Briefing Book:
Rent Regulated Tenants & Landlords: Who Are They?
RENT REGULATION
IN NEW YORK CITY:
A Briefing Book
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Chapter Two
RENT REGULATED TENANTS & LANDLORDS: WHO ARE THEY?
When examining the merits of the rent regulation system, it is
necessary to discuss available information about the people
affected by the policies: tenants and landlords. Because there is
a substantial shortage of information regarding landlords in New
York City -- and because this document comes from a tenant
perspective -- the tenant portion of this analysis is more
detailed.
THE TENANTS
All kinds of New Yorkers live in rent regulated housing:
residents of all the boroughs and people of all races, ethnic
backgrounds, ages, and income levels.
Where Rent Regulated Tenants Live.
Consider the location of rent regulated apartments in New York. A
common misconception about rent regulation is that it only serves
Manhattan. Table 3 illustrates the distribution of occupied
rental apartments throughout the five boroughs.
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Table 3
Rent Regulated Apartments
as a percentage of Rental Apartments by Borough
New York City, 1991
Bronx Brooklyn Manhattan Queens S.I.
Rent 12,379 34,292 52,275 24,672 794
Controlled 3.70% 5.70% 9.20% 6.20% 1.50%
Rent 175,538 259,238 355,769 172,499 8,031
Stabilized 53.00% 43.10% 62.60% 43.20% 16.00%
All 143,722 308,611 160,216 202,096 41,444
Other* 43.30% 51.30% 28.20% 50.60% 82.50%
Total Rental 331,639 602,141 568,260 399,268 50,269
Apartments 100.00% 100.00% 100.00% 100.00% 100.00%
Source: NYC HVS 1991, Series IA, Table 14
* The unit of analysis "All Other" includes public, Mitchell
Lama, in rem, HUD federally subsidized, Loft Board regulated
and unregulated housing.
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Fifty-six percent of all rental housing in New York City is rent
regulated. As indicated by Table 3, Brooklyn, the Bronx, and
Queens roughly mirror this citywide trend with about half of
their units falling under regulation. Manhattan has almost 20
percent more rent regulated housing than the citywide average,
and Staten Island has more than 30 percent less. While there is a
greater concentration of regulated apartments in Manhattan, it is
important to note the significant portion of rent regulated
apartments in the other boroughs.
Race and Ethnicity of Rent Regulated Tenants.
A commonly held myth about rent regulation is that it only serves
the white residents of New York City. In actuality, rent
regulation serves tenants whose race and ethnicity roughly
mirrors that of New Yorkers as a whole [Table 4].
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Table 4
Race and Ethnicity of Rent Regulated Tenants
Compared with Race And Ethnicity of NYC Renter Population
Percentage Percentage
Rent Regulated Renter
Race/Ethnicity Population Population
White, Non Hispanic 49.20% 43.20%
Black/African-American,
Non Hispanic 18.40% 24.90%
Puerto Rican 11.00% 12.90%
Other Spanish/Hispanic 14.40% 12.20%
Asian or Pacific Islander 5.40% 5.30%
American Indian, Aleut,
or Eskimo 0.20% 0.20%
Other 1.40% 1.40%
Source: 1991 NYC HVS Tabulation Package, Table 4
Note: Categories used are those of the Census Bureau.
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Half of all rent regulated tenants are people of color and/or
Spanish-speaking New Yorkers, and the rest are white. This
demographic breakdown indicates that rent regulation is serving
the whole city, not just one ethnic group.
Whites make up a high percentage (75.4) of tenants in rent
controlled apartments. This fact is largely due to the phasing
out of rent control by vacancy decontrol. For a unit to be rent
controlled, it must have been occupied by the same or a
succeeding tenant since 1971. According to Census figures for New
York City in 1970, 64.6 percent of the tenant population was
white.(1) The race/ethnicity of rent controlled tenants today
reflects this larger representation of whites in the population
as a whole when decontrol was enacted.
Age of Rent Regulated Tenants.
Another factor to consider when painting a picture of rent
regulated tenants is age. The median age of renters in New York
City varies greatly by control status.
