A 52% increase in the rent of a one bedroom apartment in New York. At first, 30-year-old Amanda Morrow thought it was a joke. She lives there with her husband and dog. “The rent went from $ 4200 to $ 6400 a month. We couldn’t believe it, but it turned out to be true.”
No rental protection
It’s not just the rent on Amanda’s apartment that’s going up. Most New Yorkers see rents rising. Increases of thirty, forty or fifty percent are not uncommon. By way of comparison: in the Netherlands, rents in the free sector can increase by up to 3.3 percent annually until May 1, 2024.
There are several causes, says broker Kobi Lahav. He has been active in the New York real estate market for over fifteen years and has experienced many extremes. “There is no rental protection for the free sector in New York. Pawn shop owners can raise their prices as much as they want. They are only required to give 60 days in advance.”
Now they are also in New York stabilized fee in controlled fee apartments. This is the regulated part of the rental market, with a statutory maximum for rent increases. About half of the rental market is made up of these types of apartments. The other half comes from housing on the free market. “Within that free market, we see prices rise more and more,” Lahav said.
At first Morrow thought the rent increase was a joke, see this video:
High inflation and rising gas and oil prices are also driving up rents. Many New York apartments are oil heated. But the heating is included in the rent. You do not have your own meter and therefore it is not kept separately for each resident. It is on behalf of the landlord. If energy becomes more expensive, the landlord has to pass those costs into the rent.
Corona discounts
In addition, during the pandemic, tenants often received a discount from the landlord, up to 20%. “The pandemic has closed the city. Many people have left New York and the properties have become vacant,” Lahav said. “There was even a law that protected tenants if they were in financial trouble because of Covid-19. For example, they couldn’t be evicted from their apartment if they didn’t pay their rent. As a result, some landlords lost income for months, while the mortgage continued “.
That law expired in January of this year. The owners have canceled the “crown discounts” to compensate for the damage suffered by the pandemic. Tenants are now paying full price again.
Another reason is the increase in mortgage interest rates. “People who found the rent too expensive often switched to buying a house,” Lahav explains. “Now we see that more and more people continue to rent because they can’t afford a house for sale.”
Ten more in a row
The broker says something is still going on. “During the pandemic, construction was largely at a standstill. Many new homes have not yet been completed and there is more demand than supply. New York is still a very desirable city to live in. You can no longer pay rent and you decide to leave “Then there are ten more in line to pay this. If demand falls, the owners will adjust the price again. “
There are still no figures on how many people are leaving New York, but Amanda and her husband are leaving the city. They can no longer pay the new rent and are forced to leave. “We leave New York with pain in our hearts. We hope to return one day, but then the prices really have to go down.”
