Tenant Breakthrough in New York State on Rent Control

Katy Murphy – Bay Area News Group

New Orleans        For tenant activists and organizers around the country and the world, rent control, real rent control, often seems like gold at the end of the rainbow, almost a mirage, certainly unattainable, and perhaps not worth the struggle.  New York City has long been a beacon for tenants trying to win such protections, even if the light from those policies has been flickering and rising rents have made the divide between landlords and tenants unbridgeable.  Overcoming fierce opposition by landlord lobbyists and decades of erosion of protection in the one-million rent-regulated apartments in New York City and a loss of tens of thousands of affordable housing units, a coalition of tenant advocates and organizations, Housing Justice for All, managed to win a historic agreement that would strengthen rather than weaken the rules.  This is huge!

Here are key elements of the final agreement worth noting:

  • Rent control would be expanded statewide offering cities and towns the ability to create their own rent control policies.
  • So-called “vacancy decontrol” would be abolished.This provision had allowed landlords to take units out of rent protections after rents passed a specified benchmark.  The New York Times noted that 155,000 units had been lost in the last 30 years due to this provision.
  • The so-called “vacancy bonus” would be abolished.This provision had enabled landlords to skyrocket the rents by 20% whenever a tenant vacated a rent-controlled unit.
  • Provisions were strengthened to provide tools to tenants to fight reno-raises, as I would call them, which are increases imposed by landlords when they renovate units or make improvements in the building, some of which were little more than cosmetic, but allowed rents to be gentrified, a problem we see around the world.
  • Rent discounts called “preferential rents” would be made permanent preventing huge bumps when a rent control tenant renews a lease.

I understand we’re in the weeds here, but watching what happens to the real estate market for tenants in New York in the next couple of years will be critically important.  If it works, as we believe it should, and it expands to cities and towns from Buffalo to Syracuse to wherever in New York State, it may serve even more successfully as a model for tenant victories in the future where the special, sui generis nature of the big Apple itself has been a barrier in the debate, even as it has been a beacon of hope.

The fight is not over.  Eviction protections for tenants in market rate units not under rent control did not improve which is a disappointment.  As Jonathan Westin, the executive director of New York Communities for Change, the former New York ACORN, was quoted in the Times, “…this is a huge win for the tenant movement that will impact the lives of millions of renters … but we also feel we have a long way to go.”

Amen, and many of us will be trying to follow your lead!


Big Boys Cashing in On Rents and Mortgages

Louisville   When it’s good for the hedge funds and real estate investment trusts (REITs), it’s almost never good for the rest of us, especially the beleaguered renters of America or anyone trying to move the next step to buy a home or get a mortgage.

Blackstone, the mega-private equity fund, cashed in once again on its multi-billion dollar bet on the rental market after acquiring 80,000 or so homes in seventeen markets around the USA, most of it through foreclosure fire sales.  Many of these homes were in semi-suburban areas around cities like Phoenix and Memphis taking advantage in the inelegant words of the Wall Street Journal “in a wager that many Americans would be willing to rent the suburban lifestyle they could no longer afford to own.”

It’s fair to say that they have made out like bandits!  The Journal figures the take in rough numbers as follows:

“…Blackstone has reaped roughly $2 billion from its two share sales [in Invitation Homes, Inc.] this year.  It also has received $682.5 million payout from Invitation before the company was public and about $197 million in dividends paid out on the firm’s shares since the IPO.”

They aren’t alone.  Their chief competitor American Homes 4 Rent is also reporting improved occupancy rates with lower maintenance costs in a climate of rising rents, as both prove that they can mange tens of thousands of rental properties when families are unable to access mortgages as easily or at a price point enabling ownership.  Other than this being great news for Wall Street and these wheeler-dealers, it’s hard to see this as good news for anyone else.

And, more news in this vein doesn’t add up to better news either.  REITs are coming back into the housing market at huge levels again, increasing their mortgage-bond portfolios by almost 28% to $308 billion over the last twelve-months or so.  Such activity puts more money at hand, but the lessons of the meltdown a dozen years ago continue to be dimly remembered since there is little real oversight examining how risky these plays may be or the different financial vehicles they might fuel in order to provide returns to investors.  Analysts claim to the Journal in another report that before the recession they were leveraged at twelve times equity, but now they are only five times equity.  Gulp, I know we’re supposed to feel better at that number, but somehow, I’m not quite there.

What do I know, but none of this adds up in a positive way for me?  Middle-income people can’t afford homes so they are paying rising rents for suburbia and hedge funds are cashing in, and Wall Street is putting more money into mortgage instruments for those with enough money to pay top dollar, while regulators and Congress are trying to exempt additional banks from community reinvestment and other reporting requirements at the same time.  To me it looks like more of the national housing market, like so much else, is being skewed to the rich and away from the rest of us.