Affordable Housing & Community Development

Herrick partner Scott E. Mollen spoke to Crain's New York Business about a new partial rent freeze on rent-stabilized apartments, with rent increases on longer leases. Scott Mollen is a former chairperson of the Rent Guidelines Board that sets the rates for rent-stabilized apartments. Effective October 2021, rents will be frozen for the first six months of a new one-year lease then go up by 1.5% for the remainder, while rents for two-year leases will increase by 2.5% from the start.

"Every year, no matter what decision the RGB makes, there’s universal criticism," Scott said. "Invariably, tenants put forward a proposal which is usually defeated," he explained, adding, "[t]he real estate industry also puts forward a proposal which is defeated." Scott pointed out that, as taxes, water charges and insurance costs continue to rise, it becomes difficult or even impossible to maintain quality housing for rent-stabilized tenants if building owners can’t increase rents.

The articles quotes Scott as adding, "It’s a myth that most of these property owners are well-heeled real estate investors." The article continues, "[m]ost are small owners who depend on rental income to pay their mortgages."

Crain's states that Scott added, "landlords have already been subject to an eviction moratorium for the last 15 months where in many cases, they were unable to collect rent from their tenants. He suggested that regulations like these prevent investors from putting their money into affordable housing."

"In today’s world, investors have many opportunities to invest in assets besides housing," he said, "and they have opportunities to invest in housing in other cities."

Read the full article in Crain's New York Business here. Access may require a subscription.