Rent stabilized apartments account for nearly half of all rental units in New York City and are a vital source of relatively low-cost rental housing. New Yorkers who live in rent stabilized apartments pay a lower median rent and have a lower median income than households in unregulated apartments, but are also more likely to experience maintenance deficiencies. The responsibility for overseeing the economic viability and affordability of this important housing stock rests with the nine-member Rent Guidelines Board (RGB), which sets annual rent adjustments for rent stabilized apartments. Given the importance of the rent stabilized apartment stock, it is essential to think hard about how to preserve both its quality and quantity.
This paper lays out the long-term relationship between net operating income (NOI) and the sustainability and quality of rent stabilized apartments. It then examines how best to use the tools and data available to the RGB for its deliberations. Finally, it suggests two ways that the RGB could adapt to the HSTPA era when setting guidelines for annual rent increases (or possibly even decreases in a deflationary world). One is to have increases in Consumer Price Index be a starting point for setting guideline rental increases, the other is to make guideline increases based on Consumer Price Index automatic, leaving the Rent Guidelines Board to simply monitor whether actual trends require further adjustments.
