Some of the residents of New York’s more than one million rent-stabilized apartments pay less than the legally allowed rent. How many? Nobody knows.
The Rent Guidelines Board’s most recent “income and expense study” found a gap of about 15 percent between legal regulated rents and rents that landlords have actually collected. The study notes further:
[T]he gap between collected and legal rent varies widely. In 2008, Manhattan property owners collected an average rent of $1,404, 9.4% lower than [the] average legal rent of $1,550 for Manhattan.In the other boroughs, the differences were more significant, with collected average rents that were 16.9% lower than legal rents in Queens; 17.8% lower in Brooklyn; and 22.1% lower in the Bronx. At least part of this differential in the boroughs is due to … preferential rents, usually offered when the legal stabilized rent exceeds the market rate for the area
The disparity points up a dirty little secret about New York’s housing market: many regulated tenants are not getting a good deal, particularly in the outer boroughs.
In Manhattan, some rents are lower than the legal rents because developers took advantage of a deal under which the city offered tax breaks for a decade in return for the landlords voluntarily putting their new apartments in to the stabilization system, even in cases where the stabilized rent exceeds the $2,000 ceiling for vacant apartments.
For some of these apartments, the market rate has been lower than the regulated rate for the entire decade — calling into question what, exactly, the city got by offering these targeted tax breaks.
We’d know more about this if the state and city mandated public disclosure of all lease deals, just as buyers and sellers of residential real estate must disclose prices.
More on the topic of disclosure tomorrow. To end rent-wars week, The Torch will offer some suggestions on what the state legislature and city hall should do to help tenants, rather than extend blunt price controls.