Vacancy Reset Would Create $3.5 Billion In Economic Activity
(New York, NY) — The Community Housing Improvement Program (CHIP) estimates that New York State could create as much as $3.5 billion in economic activity and increase real estate tax and permit fee revenue by at least $100 million for the next two years if rent-stabilized property owners were allowed to reset rents on vacant apartments that are in need of extensive renovations.
Units occupied by tenants for more than 15 years typically require more than $75,000 in renovation costs in order to upgrade systems and appliances that have passed their useful lives. Renovations are also necessary to comply with new laws passed to improve the housing maintenance code. But under rent stabilization, an apartment’s rent can only increase a maximum of $83 regardless of how much the prior tenant was paying. The 2021 Housing and Vacancy Survey estimated that 42,800 rent-stabilized apartments were vacant and unavailable for rent due to this change in the law. Registration data from the state housing agency, Homes and Community Renewal, prepared for the NYC Rent Guidelines Board this year, shows that vacant rent-stabilized apartments have doubled since last year. That number continues to grow each month.
“We need housing. We need jobs. We need tax revenue to protect our social safety net. The government can deliver these things without spending a dime of taxpayer money. They just need to let property owners reset the rents to justify massive renovation costs. They just have to give us permission to do it,” said Jay Martin, executive director of CHIP.
Average renovation costs for a vacant rent-stabilized apartment are between $70,000 to $100,000, depending on size and age of the apartment. Most apartments need upgrades to plumbing, electrical wiring and panels, lead remediation, energy efficiency upgrades, and potentially new walls, floors or ceilings. Additionally, fees and permits to do the work usually run between $5,000 and $10,000. Insurance costs for the work often exceed $5,000.
Allowing property owners to reset rents for these currently vacant units would allow them to be quickly brought back onto the market. CHIP estimates that at least 40,000 units with an average renovation cost of $80,000 would be renovated and available for rent in 12 months. This would create at least $3.2 billion in economic activity. Increased real estate tax revenue and permit fees for New York City would likely exceed $240 million over the next two years.
“The city needs this added revenue so it can continue to invest in our schools, health facilities, and public safety. And renters need more apartments, so they have more choices about where to live. We are proposing a win-win solution for elected officials,” Martin said.
To learn more visit VacancyNYC.org.
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