Could Expiring Law Increase Rents?

With rent stabilization laws set to expire this June, New York City is gearing up for a city-wide debate. Tenants are pushing for rent stabilization laws to remain in effect, but landlords are arguing that rent stabilization makes it impossible for them to stay in business. The law in question, the Urstadt Law, has been in place since 1971, with very few changes made since then.

The Urstadt Law allows for rent stabilization of any non-co-op or non-condo building built between 1947 and 1974 whose monthly rent is below $2,500, and whose owner or developer received tax benefits for constructing or renovating the building. Currently, the owner may only move to deregulate the apartment if market price for the rent goes above $2,500 or if the tenants make more than $200,000 annually.

Supporters of the rent stabilization laws claim that they are necessary to keep New York City affordable for working- and middle-class families, and protect the diversity of the city.

“The rent laws, like the subway system, are a large part of what enables New York City to be what it is. It wouldn’t be as economically integrated as it is. The rent laws are what enable a middle-class family or a working family to put down roots and remain in a rental apartment as their home,” Assemblyman Richard Gottfried told Newsday.

Landlords, however, claim that rent stabilization laws are unfair to them, and force them to keep rents artificially low. In the face of rising property taxes and maintenance costs, landlords are forced to neglect improving properties, while raising rents on properties that don’t fall under the rent stabilization legislation.

Real estate is the best way to invest your money for the biggest return. It’s a great time to invest because historically prices will go back up,” says Morgan Mason, Co-Owner/Realtor, Outer Banks Real Estate Company.  “If you’re an investor, multiple properties are always a great idea because you will generally see a larger ROI after just a few short years.”

State lawmakers are not expected to allow the Urstadt Law to expire, as they did little to modify it in 2011, when it was last up for renewal. Still, they are looking for solutions to offer compromise between tenants and landlords. One suggestion is to limit property taxes on rent-stabilized properties. However it works, New York is in for one big debate.

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