On Thursday December 13, 2018, Bronx Borough President Ruben Diaz Jr. issued a report, titled “The Preferential Rent Crisis in New York City.”
The new report examines the scope of the preferential rent issue in the five boroughs and features profiles of four neighborhoods with high numbers of preferential rent tenants: Jamaica, Bay Ridge, Fordham and Washington Heights. Borough President Diaz also puts forward new policy proposals to address both tenant and landlord concerns surrounding the issue.
“New York State must reform its rent laws, and that includes strengthening tenant protections and closing the preferential rent loophole,” said Bronx Borough President Ruben Diaz Jr. “In the coming year we can protect tenants from dramatic increases in their rents while also providing landlords with compensation for a loss of potential revenue through a comprehensive reform of our current housing laws surrounding preferential rents.”
In his report Borough President Diaz recommends that the New York State Legislature pass legislation ending the preferential rent loophole in the coming year. Additionally, the borough president calls for the creation of a new tax credit for landlords to offset the loss of potential revenue represented by the difference between the preferential and legal rents as well as more stringent punishments for landlords who harass tenants to create vacancies.
The full report could be read here.
Preferential rents are defined as rents that have been granted by a landlord that are below the legal registered rent for a rent stabilized unit as registered by New York State Homes and Community Renewal (HCR) and regulated by the New York City Rent Guidelines Board. Under current laws, were landlords to raise preferential rents to the legal rents en masse, it could put hundreds of thousands of tenants at risk of eviction and displacement.
Borough President Diaz’s report shows that more than 260,000 apartments across the five boroughs currently have a preferential rent. This is seven percent of all residential dwellings in the city, and 29 percent of all rent stabilized units in the five boroughs.
Borough President Diaz’s report estimates that a new tax credit for landlords would cost roughly $93.5 million per year to implement but would save billions in potential costs created by displacement, such as building new affordable units or housing families in shelters.
“Addressing the affordable housing crisis requires us to not only build new units, but to keep families in their existing homes and neighborhoods,” said Borough President Diaz Jr. “Eliminating the preferential rent loophole in conjunction with new tax breaks for landlords will help our city prevent displacement and keep our neighborhoods intact.”