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Rent control can be referred to as a set of laws that are placed by price controls that are posed on renters of apartment buildings. Rent control is the older of the two rent regulation systems in place within New York City. The state of New York has almost 60 years of experience in handling the many issues that they are faced with regarding ongoing rent regulation and has the longest amount of experience in the nation regarding the issue. Rent control covers only those tenants whose buildings were built before February 1, 1947 and who have lived in their apartment since July 1, 1971 (if the building has fewer than three units, since April 1, 1953). There are a total of 51 municipalities have rent control which include New York City, Albany, Buffalo and various cities, towns, and villages in Albany, Erie, Nassau, Rensselaer, Schenectady, and Westchester counties.
President Franklin D. Roosevelt signed off on the Emergency Price Control Act (EPCA) which was considered to be widespread nationally system that was based upon the price laws. Price controls were the governments’ response to the inflationary pressures that resulted from a fully employed wartime economy that channeled resources exclusively to the war effort. Residential apartments were placed under the price control plan and were made part of the EPCA. However, not all of the counties fell under this particular regulation within the state which caused them to be subjected to federal regulation. This caused the Federal Office of Price Administration in November, 1943 to place a temporary freeze on New York City rents based upon the March 1, 1943 levels.
Since the war was coming to end normalizations and the nation’s economic situation was then determined that it would be in the best interest for the Emergency Price Control Act to be terminated effective June 30, 1947. This lead to Congress passing the Federal Housing and Rent Act of 1947 which was a immediate replacement of the EPCA of July, 1947. Under this law, new construction after February 1, 1947 was totally exempted from controls while pre-1947 buildings remained subject to continuing regulation.
The expectancy of the removal of Federal restraints that were placed upon them as well as the continuous crisis pertaining to the lack of apartments gave the state the authority to implement their own set of laws. Also, the lack of apartments was due to the fact that new construction wasn’t taken place because of the war. Subsequent Federal legislation, the 1949 Federal Housing and Rent Act, gave the States authority to assume administrative control of rent regulation and the power to continue to continue, elimate or modify the Federal system.
During 1950 an agency known as the Temporary State Housing Rent Commissioner was in charge of overseeing the laws regarding rental housing under Chapter 250 of the Laws of 1950. It was this act that temporarily froze rents again based upon the level that was in effect as of March 1, 1950 in order to give the commission enough time to be able to disclose a rent control plan for New York. In order to alleviate the shift from the Federal controls the plan that actually was implemented into legislation in 1951 and was considered to be strongly comparable to the Federal regulatory structure that was in effect. At the time of the initiation of State rent control, approximately 2,500,000 rental units were under statewide control. This translates into to about approximately 85% of the rental units being located in New York City. The state structure actually acted as a liaison between both the tenant and the owner when it came to issues such as rents, services, and evictions. Through this they began to oversee the structure of neighboring rent offices that were set up all throughout the state.
Due to the relentless apartment shortage which was created in part by World War II as well as inflation woes which was originated by the Korean War slowly subsided which lead to the State passing a series of partial end to controlling actions. These acts are as followed:
- Apartments in one or two-family houses which became vacant on or after April 1, 1953 were exempted from controls.
- Counties, cities and towns outside of New York City were given decontrol power.
- In 1958, the first luxury decontrol order was issued which deregulated approximately 600 units in New York City then renting for more than $416.66 per month unfurnished and $500 per month if the apartment was furnished.
By 1961 there were roughly 1,800,000 units that were subjected to rent control all throughout the State. This only existed for New York City and approximately eighteen counties that existed outside of the city that actually had rent controlled units. There was an ongoing end to controlling the movement which seemed to continue throughout the 60’s which lead to important administration changes that would happen by the start of the next decade. During 1962 the responsibility for the overseeing the rent control inside New York City was actually reassigned to the city and would fall under the Local Emergency Rent Control Act. This Law would enable the City to shape its own rent control program since the overwhelming majority of controlled units were largely in part in the City. This caused the organization that was involved in State rent control to be reassigned from the Temporary State Housing Commission to the State Division of Housing and Community Renewal (DHCR) in 1964.
By 1964 it was estimated that about 5,000 soaring rental apartments that were located in New York City put an end to the control of prices of units that were without any furniture renting for approximately $250 a month or more and units that were furnished renting for approximately $300 a month based upon projections taken from April, 1960. The ending of price control was spread over a period of time. Units were decontrolled immediately upon vacancy, while occupied units were subject to a test based on family size and characteristics (such as families with school age children) and apartment size. This lead to a housing survey that was conducted in 1965 where they actually disclosed available apartments which caused the rate to be about 8.8% for both unfurnished and furnished units for rents that were considered to be overindulgence with amounts that would range from $250 to $300. This brought about another new order in 1968 which lead to end of price controls of units that had these rents since April 1, 1965. Through this the end of price controls would become more spread out. This made about 7,000 units end price control under the direction of the Administrator’s order of 1968.
