‘Landlords Just Went Wild’: A Brief History of Vacancy Deregulation in New York

New York City real estate interests are putting on a full-court press this year for what they’re calling "vacancy reset": legislation allowing landlords to raise rents as much as they want on rent-regulated apartments that have been occupied for at least 10 years as soon as they become vacant. 

Landlords have argued that since they lost the power to deregulate vacant apartments in 2019, when the state legislature passed sweeping rent reforms, building owners have increasingly allowed rent-regulated apartments to fall into disrepair because they can’t recoup their costs. (Comptroller Brad Lander quickly countered that the numbers show otherwise, with vacant apartments unavailable to rent falling by more than a third from 2021 to 2023.) At the same time, a March 6 report by the Pratt Center for Community Development countered that the vacancy reset bill could result in the removal of more than half a million apartments from rent regulations, and "create a strong financial incentive for displacement of long-time tenants."

But there’s no need to speculate on hypotheticals when we have history to look back on. Vacancy decontrol has been tried twice before in the decades since New York first created its rent regulations—and both times what transpired, according to those who lived through it, was utter chaos.

The first move to allow unlimited rent increases for vacant apartments came in 1971, at the instigation of New York Governor Nelson Rockefeller. A longtime opponent of rent control laws who had been outraged when he granted the city power to reduce rent regulations and it instead expanded them, Rockefeller pushed vacancy decontrol through the Republican-controlled state legislature, effectively overruling the City Council. Starting June 30, 1971, any apartment that became vacant, by hook or by crook, would be granted a get-out-of-rent-control-free card.

Two years later, amid growing alarm over rising rents, Rockefeller appointed Andrew Stein, the city political lifer then in his second term in the State Assembly, to oversee a commission to "examine the rent-increase situation and to recommend possible State Action in this area." After three months of research, including testimony from landlords, tenants, and public officials and reviewing calls to a tenant hotline set up for the occasion, Stein’s Temporary State Commission On Living Costs and the Economy came back with a report that was a scathing indictment of the fallout of vacancy decontrol, describing tenants faced with "inhuman treatment," "verbal and physical abuse," and being "at the continuous mercy of a landlord who may serve notice at any time, particularly if the tenant 'makes trouble' by asking for a paint job."

"Vacancy decontrol has neither stimulated new building construction, stopped abandonment, spurred renovation nor has it brought substantial new money into the City's housing stock," the commission wrote in its final report, released in January 1974. What it had done was to send rents in the city soaring: Average rent increases in apartments that had changed tenants were a whopping 52 percent higher than those that remained regulated.

At a commission hearing at the then-new World Trade Center, George Sternlieb, a city planning professor at Rutgers, testified that allowing landlords to charge whatever they wanted for vacant apartments had done nothing to fix up buildings in poor neighborhoods, as the law had intended: "Vacancy decontrol for the South Bronx, for Browns­ville area, does not make a hell of a lot of difference. You are not going to be able to get tenants in there." And elsewhere, because it made it easier for landlords to raise rents if tenants were more transient—which was more likely if housing was more unpleasant to live in—"in a sense we had a bonus for bad buildings and we punished good buildings."

The result, as any economist who knows how incentives work could have predicted, was a rush to make buildings as bad as possible. "All of a sudden we are getting complaints that the heat is turned off," Assemblymember Frank Barbaro told the Stein commission. "When the heat stops and the tenants call the landlord, he says, 'I ran out of fuel.' It is not true. There is fuel, because we called the Emergency Repair Section of the City of New York, and they come down, and the heat is turned on."

One woman introduced her 77-year-old neighbor, who had voluntarily given up her four-room apartment to a larger family, then ended up in a three-room apartment that cost almost double her old rent. Another reported that landlords on her block had pushed out tenants by having the super tell them, "You know, we're going to tear down the building in three years. I wouldn't bother fixing it up if I were you."

Andrew Kerr, the administrator for the city Housing and Development Administration—the predecessor of today’s Department of Buildings and Department of Housing Preservation and Development—testified that "since the implementation of vacancy decontrol, the incidence of harassment has more than doubled." Harassment complaints, said Kerr, had leaped from 533 in 1970 to 1,132 in 1971, "three quarters of which came during the months immediately following enactment of vacancy decontrol."

Housing courts became packed with eviction cases, testified Michael McKee of the Brooklyn Tenants Union, many "brought by the landlord simply be­cause the landlord doesn't want to renew the tenants' lease or because the tenant has asked for a paint job and the landlord has decided that the tenant is a troublemaker."

McKee, who remains a tenants rights organizer today with Tenants PAC, remembers this era well. "Landlords just went wild—the harassment, the attempted evictions, trying to buy people out, trying to scare people out. It was amazing. It was a very frightening time," he told Hell Gate. "I remember working with tenants who would experience things like having goons show up at 3 a.m. banging on the doors to try to scare them, all sorts of arson. It was the Wild West." 

