‘Good Cause Eviction’ bill: A rent control wolf in sheep’s clothing?

By Anthony SanFilippo
July 2021

A double whammy could be coming out of Albany that could negatively impact both renters and housing providers alike, both in the city itself, and across New York State.

The New York legislature is considering a bill that is essentially a glorified, but universal, rent control bill.

The legislation, being considered by both the Assembly and the Senate, is being labeled as “Good Cause Eviction”, which could be misleading. That’s because at its core, the bill would essentially force housing providers statewide to accept tenants for life — with a cap on yearly rent increases.

As such, no property owner who uses their property as an investment by renting it out could ever evict a tenant or deny a lease renewal (with minor exceptions) and the housing provider could not raise the rent more than three percent, or 150 percent of the area’s Consumer Price Index. If they did, the tenant could legally argue that they are not paying said rent and could avoid eviction.

If passed, this new law would apply to every apartment in the state – including those rented by the wealthy – and would come on the heels of legislation passed in 2019 that already made it tougher for small business housing providers to make ends meet.

At the local level, The Albany Common Council is considering a proposal that will make it harder for tenants in Albany to find quality, affordable housing.

The city proposal, Local Law F of 2021, would prohibit housing providers from evicting tenants except under strict circumstances, even when a tenant’s lease has expired, and would place government restrictions on the amount a property owner could increase their rent.

The plan would disincentivize housing providers from making much-needed upgrades to their properties. If this law goes into effect, it will also greatly limit the provider’s property rights and could force them to sell their properties, taking much-needed affordable housing off the market in the City of Albany.

Additionally, this law could:

  • Put small rental property owners out of business, discourage new investment in Albany, and ultimately hurt the tenants it is supposed to help.
  • Affordable housing availability will drop – the resale value of rental properties will drop by as much as 40%, inviting large corporate landlords into Albany.
  • Because the bill will limit their source of income, small-business owners will have no incentive to invest in their properties, resulting in a degradation of apartment conditions in Albany.

If one or both of these bills becomes a law, there are certainly some tenants who will benefit, but the reality is this is simple economics – rent increases occur because of too much demand and not enough supply. A lack of regulation is not the issue.

There have been myriad studies that have proven that rent control policies, such as those being proposed in Albany both at the local and state level, only make the chasm between supply and demand even more stark.

There are those that will hold onto a larger apartment, even if they no longer need the space, because rent control makes the rent artificially lower than it should be, so why give it up? Additionally, having rent-controlled apartments creates spikes in the demand because more renters would like to get into one, hoping to save money in the long run.

But it’s a vicious circle.

With rent control, housing providers can’t recoup costs. And while corporate housing providers may have a different profit margin, the mom-and-pop housing provider often finds themselves having to make tough decisions. They might skip optional repairs and upgrades, making the value of the property decrease with time.

And as for those corporate providers. The ones currently in place might be OK, although they may choose not to invest the resources into converting their current buildings into larger condominiums or even co-ops. But new investment and development in rental housing tends to dry up when there is rent control because from a business perspective, why make the investment if it’s not going to you yield an acceptable profit?

Meanwhile, contractors and other businesses who rely on work being provided by housing providers also take a financial hit as jobs tend to dry up.

Just switching the words from “rent control” to “Good Cause Eviction” is not going to make those problems go away.

Albany, and the entire state of New York, would be better served by developing new housing or rehabilitating existing stock, to ensure there are homes people can afford, rather than allow government regulation to slowly pick away at the scab that is created by universal rent control.


SHARE THIS STORY:

Related Stories