While the median age of all renter householders in New York City
is 42 years and the median age of stabilized renters is a
comparable 41 years, the median age of rent controlled
householders is much higher, at 70 years. Some 61 percent of all
householders in rent controlled apartments are 65 or older, while
only 14.7 percent of all stabilized householders are in that age
bracket. Thus, rent control serves an aging population that
greatly benefits from the protection it provides. Rent stabilized
tenants are younger on average and more closely approximate the
median age of the renter population in general.
The presence of children in rent regulated households is also
worth noting. Of the 971,076 stabilized apartments in New York,
30.3 percent house children under 18, compared to only 8 percent
of the 124,411 rent controlled households. Children are more
likely to be found in other, unregulated types of housing than in
regulated housing. Of the city's 598,652 unregulated dwellings,
240,649 (40.7 percent) house children under 18.
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Table 5
Household Incomes by Rental Status
New York City, 1990
Income Controlled Stabilized Other*
Less than $9,999 39.40% 26.60% 24.60%
$10,000-19,999 23.30% 19.80% 17.90%
$20,000-29,999 13.40% 16.70% 17.20%
$30,000-39,999 6.40% 12.80% 12.90%
$40,000-49,999 7.80% 7.90% 10.60%
$50,000-59,999 4.40% 5.00% 6.00%
$60,000-69,999 2.00% 3.20% 3.60%
$70,000-79,999 1.20% 2.30% 2.70%
$80,000-89,999 1.60% 1.50% 1.60%
$90,000-99,999 1.00% 0.90% 1.00%
$100,000 and more 0.40% 3.30% 2.00%
Source: NYC HVS Series IA, Table 9
* The unit of analysis "Other" refers to in-rem, HUD federally
subsidized, Article 4, Loft Board regulated and unregulated
housing.
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Incomes of Rent Regulated Tenants.
Households of all income levels occupy rent regulated housing
[Table 5]. As indicated by the data, 62.7 percent of rent
controlled households and 46.4 percent of rent stabilized
households earn less than $20,000 per year. Note that the
relationship is progressive: i.e., the lowest-income categories
show the greatest percentages of tenants served by regulation.
Despite studies purporting to demonstrate otherwise, low-income
tenants are the major beneficiaries of rent regulation.
Another way to measure income levels of regulated tenants is to
compare median incomes of tenants in different types of housing
[Table 6]. The data show that rent controlled tenants have
significantly lower incomes than other tenants-with the exception
of tenants in public housing. Rent stabilized tenants have a
median income slightly higher than that of the total rental
universe but lower than that of tenants in other housing.
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Table 6
Median Incomes of Renter Household by Control Status
New York City, 1990*
Public Mitchell Total
Housing Controlled Stabilized Lama Other** Rental
$8,088 $12,075 $21,000 $23,000 $24,000 $20,000
Source: 1991 NYC HVS
* Data were collected at the time of HVS enumeration in 1991;
income data reflect earnings for previous year, 1990.
** The unit of analysis "Other" refers to in-rem, HUD federally
subsidized, Article 4, Loft Board regulated, and unregulated
housing.
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According to a recent report by the Community Service Society,
poverty is on the rise in New York. "The poor population of New
York City increased from 1.4 million in 1979 to 1.8 million in
1990."(2) In addition: "From 1979 to 1990 the poverty rate...
grew from 20.0 percent to 25.2 percent."(3) Given this increase,
it makes sense to examine the extent to which rent regulations
are serving the poorest households [Table 7]. The indicators of
poverty used are receipt of public assistance and the federal
poverty level.
Two findings are illustrated by the data. First, an increased
number of tenants -- including households in all control statuses
of housing -- have fallen into poverty since 1987. Second,
significant numbers of households receiving public assistance and
households below the poverty level are protected by rent
regulations. Almost 25 percent of rent stabilized households have
incomes below the federal poverty level. The number of rent
controlled households similarly affected is slightly lower (23
percent).
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Table 7
Renter Households Receiving Public Assistance
and with Incomes Below Poverty Level
New York City, 1991
Households Receiving Households with Incomes
Control Status Public Assistance Below Poverty Level
1987 1991 1987 1991
Rent Controlled 5.0% 9.3% 24.1% 23.4%
7,055 10,395 27,311 20,684
Rent Stabilized 12.9% 18.2% 21.5% 24.3%
104,438 157,818 142,419 177,339
Mitchell Lama 6.8% 13.6% 21.0% 17.7%
3,094 9,701 7,951 9,973
Public Housing 27.7% 47.0% 45.7% 55.7%
42,346 77,772 58,972 77,335
Other* 12.8% 12.3% 23.1% 17.3%
34,333 56,573 48,525 65,184
Total Rental 13.2% 18.6% 24.0% 25.2%
218,739 312,254 321,759 350,515
Source: 1991 NYC HVS
Note: This table was produced using computerized data.
