartment Association created this video explaining how regulating rents reduces housing supply, discourages improvements to apartment communities and increases market-rate rents. The result is higher rents and less affordable housing for everyone, with low-income residents and families hit the hardest. In short, rent control hurts everyone, including those it was originally intended to help.
Portions of this article were contributed by Robert Pinnegar, President & CEO, National Apartment Association.