New Article: Justin R. La Mort, The Theft of Affordable Housing: How Rent-Stabilized Apartments are Disappearing from Fraudulent Individual Apartment Improvements and What Can Be Done to Save Them, 40 N.Y.U. Rev. L. & Soc. Change (2016). Introduction below:
Long before modern rent laws were enacted in New York City the rental market was “governed by the law of short supply and great demand.”1 The consequences of this market failure led to great human suffering and social unrest. In response, the government attempted to ameliorate the harsh consequences of an overheated rental market with evolving forms of rent regulation. Rent stabilization is currently the main form of rent regulation allowing the middle- and working-class the ability to afford to live in New York City by prohibiting unjustified evictions and ensuring limits on rent hikes. These tenants have protection against substantial rent increases and security in knowing they cannot be evicted for arbitrary reasons. As of 2013, forty-six percent of New York City renters, or 961,000 households, lived in rent-stabilized housing.2While this number may seem large, it is a significant decrease from the nearly sixty-three percent of rental units that were subject to rent regulation in 1981.3 This loss in affordable housing threatens to further increase homelessness and eliminate the diversity that makes New York City a vibrant place to live and work.
One of the greatest challenges facing the future of rent stabilization is the illegal theft of affordable housing through fraudulent individual apartment improvements (“IAI”). IAI are an exception to the limits on rent increases imposed by rent stabilization. IAI were originally meant to promote building renovations by allowing landlords to recoup investments made to improve properties. However, due to a lack of government supervision, IAI are frequently exploited by property owners. In a recent audit, City Comptroller Scott Stringer found that “fraudulent activity may have expedited the loss of an untold number of rent-stabilized units from the City’s regulatory system.”4 The loss of this untold number of units has far-reaching effects on the City’s tenants who are increasingly marginalized by unaffordable rents and an unavailing legislature. The goal of this article is to explain how the present system of rent stabilization occurred in the context of struggle between millions of middle and working class tenants and the wealthy real estate lobby, how that struggle has led to an affordable housing crisis, and what can be done to create a more equitable city. Part II provides historical background, describing the evolution of New York City rent regulation from 1920 through today and explaining how these laws became so unnecessarily complex. Part III examines how courts have reconciled conflicting messages from the legislature in their handling of rent overcharges, focusing on cases of unsupervised IAI fraud. Finally, Part IV recommends several legal and policy changes that would increase transparency for all parties, provide greater clarity in the law, and prevent the theft of affordable housing.
Poverty Law 