ProPublica released a new analysis recently that shows two-thirds of the more than 6,000 properties receiving tax benefits from New York City for rent stabilization practices are still raising rents as much as they want.
The report, which is part of an ongoing series into New York City's broken rent stabilization system, takes a look at the 421-a program, which requires developers to fill out an application promising they'll register for rent stabilization. When the construction is complete, housing officials are supposed to verify the rent stabilization registration and issue a certificate of approval. However, as Cezary Pokul found, that system is often ignored, allowing landlords to reap the tax cuts but continue raising rents on their tenants.
Collectively, these landlords save about $300 million a year in property taxes without showing they’ve qualified for the tax break, ProPublica estimates. Some landlords have pocketed the tax break for more than two decades while waiting for housing officials to approve them for benefits they are already receiving.
ProPublica’s analysis found that the vast majority of landlords ignoring the rules own smaller, three- to 10-unit properties in gentrifying neighborhoods on the city’s periphery.
This finding contradicts a common misperception among city leaders that 421-a’s tenant protections only help relatively affluent people who rent luxury housing. It also means that Mayor Bill de Blasio, who has made creating and preserving affordable housing a priority, could add thousands of apartments to his tally simply by enforcing existing laws.
As part of the analysis, ProPublica put together a database of all the properties in New York City that are tax-subsidized, and as of June are entitled to a rent freeze.