Vacancy Decontrol
A Disaster Then, A Disaster Now

By Steven Wishnia

Vacancy decontrol--reserving rent controls and tenant protections for occupied apartments, but removing them once the tenant moves out--is often mentioned as a "compromise" that would protect "tenants in place" but still give landlords some of what they want.

Senator Alfonse D’Amato has called it the "moderate" position. Joseph Bruno has hinted he might accept it. Governor Pataki seems to like it, and the New York Times has endorsed it.

But from the tenant perspective, those who support vacancy decontrol are either anti-tenant, don’t understand the way the real world works, or are ignorant of history. New York State already had vacancy decontrol for three years in the 1970s, and the results were an unmitigated disaster--except for the landlords who made money from it.

It was imposed on us by Governor Nelson Rockefeller in 1971. Charles Urstadt, the state official generally considered its architect, worked on Governor Pataki’s transition team in 1994-95. Within three years, the Legislature repealed it--passing the Emergency Tenant Protection Act of 1974, which expires June 15. (Urstadt was also responsible for a 1971 law barring New York City from passing rent control laws stricter than the state would allow--thus enabling certain politicians who city residents can’t vote against to jeopardize our homes 25 years later.)

Under vacancy decontrol, over 400,000 apartments in the city and thousands more in Nassau and Westchester counties were deregulated. The tenants who moved into them lost not only rent controls, but the right to renew their leases automatically. Their rents averaged 50% higher than what rent-controlled tenants paid. Evictions and harassment boomed. And the policy that was allegedly intended to give landlords an incentive to construct new housing instead coincided with the beginnings of massive abandonment in New York.

A commission appointed by Rockefeller in 1973 recommended repealing vacancy decontrol, finding that it "has neither stimulated new building construction, stopped abandonment, spurred renovation nor has it brought substantial new money into the City’s housing stock. It has led to tenant insecurity over tenure and harassment." However, the ETPA did not roll back the decontrolled rents. It also allowed a modified form of vacancy decontrol for rent-controlled apartments in the New York area and did not repeal it at all in the Albany and Buffalo areas.

For the effect vacancy decontrol might have on New York City now, one might look at San Francisco, whose housing-market demographics might be closer to New York’s than any other city in the country is. San Francisco has had strict controls on rent increases for occupied apartments since 1979, but allows unlimited increases when a new tenant moves in. (In 1995, the California legislature outlawed rent controls on vacant apartments, imposing vacancy decontrol on cities such as Berkeley and Palo Alto.)

In early 1997, a survey by the San Francisco Tenants Union found that the average rent for advertised vacant apartments in the city was $1,369 a month. Two-bedroom apartments averaged $1,724--up more than $450 from February 1996, and almost four times what they averaged in 1980. Landlords were asking over $1,200 even in historically poor and working-class areas like the Mission and Lower Haight districts. Not surprisingly, the cheapest neighborhoods had the lowest vacancy rates. A January survey by a real-estate organization found similar prices.

If anyone doubts that the prospect of massive vacancy increases would inspire landlords to harass "tenants in place," consider the story a Brooklyn rock musician tells: In the late 1970s, he was looking to rent a space either isolated or soundproof enough for his band to rehearse in. "We have some spaces where the landlords have specifically requested rock bands as tenants," a Park Slope real-estate agent told him. "These wouldn’t happen to have rent-controlled tenants upstairs now, would they?" the musician asked.

You guessed it.