The NY State Division of Housing and Community Renewal finally closed a loophole in rent regulations that would have allowed owners and landlords leaving government-subsidized housing programs to increase rents to market rates by citing "unique and peculiar" circumstances. According to the NY Times, some tenants' rents would have skyrocketed from $981/month to $4,500/month for a two-bedroom on the Upper West Side and from $1,000/month to $5,275/month for a three-bedroom, also on the Upper West Side.
The Division of Housing & Community Renewal explains that the Mitchell-Lama program was created in 1955 "for purpose of building affordable housing for middle-income residents." The owners would get low-interest mortgages and tax exemptions, in exchange for "limitation on profits, income limits on tenants and supervision by DHCR." For buildings completed before 1974, there was a "unique and peculiar" provision loophole intended to allow for rent increase for, say, a unit rented by a building manager, but the owners of 23 Mitchell-Lama buildings in NYC and Westchester and Nassau Counties, per the Times, "sought permission from the state to raise the rents to market levels in 4,400 units."
The buildings will now move into rent stabilization (which generally means landlords will have to wait for the current tenants to leave before jacking up rents - more information here), or they can revise their applications to leave Mitchell-Lama. Building owners are also unhappy that the law was called a "loophole" - earlier in the fall, a lawyer representing the Rent Stabilization Association called the change a "political response to tenant activism."
Graphic from a 2006 study by City Comptroller William Thompson, who found that around 25,000 apartments were in the process of leaving the Mitchell-Lama program
