What to Know About New York’s Housing Deal

New York State officials have set the stage to take action on the state’s housing crisis. On Monday, the governor announced a framework for a package of housing laws that would make it easier to build homes and curb the skyrocketing cost of living.

Leaders are still hashing out details. But proponents say the package could be a significant and overdue move in New York, where housing costs continue to be a huge burden on residents and the economy.

In New York City, the typical household can reasonably afford to rent a $1,750 apartment, according to city estimates. But the median rent in market-rate New York City apartments was $2,000 in 2023, and in many parts of the city, the price is far higher. In Manhattan, the median monthly rent on a new lease is roughly $4,000.

Part of the package will seek to address the economics driving the crisis: The supply of homes is not large enough to meet the demand, but property taxes, high interest rates and the cost of labor have made construction prohibitively expensive, developers say. While it is impossible to know how many additional homes are needed to accommodate everyone who might want to live in New York City, most guesses put the number in the hundreds of thousands.

The new housing package may balance out some of those costs, though the details will determine the effectiveness of each measure. The plan is also facing blowback from some landlords and from advocates for housing growth and tenant groups who say it does not do enough to help tenants. Here is what leaders are discussing.

A Tax Deal for Developers

It may feel like new apartments are constantly being built across New York City. But experts are clear: There still aren’t enough.

It is impossible to say how many are needed, in part because nobody can predict how many people might want to move to New York. One estimate, calculated last year by a Washington-based nonprofit called Up for Growth, suggests the New York City metropolitan area is short almost 340,000 homes. The number of affordable apartments available to rent in the city is functionally zero, per city estimates.

But instead of accelerating, apartment development has ground to a halt. One big reason is that a tax break for developers, known as 421a, expired in 2022.

Rental buildings are taxed at a higher rate than condos, co-ops and small homes. Many developers argue that the rent they can collect doesn’t cover taxes and other costs like labor and land. They say the high costs make it hard to justify investing in new buildings. Constructing affordable units, which bring in less rent, is even less attractive.

The housing deal announced on Monday includes a new tax break, which is being called 485x, meant to jump start construction. How effective it will be depends on a few factors that are still being decided.

One is how many below-market-rate apartments developers will be required to include in each of their projects to get the tax break. Another is a crucial piece negotiated with labor unions: how much developers will have to pay workers. If the new measures require higher wages for construction workers and a lot of affordable units, construction will be less appealing to developers, though better for renters and for workers.

Adding New Protections for Tenants

In order to win support from left-wing lawmakers, the housing deal also includes a contentious provision known as “good cause eviction,” which is designed to keep renters from being evicted and prevent price gouging by landlords.

Before the pandemic, landlords filed about 200,000 eviction suits on average every year, mostly over unpaid rent, according to an analysis by the New York University Furman Center. In 2023, the number was about 133,000.

Of that overall number, a much smaller subset of tenants actually get removed from their homes. In 2023, for example, New York City marshals executed nearly 3,600 warrants for eviction over unpaid rent.

Renters are routinely shocked by how much their rent can go up year over year. The median rent for market-rate New York City apartments went to $2,000 from $1,825 in 2021 and roughly $1,625 in 2014, according to city figures. Prices in some neighborhoods have been going up much faster: The roughly $3,200 median asking rent in Ridgewood, Queens, in March is more than 33 percent higher than March 2019, according to StreetEasy.

A “good cause eviction” measure would change that dynamic. It basically says that unpaid rent — if it’s tied to a very high, “unreasonable” rent increase — is not a valid reason to evict someone. The measure also says that the end of a lease is not a valid reason to force a tenant out.

About half of New York City’s more than 2 million apartments are rent- stabilized and are subject to even tougher regulations. Lawmakers are still figuring out how many apartments might be covered — it is likely that small landlords will be exempt as will landlords of newly built apartments, but it could be as many as 400,000 households. It’s not clear if the provision goes far enough to placate progressive legislators.

Rolling Back Old Protections for Tenants

One of the biggest frustrations for landlords and tenants alike is that amid such a huge crisis, tens of thousands of apartments are sitting vacant, according to some estimates.

In 2019, the State Legislature passed tenant-friendly laws that eliminated many of the ways landlords used to raise rents in rent-stabilized apartments. The laws said property owners could raise the rent on new tenants to recoup up to $15,000 per apartment over 15 years for making repairs. But landlord groups said the amount fell significantly short of how much they often needed to make improvements on many apartments, some which had been occupied for years.

Those limitations mean landlords are leaving units vacant instead of investing in costly renovations because they say they simply can’t charge enough to make it worthwhile. There is no publicly available data to verify landlord or tenant claims.

The new housing deal is likely to raise the cap from $15,000 to $50,000 in some cases. Landlord groups say that amount still isn’t enough, while tenant advocates are crying foul.

More Flexible Development Rules

A morass of state laws and city regulations significantly limit how many homes can be built in the city, and where. But changing the rules to allow for more development has always been a thorny proposition.

Take, for example, the limit on the density of new apartment buildings. State rules restrict the bulk of new residential buildings, though they do not place similar limits on office buildings. Attempts to change that have routinely been beaten back by Manhattan politicians, and developers have sometimes resorted to building the thin, tall “pencil towers” that pierce the skyline.

The deal would loosen those restrictions, though it is likely to have some exemptions for historic districts, among other caveats. The Regional Plan Association, an independent nonprofit research group, estimated that removing the cap entirely might yield 30,000 affordable homes in high-rise neighborhoods.

The framework also would give developers tax breaks to convert office buildings to new apartments. City officials have estimated that those types of conversions could make way for 20,000 or more apartments.