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Proposed DHCR regulations will exacerbate housing supply problems

September 9, 2022 Community Housing Improvement Program
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The New York State Division of Housing and Community Renewal (DHCR) has proposed new regulation on rent-stabilized housing that will result in thousands of apartments remaining vacant, exacerbating the affordable housing crisis plaguing New York City. The proposed rules would create a formula for setting rents on reconfigured units in rent stabilized buildings. In almost all instances, the new formula would make it financially infeasible for a property owner to engage in a reconfiguration. This means the units will remain vacant and unavailable for rent in perpetuity.

“It’s unfortunate that DHCR has failed to notice that we have a massive lack of housing supply in New York City. That can be the only explanation for proposing new rules that encourage disinvestment in the operation of affordable apartments,” said Jay Martin, executive director of the Community Housing Improvement Program (CHIP).

Six months ago, CHIP launched an advocacy campaign to highlight the growing problem of vacant rent-stabilized apartments (vacancynyc.org). The 2021 Housing and Vacancy Survey found that 42,800 rent-stabilized apartments are currently vacant and unavailable for rent.

These units require substantial rehabilitation work that costs more than $75,000, but the current rents are not high enough for the property owner to secure funding to make the renovations. In limited instances, some of these units have been able to be renovated and re-rented through reconfigurations with other units. The proposed DHCR regulations would end this practice, which means they will remain vacant because owners will not be able to secure funding for renovations.

“Anyone suggesting that these proposed regulations would lead to more of these units being rented clearly knows nothing about housing. This is simple math. The costs are too high to do the renovation work, so the units will sit vacant forever,” said Martin.

The proposed regulations also lack clarity. One legal interpretation of the proposed regulations would suggest that reconfiguring a deregulated unit in a rent-stabilized building would require the owner to re-regulate the unit. Amendments to the regulations are necessary to provide property owners certainty, or they will be hesitant to make renovations moving forward. CHIP looks forward to providing detailed testimony on these changes at the hearing on November 15.


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