Wednesday, June 19, 2013

Classic Apartment Building on University Place

University Place North of East 8th Street has a number of distinctive old apartment buildings, mostly from the 1920's I would say or a little earlier....now I think all co-operative places or condops or something like that...

University Place itself is a busy little street that just runs from NYU down at Washington Square to 14th Street...restaurants and florist and usual kinds of shops you would expect in an upscale area.

What I wanted to note was that this was a perfect example of the kind of building that used to have these terribly cheap apartments due to rent control..

This makes for interesting reading in Manhattan, where the average apartment now sells for about a million dollars (this is just an average usually one bedroom apartment with nothing all that special about it) and the average rent for a one bedroom is now about $4,000  a month...there are places cheaper than the average of course, but they get snapped up fast...

Because of the high costs of living in Manhattan, Brooklyn has become extremely popular now with more middle class people, artists and young people. Not that good places in Brooklyn are cheap, old established neighborhoods like Park Slope are just as expensive as Manhattan I would say. (this was true long ago of Brooklyn Heights, which many people view as more Manhattan than Brooklyn anyway)..because it is far out and has less public transportation, the Bay Ridge area as of this writing had the best values for decent places. 

The Borough of Queens is a mixed bag as is the Bronx, but the Bronx as you might imagine has the cheapest rents in the City and it the most resistant to gentrification, in part due to all the large public housing projects and also smaller ones laced through most of it...and, it has to be said, worse crime statistics. 

Of course, getting one of these apartments was not easy. People usually inherited them ( I am not kidding about this at all, for those of you who live outside NYC, the law used to say that any immediate family member could take over the apartment at the same old low rent)--or by some illegal means, such as paying a "key fee" to the building manager or superintendent, or making some deal with the owner who was moving out , often involving "buying furniture."

I think I have mentioned this before, these often large payments would amortize themselves over a period of time because of the low rent.

So you would have someone with maybe a big three bedroom place is one of these buildings paying much less than someone with a conventional studio apartment in a 1960's building, which was rent stabilized but not rent controlled.

Rent control was introduced during World War II and while of course enormously popular in a city of renters, not very good for landlords or the overall maintenance of the buildings.

Let me see if I can find an internet account of how rent control worked exactly--here is Wikipedia on bare facts again


Rent Regulation in New York State takes the form of rent control and rent stabilization programs.[1] Each city in the State of New York, USA may choose whether to participate or not, and as of 2007, 51 municipalities participated in the program, including Albany, Buffalo, and New York City, where over one million apartments are rent-regulated. In New York City, only buildings with six or more apartment are subject to rent stabilization.[2]
In 1920, New York adopted Emergency Rent Laws, which effectively charged the courts of New York State with their administration. When challenged by tenants, rent increases were reviewed by a standard of "reasonableness." The definition of reasonableness was subject to judicial interpretation. Certain apartments were decontrolled beginning in 1926, and the Rent Laws of 1920 expired completely in June 1929, though limited protections against unjust evictions were continued.[3]
New York's current rent control program, which began in 1943, is the longest-running in the United States. New York City is the only large city in the United States that has strong rent control laws.[2] From 1943 to 1950, rent control was administered by the federal government. It has been administered by state government since 1950, although state and city agencies shared administrative work from 1962 to 1984.[4]
Rent regulation affects rent increases and prescribes rights and obligations for tenants and landlords.

Rent control

Rent control exists in New York City and a small list of other municipalities in Nassau, Westchester, Albany, Rensselear, Schenectady, and Erie Counties.[5]

Qualification

To qualify for rent control, a tenant must have been living continuously in an apartment since July 1, 1971. When vacant, the unit becomes rent stabilized, except in buildings with fewer than six units, where it is usually removed from the program. In some cases, a tenant living in a one- or two-family home may qualify for rent control if the tenant has lived there since 1953, however, once the apartment or home has been vacated, the home or apartment (if in a two-family) is deregulated.[6]
In apartments within single and two-family homes, the tenant must have been residing in the unit continuously since March 31, 1953 in order to qualify for rent control. Once the unit becomes vacant, it leaves the rent control program and is not eligibile for rent stabilization.[6]
Rent control does not generally apply to units built after 1947.[6]

Terms

Rent control limits the price a landlord can charge a tenant for rent and also regulates the services the landlord must provide. Failure to provide these may allow the tenant to demand a lower rent.[6]
Outside of New York City, the state government determines the maximum rents and rate increases, and owners may periodically apply for increases.
In New York City, rent control is based on the Maximum Base Rent system. A maximum allowable rent is established for each unit, and every two years, the landlord may increase the rent up to 7.5% (As of 2012) until the Maximum Base Rent is reached. However, the tenant may challenge these increases on grounds that the building has violations or the owner does not need to increase the rent that much to cover expenses.

Maximum base rent

In New York City, the maximum base rent (MBR) is calculated to ensure the rent from rent control units covers the cost of building maintenance and improvements. As set up in the New York City Local Law 30 of 1970, the formula reflects real estate taxes, water and sewer charges, operating and maintenance expenses, return on capital value and vacancy and collection loss allowance. The MBR is updated every two years to reflect changes in these expenses.[7] The owner if not already, must apply for the maximum base rent system for the tenants, prior to the MBR rents were annually determined by the city/state which developed its own set of regulations.

I am sure you can imagine how landlords feel about rent control and rent stabilization, etc.

The Tenants have an organization, the Metropolitan Council on Housing, with a website

http://metcouncilonhousing.org/

Things have not been going in favor of tenants for a long time in NYC, as the real estate interests make big donations to politicians when they run for office and are well organized. Mayor Bloomberg is a good example of a politician who really has little use for rent control or any other law like it and would like to return the City back to the days when it was all simply supply and demand..which is what is happening with all these buildings going co-op and the new buildings going up being mostly co-ops or condos.


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