The Westchester County Rent Guidelines Board has approved rent increases of 2.5% for one-year leases and 3.5% for two-year leases, effective from October 1, 2024, to September 30, 2025. This decision, finalized with a 6-1 vote, has sparked diverse reactions from both landlords and tenant advocates.
The Rent Increase Decision
The Building and Realty Institute (BRI), a landlord advocacy group, expressed dissatisfaction with the new rent hikes. They argue that the approved increases do not adequately cover the rising operational costs due to inflation, increased material expenses, and soaring insurance rates. "The system is flawed and might only be fixed after a major crisis," said Lisa DeRosa, President of the BRI and a property owner in White Plains.
Currently, the average rent for rent-stabilized apartments in Westchester is $1,473 per month. Tenant advocates, however, are not pleased. Genevieve Roche, former tenant representative on the Rent Guidelines Board and current director of operations and finance for Mount Vernon United Tenants, called the decision "outrageous," pointing out that many tenants are severely rent-burdened, spending between 55% and 64% of their income on rent.
Rising Costs and Financial Pressures
Landlords are facing significant financial pressures. Insurance premiums for rent-stabilized properties have increased by an average of 26% annually, with the average cost to insure an affordable apartment rising to $1,770, up 103% from four years ago. This increase in premiums, coupled with fewer insurers willing to cover multifamily housing, has made it increasingly challenging for property owners to maintain their buildings.
Since 2019, nearly 5,000 rent-stabilized units have been taken off the market due to these financial challenges. The 2019 Housing Stability and Tenant Protection Act (HSTPA) has further strained landlords by limiting funding programs for essential upgrades and renovations. Despite recent legislation raising the Individual Apartment Improvement cap to $30,000, this amount falls short of the $100,000 to $150,000 typically needed for comprehensive apartment rehabilitation after long-term tenants vacate.
A recent BRI survey found that most landlords have refrained from applying for Major Capital Improvements (MCI), such as boiler replacements, window installations, electrical rewiring, plumbing, and roofing. MCI applications have dropped by 83% in the past five years, as landlords wait for a more favorable economic climate.
Future Outlook: The Rent Guidelines Board will hold another public meeting in September 2024 to finalize the rent guidelines for leases starting between October 1, 2024, and September 30, 2025. This ongoing dialogue underscores the complexity of balancing tenant affordability with the financial viability of maintaining rent-stabilized housing.
In conclusion, the approved rent increases aim to address both tenant and landlord concerns. However, the rising operational costs and financial pressures on property owners highlight the need for a more sustainable and balanced approach to rent stabilization in Westchester County.
