Housing supply

Proposed DHCR regulations will exacerbate housing supply problems

The affordable housing crisis in New York remains widespread. Photo: Community Housing Improvement Program

The New York State Division of Housing and Community Renewal (DHCR) has proposed new rent-stabilized housing regulations that will leave thousands of apartments vacant, worsening New York’s affordable housing crisis. . The proposed rules would create a formula for setting rents for reconfigured units in rent-stabilized buildings. In almost all cases, the new formula would make it financially impossible for a landowner to commit to a reconfiguration. This means the units will remain vacant and unavailable for rental in perpetuity.

“It is unfortunate that the DHCR has not noticed that we have a massive lack of housing supply in New York. This may be the only explanation for proposing new rules that encourage divestment in the operation of affordable apartments, said Jay Martin, executive director of the Community Housing Improvement Program (CHIP).

Six months ago, CHIP launched an awareness campaign to highlight the growing problem of rent-stabilized vacant apartments (vacancynyc.org). The 2021 Housing and Vacancy Survey revealed that 42,800 rent-stabilized apartments are currently vacant and unavailable for rental.

These units require major rehabilitation that costs over $75,000, but current rents are not high enough for the owner to secure the financing needed to complete the renovations. In limited cases, some of these units have been able to be refurbished and re-let through reconfigurations with other units. Proposed DHCR regulations would end this practice, meaning they will remain vacant as owners will not be able to obtain financing for renovations.

“Anyone who suggests that these proposed regulations would lead to more of these units being rented clearly knows nothing about housing. It’s a simple calculation. The costs are too high to carry out the renovations, so the units will remain vacant forever,” Martin said.

The proposed regulations also lack clarity. A legal interpretation of the proposed regulations is that reconfiguring deregulated housing into a rent-stabilized building would require the landlord to re-regulate the housing. Regulatory changes are needed to provide certainty to homeowners or they will be reluctant to move forward with renovations. CHIP looks forward to providing detailed testimony on these changes at the November 15 hearing.