* The unit of analysis "Other" refers to in rem, HUD federally
subsidized, Article 4, Loft Board regulated and unregulated
housing.
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THE LANDLORDS
Exactly who New York City's landlords are remains unclear due to
a lack of available data. Given this information gap, no
breakdown of demographics -- and certainly no profile of landlord
incomes -- can be made. The information that is available, though
piecemeal, raises two important considerations.
Concentration of Ownership.
First, both the 1987 HVS and a study financed by the real estate
lobby found a significant concentration of ownership of New York
City rental properties. According to a study conducted in 1985
for the Rent Stabilization Association, 71 percent of New York
City's rental apartments were owned by only 12 percent of
landlords. These landlords owned an average of 238 apartments
each. The remaining 88 percent of landlords owned the remaining
29 percent of the rental stock, each operating significantly
smaller holdings.(4) Although this study is seven years old, it
is unlikely that the real estate industry has become less
concentrated given recent economic trends.
There are two ways to view these data. On the one hand, it is
fair to say that most owners of rental property are small
landlords. It is also fair to say, however, that the vast
majority of tenants in New York City live in apartments owned by
large landlords. While there are hundreds of "Mom and Pop"
owners, a small number of owners own a large number of the city's
apartments and yield large profits.
For example, the largest owner of rent regulated apartments in
New York is Samuel Lefrak. According to an April 29, 1990
interview in the Daily News Magazine, Mr. Lefrak owns "some
94,000 units at an average [rent] of $850 a month." Thus, in 1990
his gross monthly rental income was in the neighborhood of $80
million. Moreover, if his property portfolio is multiplied by the
median renter household size for 1991 (two people), it becomes
clear that Mr. Lefrak is landlord to about 188,000 people -- or
3.9 percent of the renter population in New York City.
Clearly, Mr. Lefrak operates his real estate business differently
than a smaller owner might, which leads to the next
consideration.
Financial Objectives.
The financial objectives of landlords vary greatly. Some seek
long-term tenants and desire stable, long-term, relatively low
profits. Others may seek high levels of cash income over the
short term and encourage rapid turnover in their apartments to
gain rent increases through vacancy allowances. Regarding
ownership objectives, Kenneth Baar makes the following
observation.
"Some research has indicated that there is a 'dual
economy' in the rental housing business. One part
of this economy is operated by local owner
occupants or neighborhood residents. These owners
borrow as little as possible, perform their own
maintenance, derive substantial satisfaction from
the interpersonal gratification associated with
providing reasonably priced housing, and tend to be
satisfied with relatively low rates of return. Such
ownership patterns are most widespread in areas
where buildings are small and property values are
stable. The other part of the dual economy consists
of 'professional' investors or 'profit maximizers.'
These investors tend to make rent setting and
maintenance decisions on the basis of short term
housing strategies. They are most active in markets
where property values are undergoing rapid
fluctuation".(5)
These varying financial objectives greatly affect the quality of
the housing that different landlords provide to tenants.
Notes to Chapter 2
1. Sternlieb, George with James W. Hughes, 1973, Housing and
People in New York City, New York City: Housing and
Development Administration, Department of Rent and Housing
Maintenance, pg. 171.
2. Rosenberg, Terry J., Ph.D., 1992, Poverty in New York City,
1991: A Research Bulletin, New York, Community Service
Society, pg. x.
3. Ibid, pg. xi.
4. Arthur D. Little, Inc., 1985, The Owners of New York's
Rental Housing: A Profile, Reference 53219. Report to Rent
Stabilization Association of New York, Inc. From the
original release of this report, not the second. revised
version. In response to a critique of the report by the New
York State Tenant and Neighborhood Coalition, Arthur D.
Little revised a table in such a way as to make it
impossible to extract information about ownership
concentration and reissued the report.
5. Baar, Kenneth K., "Guidelines for Drafting Rent Control
Laws: Lessons of a Decade," Rutgers Law Review, Vol. 35. No.
4, Summer 1983, pg. 734.