However in 1969 the economic situation reflected changes both on a local and nationally level due to different economic contributors. Nationally, the Vietnam War caused a steep rise in the rise of inflation and locally, housing production begin to slump. This would cause a vacancy decline that actually existed from 1965 which was at 3.2% to 1.23% in 1968. Based upon this information it caused rents to begin to rise swiftly for those who didn’t fall under rent control regulation. This caused a reduction of the rental apartment marketplace and caused the city to pass yet another order known as the Rent Stabilization Law of 1969.
They were about 400,000 New York City apartments’ buildings that had six or more units but were actually exempt from rent control but would now be covered by the Rent Stabilization Law. Out of the 400,000 apartments there were about 325,000 buildings that were actually constructed after February 1, 1947. The remaining 75,000 had actually been rent controlled apartments however the price controls had ended.
The Rent Stabilization Law, which contains a built-in rent adjustment mechanism and a simplified procedural structure, was designed to more readily adapt to the change in the housing market. The Rent Stabilization is buildings that have six or more units and were built between February 1, 1947 and January 1, 1974. The tenants who lived in these buildings that have six or more units that were build prior to February 1, 1947 but moved in after June 30, 1971 are considered to be covered by Rent Stabilization. There is a third category of rent stabilized apartments that covers buildings with three or more apartments constructed or extensively renovated since 1974 with special tax benefits. These buildings are only considered stabilized while the tax benefit is in place.
In addition, Rent Stabilization Law gave the Rent Guidelines Board the authority to institute levels of rental increases for lease renewals and new tenants. The Law authorized the creation of the Conciliation and Appeals Board (CAB) to receive and act on complaints from tenants and applications from owners. Also, the laws allowed the Rent Stabilization Association to develop their own sets of laws. By doing this they required the owners to become members of the association so that they could avoid having their apartments being placed under rent control. This system actually integrated a mechanical method for periodic rent modifications. An adjustment feature was soon added to the rent control system in order to preserve, maintain and improve this older housing stock. This adjustment feature, enacted by Local Law 30 of 1970, is the Maximum Base Rent (MBR) program, which was the most significant revision of the City’s rent control system. Through this program there is a mathematical formula that is in place to calculate what the maximum rent levels should be for controlled apartments that are located in the city.
In 1971, New York City actually allowed rent stabilization to post-1947 buildings where the State approved several laws that were created to deregulate over a period of time would and control, stabilize the housing market. Chapter 371 of the Laws of 1971 provided for decontrol of rent controlled and rent stabilized units which were voluntarily vacated on or after July 1, 1971. This gave the owners the opportunity to set market rate prices once the apartment became vacant. In addition, the “Urstadt” Law, named after the then State Housing Commissioner Charles Urstadt, prohibited any municipality in the State from adopting new regulations that were more stringent than those that were presently in effect.
It was from about July, 1971 to about December, 1973 that more than 300,000 rent controlled apartments once again ended up with price controls and close to about 90,000 rent stabilized apartments no longer existed. The swift inflation which was caused by the ongoing Vietnam War was the economic trademark of this time period. During this time, the Federal government actually forced a 90 day wage and price freeze at the ending of 1971. This federal program was finally terminated in January, 1973. However, the general inflation prices during this period, combined with vacancy decontrol, resulted in very large rental increases for apartments located in New York City and its surrounding suburbs.
Due to the overwhelming rent levels which caused Governor Nelson Rockefeller to step in and take action aimed at the Temporary State Commission on Living Costs and the Economy of the State of New York to have a hearing regarding the issues and make recommendations based upon the vacancy decontrol. The Commission, under then Chairman Andrew Stein, recommended abrogation of vacancy decontrol. Based upon its findings showed that vacancy decontrol did result in about a average rent increase of close to about 52% in a apartment that was decontrolled compared to only 19% increase for prior rent stabilized units within the city while the operating costs only contributed to roughly 7.9%.
The State Legislature’s responded to rising public apprehensions caused by rapid rent increases and inadequate supply of affordable housing was the enactment of the Emergency Tenant Protection Act of 1974 (ETPA). This act provided stabilization for counties such as Nassau, both Westchester and Rockland where the municipalities decided to implement these laws because of the emergency housing crisis since the vacancy was considerable less than five percent. This brought forth a amendment to the Rent Stabilization Law and placed a end to the decontrol stipulation of the 1971 legislation which applied to rent stabilization.
According to the EPTA any buildings in New York City that had more than six units had completed construction between March 11, 1969 and December 31, 1973 fell under the rent stabilization for the first time. In addition, rent controlled units and rent stabilized units, in buildings with six or more units and deregulated by vacancy decontrol, were re-regulated and placed under stabilization. These laws didn’t apply for the Nassau, Rockland and Westchester since the decision was made locally pertaining to applicability. However, if a building contained six rental units and finished before January 1, 1974 then it fell under this law. The Act also directed the creation of county rent guidelines boards to determine annual rent adjustments for classes of housing within the respective counties.
Sources:
http:// www.tenant.net/Oversight/50yrRentReg/history.html
Retrieved on March 16, 2009
http://www.housingnyc.com/html/resources /faq/rentcontrol.html
Retrieved on March 16, 2009
http://www.metcouncil.net/campaigns/rentregs.htm
Retrieved on March 16, 2009
http://www.metcouncil.net/factsheets/rentcontrol.htm
Retrieved on March 16, 2009
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