A loophole in rent regulation laws is pushing longtime, low-income residents out of their rent-stabilized homes, according to tenants and advocates who faced off against landlords at a hearing on Thursday.
State senators heard testimony during the seven-hour meeting on rent regulations at Medgar Evers College in Crown Heights. Legislators are considering a set of nine bills that could increase tenant protections and eliminate tactics landlords frequently use to raise rents in rent stabilized properties.
“Landlords are using the current laws to push working class communities out of their homes,” said Marcella Martinez, a resident of Sunset Park who lost her rent-stabilized unit in 2008. “This rampant abuse is mostly affecting people of color and people who can’t defend themselves. They want us out so they can tear the place down and build a place for rich people.”
Martinez represents Neighbors Helping Neighbors, one of several tenant counseling groups supporting an end to the Major Capital Improvements policy and the preferential rent loophole.
In rent-stabilized apartments, of which there are more than 800,000 citywide, landlords can only make annual increases that are determined by the city’s Rent Guidelines Board — currently 1.5 percent when renewing a one-year lease.
But preferential rent allows landlords to offer tenants rent that is below the maximum rates set by law. When renewing a lease, the landlord can hike rents to its maximum.
That maximum can be dramatically inflated by Major Capital Improvements, which allow landlords who make significant renovations to a rent-stabilized property to raise rents to offset the costs.
Tenant advocates say landlords use these two tools to hike rents up hundreds or even thousands of dollars in units meant to be among the city’s most dependable affordable housing stock.
Those sudden hikes push out long-time residents and give landlords license to charge market rates in stabilized units.
A 2017 ProPublica investigation found that the use of preferential rent increased every year from 2000 to 2015, and concluded that the “tactic fosters gentrification, eviction and homelessness.”
But opponents argue that ending MCIs would keep landlords from making necessary repairs to their buildings, dilapidating housing stock and costing construction jobs.
Paimaan Lodhi, who testified on behalf of the pro-landlord group Real Estate Board of New York, thinks the proposed bills go too far.
“Sweeping reforms like these could cut off revenue streams for landlords,” Lodhi said. “This could lead to deterioration of housing stock and lower property values.”
Lodhi offered his testimony amid frequent boos and hisses from the crowd, which was mostly comprised of tenants rallying to support the legislation.
Brooklyn resident Clara Perez Joseph said her landlord gave her preferential rent in her rent-stabilized apartment. But upon signing a new lease after two years, her rent shot up from $800 to $1,200 a month. She asked legislators to make preferential rents permanent until vacancy.
“We have to pass these bills in the Senate and the Assembly, so the governor doesn’t have a chance to water them down,” Joseph said.
Tenant groups are looking to press the gains they made in the 2018 elections, and use the new progressive leaders in the state legislature to enact their agenda. Freshman State Sens. Zellnor Myrie and Julia Salazar were present to hear testimony.
“This is our chance to put through all nine bills and ensure these protections for tenants for years to come,” Joseph said.
State lawmakers have about a month to make a decision before the current rent regulations expire.
