Real Estate

New York lawmakers stun the real estate industry with rent control redux

WSJ Editorial Board calls it "a return to the bad old days"

New York State Senate and Assembly leaders passed expansive changes to rent control laws that stunned the real estate industry. The state’s governor, Andrew Cuomo, signed the bill on Friday, a day before the existing, more moderate law expired.

Legislators won’t have to worry about wrangling over tenant protections every few years, like the old law. The bill makes these changes permanent.

The legislation makes it more difficult to evict non-paying tenants and tightens restrictions on the rent increases landlords are allowed to make after improving buildings. It repeals provisions allowing removal of units from rent stabilization when the tenant’s income is $200,000 or higher in the preceding two years. It also eliminates a provision allowing landlords to raise rents as much as 20% each time a unit becomes vacant.

“These reforms give New Yorkers the strongest tenant protections in history,” Assembly Speaker Carl Heastie and Senate Majority Leader Andrea Stewart-Cousins said in a joint statement. “For too long, power has been tilted in favor of landlords and these measures finally restore equity and extend protections to tenants across the state.”

The Editorial Board of The Wall Street Journal had a different view. In a piece titled, “Albany goes wild,” the newspaper said: “There’s a lot of ruin in New York, but progressives who control the state and city governments are intent on showing how much. Law by law, Gov. Andrew Cuomo and Democrats are chipping away at the policies that made New York City livable after decades of decline and returning to the bad old days.”

The move became possible after 2018 voters swept progressives into office in a wave of anti-Trump sentiment that not only flipped control of the state Senate, it also booted out a host of moderate Democrats who supported a less stringent version of rent control laws.

According to The New York Times, real estate developers made frantic last-minute efforts to avert the final approval of the strictest rent control law in decades, but it was too late.

“There was some arrogance on the part of the real estate industry that was based on how things have functioned in Albany for a long time,” State Senator Zellnor Myrie, a Brooklyn Democrat who is a member of the new group of progressives, told the Times. 

Governor Cuomo rebuffed eleventh-hour pleas from real estate leaders such as Douglas Durst, Richard LeFrak and William C. Rudin, who are involved with some of the most iconic buildings on the New York City skyline such as One World Trade Center and 3 Times Square. Cuomo told them on a conference call they should “call their legislators if they want to do something about it,” the Times said, quoting an anonymous source.

“The best bill they can pass, I will sign,” Cuomo said on Tuesday at a news conference. “If you want to hear an explosion in this state, you let the rent control laws expire."

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