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New York’s New Housing Deal: A Significant Win for Tenants

Ross Barkan

April 30, 2024

The importance of new tenant protections

The importance of new tenant protections

is being undersold by both activists and pundits

Few seem happy with the historic deal on housing that came out of Albany last week. Included as part of a $237 billion state budget that arrived several weeks late, the grand bargain ropes together new tenant protections and a new developer tax break among other reforms — all adding up to a package that alienated real estate interests and progressive activists alike. Democratic socialist lawmakers voted against the budget and the Real Estate Board of New York (REBNY), one of the state’s most powerful lobbies, proclaimed that the agreement fell “far short” of addressing the city’s housing needs. 

Disgruntled progressives and real estate developers both have a point, but when the dust settles, what will be obvious — and important — is that a significant slice of renters in the five boroughs will see their rents rise more slowly next year, thanks to action in Albany. That, on its own, is a very big deal.

Given 1.4% vacancy rates and the fact that a majority of New York City tenants qualify as rent-burdened, meaning they pay 30% or more of their income on rent, it’s fair to say that Gov. Kathy Hochul and the state Legislature didn’t do enough. But last year was a major missed opportunity: Then, Hochul’s “Housing Compact” fell apart, as she failed to convince lawmakers to give the State power to override local zoning, particularly in the housing-starved suburbs, to add more supply. Republicans and Democrats alike fiercely opposed Hochul and she backed away. She can be blamed for failing to marshal the political will to make this happen, but the powerful real estate industry didn’t have her back — they were more concerned with chipping away at tenant protections and reviving a version of 421-a, the generous tax break for building some affordable housing that expired in Spring 2022. 

In this budget, the governor started with more attainable goals — she left the suburbs largely alone — and got further. 

Landlords and developers can’t truly complain because Democrats threw them plenty of bones. Larger rent increases can now occur after apartment renovations. 

In place of 421-a, lawmakers created 485-x, which offers a 40-year tax abatement for producing 20% affordable housing on qualifying projects. That could prove to be a significant boost to production, as could the elimination of the outdated FAR [(floor area ration) cap on residential buildings. 

Unlike last year, Governor Hochul started with more attainable goals — and got further.

But the handful of pro-development reforms shouldn’t distract us from appreciating the eviction protections, which have been undersold. In New York City, certain tenants in apartments that are not rent-stabilized — stabilized units, which cover a little more than 1 million tenants in the city, have their rent levels set annually by the Rent Guidelines Board — will now be empowered to fight eviction and rent hikes over 5% plus inflation or 10%, whichever is lower. Protections kick in immediately, though landlords will have four months before they need to start complying with notice requirements. The new law will also guarantee that covered tenants can renew their leases each year, as long as they stay current on rent and follow the terms of their lease. Lawmakers and advocates estimate that between 60% and 70% of the city’s rental housing stock will be covered by the current system of rent stabilization and the new tenant protections. 

The threshold for rent increases is higher than what progressive Democrats have wanted since 2019, and New York has more carve-outs to its “good cause” law than what states like Oregon and California have on their books. Progressives and tenant groups are furious about these: Landlords with fewer than 10 units are not covered, as well as apartments renting for more than 245% of their county’s Fair Market Rent. (Based on 2024’s Fair Market Rent, this would be $5,846 for a studio, $6,005 for a one-bedroom, $6,742 for a two-bedroom, or $8,413 for a three-bedroom.) New buildings are excluded for 30 years.

Lawmakers and advocates estimate that between 60% and 70% of the city’s rental housing stock will be covered by the current system of rent stabilization and the new tenant protections.

Moreover, evictions can still occur if landlords want to remove apartments from the rental market entirely or if they plan to demolish the building. Judges can also approve rent increases above the good cause parameters if the landlord’s fuel, insurance, maintenance costs and any “significant repairs” are taken into account, like removing asbestos or replacing electrical systems. Especially aggressive landlords could exploit this provision to battle for rent increases that might not be necessary. 

The complaints about the carve-outs are valid, but getting something akin to “good cause” protections on the books in a state where real estate has been dominating the discourse for decades is a significant accomplishment.

Now that New York has in law a principle that there’s such a thing as illegally high rent increases in otherwise unregulated apartments, future legislatures can return to strengthen the protections. They can chip away at the exemptions. They can change precisely how the principle of “good cause” is defined.

What’s unlikely to happen is backsliding on the basic notion that some rent increases are unfair and therefore illegal. All who care about tenants in this majority-renter city should count that as a significant win.