New York City’s Independent Budget Office this week reported that some 13,000 rent-regulated apartments in the city have been vacant for more than two years — fueling the charge that owners are deliberately “warehousing” apartments to pressure ꦑ✤legislators to ease limits on rent increases.
A group called the End Apartment Warehousing C﷽oalition, comprising 22 tenant organiza☂tions, supports legislation that would impose a fee on any landlord whose unit is vacant for more than three months.
Te꧟nant advocates assert that such an approac✨h will help end homelessness.
In reality, that would be an unprecedented form of regulatory overre▨ach: forcing business owners to operate at a loss.
To understand why, turn to New York’s of 2🥂019, which tightened the screws on owners of the nearly 1 million rent-regulated apartmenܫts in dramatically new ways.
Most important, for the f💞irst time, it limited rent increases that could be justified by “major capital improvements” to units to just $15,000 over a 15-year period.
That means that no matterꦜ how much owners must spend to repair heating systems, roofs and windows, they’ll be limited i🐓n how much they’ll be permitted to raise the rent.
ܫFor tenant activists, this was a way to close a regulatory “loophole” that allowed buildings to raise rent.
But there’s a direct link betwee𒊎n the cap on capital improvement reimbursements and the so-called “warehoused” apartments.
If it costs more to maintain a unit — and keep it in compliance🌠 with housing codes — than rental income justifies, it only makes sense to padlock it.
In other words, an anti-warehousing law would force owners to lose money every month — or rent a substandard unit at the risk of being in violation of housin💧g laws.
It makes sense, and saves d𓄧ollars, to keep the unit vacant.
Other proposed laws are as bad or worse.
The End Warehousing Coalition, for instance, is pushing for a bill proposed by Manhattan Borough President Gale Brewer to require inspections, and presumably repairs, for vacant apartments — on the grounds that they may harbor rats or ღpose a fire hazard for neighbors.
That approach leads to the wo🎃rst of both worlds: forced spending on repairs and no rental income at all (at least until the fixed-up units can be rented).
Losses would pꦗile up — and, plausibly, spark the kind of abandonment the city ♌saw in the 1970s.
Should supermarkets to be required maintain stores if they run in the⛦ red? Drug stores? Banks?
It’s a small step from being required to operate at a 💜loss to a municipal takeover — and taxpayer sಌubsidy.
That’s called public housing — and the kind we have now operates at a and faces an e🧔stimated $80 billion in deferre꧒d-maintenance bills.
The city’s already taking a smal🐈l step along this road, offering grants to building owners to make repairs for which they can no longer raise the rent.
These are costs the private market can cover if it’s allowed to operate; instead, city taxpayers will have to pay꧑.
Meanwhile, the 2019 law is hurting rent-stabilized apartmen♉ts beyond the “warehousing” of some.
The most recent Census Bureau Housing and Vacancy Survey of city apartments found 33% of rent-regulated units have rodents, compar﷽ed to just 18% of market-rate units, 🐈and three times as many have mold.
Twice as many have toilet an💝d elevator breakdowns.
The math here𝔍 is simple: When you can’t raise the rent if your costs go up, you’re forced to do what it takes to keep costs down.
At b💎ottom, the problem ꦡlies with the entire concept of rent regulation — where bureaucrats are allowed to set rents that are too low for landlords to recoup investments.
Yet the 2019 law made that enormously worse.
And without relief, soon, New Yorkers can only expect more vacant units, e🐟ven as the city desperately needs more, not less, rental hous൲ing.
Howard Husock is an American Enterprise Institute senior fellow.