Landlord groups say the Housing and Vacancy Survey distorts the vacancy rates in New York City to maintain rent stabilization. (iStock)
Manhattan’s vacancy rate hit 10.5 percent in 2020 and the five boroughs averaged 6.5 percent, according to census data released last week.
The magic figure that keeps New York rent-stabilized is 5 percent. If vacancies creep above that, the rental surplus voids the housing emergency and with it, rent stabilization.
Fortunately for renters who benefit from the program, it does not use the 10-year census. Instead, it goes by a triennial poll called the Housing and Vacancy Survey, which is now pooling data for 2021. And the rental market’s recovery these past six months means vacancies have likely dipped since the census’ mid-2020 count.
However, landlords and their representatives them say the Housing and Vacancy Survey, conducted by the the city’s Department of Housing Preservation and Development in partnership with the U.S. Census Bureau, distorts city occupancy rates in a way that satisfies the requirements of rent stabilization and conceals a growing number of unused apartments. They contend that the decennial census offers a truer picture.
“There are questions about the accuracy of the vacancy survey,” said Sherwin Belkin, a partner at Belkin Burden Goldman. “You have apartments that in fact are vacant and are not counted.”
The survey calculates the vacancy rate by dividing the number of unoccupied units for rent by the total number of available units. In doing so, it omits vacant units not on the market.
Some of those vacant units are awaiting or undergoing renovation. Others are occupied part-time by people with second homes. And another omitted subset is “held for other reasons,” a category undefined by the survey’s glossary. HPD did not respond to a request for comment on why those apartments are not counted toward the vacancy rate.
Data from the past two vacancy surveys show a surge in the number of vacant units deemed not for rent or sale. In 2017, some 245,000 units fit that category and were excluded from the vacancy calculation, a 34 percent jump from 183,000 in 2014. The 2017 figure was the highest since the survey started in 1965.
The number of vacant available rentals rose to more than 79,000 in the same period, an increase of 4.9 percent. Still, that means for every vacant unit counted by the Housing and Vacancy Survey, three empty apartments were ignored.
“We should be asking: If we have all these vacant units that we’re not using, why are we not using them?” said Michael Johnson, spokesperson for the Community Housing Improvement Program, a prominent landlord group. “Is this a functional housing market if the number of units just sitting vacant out there continues to grow, but the vacancy survey has a vacancy rate below 5 percent to keep rent stabilization?”
Rent stabilization is meant to keep apartments affordable when supply is tight. But a rising number of unrentable apartments, concealed by the survey, saps the housing stock of viable units, contributing to the affordable housing crisis.
The biggest contributor to the rise — at nearly one-third of unrentable vacancies in 2017 — is units awaiting or under renovation.
An untold number of those are stuck in what Johnson dubbed “rent purgatory.” Their legal rents are too low for an owner to justify paying for improvements as the 2019 rent law prevents them from raising the rent enough to offset the costs.
In part because vacancy rates from the 10-year census include apartments undergoing renovations, CHIP sees them as a more accurate representation of New York’s housing market.
Judith Goldiner, an attorney at the Legal Aid Society, however, says the census vacancy rates skew high because they count rental properties where the tenant has yet to move in, pieds-à-terre and addresses where the tenant had set up mail forwarding but maintained the apartment.
Plus, the return of renters to the city since the census was conducted last year will likely push down vacancy rates, although whether they came back in time is unknown: The triennial survey that counts for rent stabilization was conducted from February through June.
“I don’t think there’s any reason to think the vacancy rate won’t be anything well below 5 percent,” Goldiner said. The city will get the data in January.
Manhattan posted a 2.6 percent “visible” vacancy rate in July, down from 3.5 percent a year ago, according to a report by Corcoran. The report only counts vacancies that are listed, though.
Even if the legislature did count more units that are actually vacant, a figure higher than 5 percent would not necessarily lead to scrapping rent stabilization. Lawmakers would move to change the threshold because letting rent stabilization end would trigger a backlash.
“That’s a massive political problem for the City Council, for everyone in the state government,” said CHIP’s Johnson.
“They can change the 5 percent to some other metric,” said Belkin. “Or they could declare Covid itself to be requisite for an emergency. Or they could declare that if there’s a full moon, there’s rent stabilization.”
But any change would likely elicit legal challenges from the real estate industry, he said.
Numerous landlord groups, including CHIP, have taken the 2019 rent law to court, claiming it violates due process. A Supreme Court ruling last week that blocked New York’s moratorium sided with landlords over the same constitutional right.
“The U.S. Supreme Court has shown, particularly in the last year or so, that it respects private property rights as more of a balanced view towards rent regulation,” Belkin said.
But most see the statute as inseparable from the identity of the city’s housing market.
“I put rent stabilization in a box with death, taxes, and another season of ‘The Bachelor,’” said Michelle Maratto Itkowitz, partner at Itkowitz PLLC. “These are things that are never going away.”