Subsequent estimates of the number of tenants displaced, according to McKee, found that 110,000 rent stabilized apartments and 400,000 rent controlled apartments were deregulated in just the three years that vacancy decontrol was in place.

Terrence Moan, one of three staffers of the commission’s housing and rent study group, told Hell Gate that one argument raised for vacancy decontrol was that the nature of rent regulation had created wide rent disparities even within buildings: "Someone could be living in a two-bedroom apartment and paying $200 and someone could be living in the apartment above it and paying $2,000." The result, recalled Moan, "was totally chaotic—some landlords were making out like bandits, and some were starving to death."

Still, he said, even the foibles of the existing rent stabilization system, where landlords of all kinds have to deal with the same across-the-board percentage increase, is "fairer than the craziness of rent decontrol," which made it impossible for tenants to ever be secure from abrupt eviction. "It's still somewhat skewed and rough justice, but at least there’s some justice in it." 

The Stein commission’s final report in January 1974 recommended that vacancy decontrol should be immediately repealed. By then, Rockefeller had stepped down after 15 years in Albany to prepare for a fourth presidential run (he would instead end up appointed Gerald Ford’s vice president following Richard Nixon’s resignation); his successor, Malcolm Wilson, facing a tough reelection race and hoping to curry favor with tenants, okayed scrapping vacancy decontrol, though the state rejected rolling back rents to their levels as of the start of 1973, instead locking them in at whatever they’d been raised to by the time of the law’s enactment. (Wilson’s gambit didn’t work: Hugh Carey won the governor’s race in a landslide.)

"It was an anomalous situation," McKee noted. "If it had been Rockefeller running for a fourth term, I don't think this would have happened."

Two decades later, the Stein report had largely been forgotten when landlords made a renewed push for vacancy decontrol. This time, it came with a twist: Apartments would only be freed from rent regulations if they became vacant when their rents were over $2,000 a month ("high-rent vacancy decontrol"), or if they had rents over $2,000 and their existing tenant had an annual household income over $250,000 ("high-income decontrol").The new decontrol law was passed by the state legislature in 1993 under threat of losing campaign donations from the real estate industry and signed into law by Governor Mario Cuomo; the following year it was extended by the City Council at the behest of landlord-friendly Council Speaker Peter Vallone, whose longtime chief of staff had just been hired to head the landlord lobby. Dubbed "luxury decontrol," it was sold as a way to enact rent hikes only for those who could most afford them: Much was made of Mia Farrow living in a ten-room apartment on Central Park West for the then-bargain rent-regulated price of $1,800 a month.

Instead, the result was a loophole that led to a mini-repeat of the 1970s eviction wars. According to McKee, because oversight of the new deregulation law was minimal, some landlords would simply stop registering their apartments and treat them as de facto deregulated—leaving it up to tenants to figure out if their new rents were illegal and how to challenge them. The City's Rent Guidelines Board later estimated that the city had lost more than 152,000 rent-stabilized apartments to high-rent deregulation between 1994 and 2016, not counting those that were illegally removed from the rolls. "We have no way of knowing how many apartments were lost to high-rent vacancy decontrol before we got it repealed in 2019," McKee said.

The latest iteration of vacancy decontrol, first introduced in the state legislature last year as the Local Regulated Housing Restoration Adjustment, would allow a "reset" of rents in newly vacant apartments where tenants have been there for ten years or more, if landlords have demonstrated they have "restored" the unit. (Tenants would be able to challenge the new unregulated rent, but only if it exceeded federally determined market rents for the neighborhood.) While it might seem unlikely to gain traction during a time of Democratic control in both Albany and City Hall—Assembly housing committee chair Linda Rosenthal immediately called it a "non-starter" and made similar comments about the bill's chances this year—the 1990s vacancy decontrol laws were both passed with the backing of Democratic leadership.

Moan, who went on to serve as a City Deputy Commissioner for commercial property under Ed Koch before resigning under pressure after setting up his own private affordable housing firm, said the lesson of five decades of decontrol efforts should be simple. "Tenants want to have an ownership right: This is my home," he said. "Rent stabilization gave tenants an ownership interest in their homes, and that was critical: It built communities, it built neighborhoods, and it gave a sense of permanence and security to tenants, so that was vital."

In other cities that lack rent regulations, Moan said, it's become especially common for new owners of a building to jack up rents to try to recoup their purchase price, rather than based on a unit’s actual worth, resulting in evictions. "That displacement I just think is terrible. Anything that gives tenants an ownership interest in their rental apartments is essential, wherever it may be."