Landlords face financial disincentives to renovate vacant rent-stabilized apartments due to the 2019 rent stabilization law, which limits cost recovery to a mere 2 percent return on investment. This is significantly less appealing compared to nearly 5 percent from Treasury notes. As a result, many apartments remain vacant, with over 50,000 in NYC alone. A landlord might invest over $100,000 in renovations but recover only $30,000 through temporary rent increases, further complicating the decision to improve such units. Legislative reform is essential to incentivize renovations and reduce vacancy rates.
The 2019 rent stabilization law limits cost recovery, leading to an estimated 2 percent return on investment, making investing in rent-stabilized units unattractive compared to Treasury notes.
With a renovation costing over $100,000, the landlord could only recover $30,000 through a temporary rent increase, resulting in a mere 2 percent ROI.
More than 50,000 apartments remain vacant in NYC due to legislative disincentives that hinder landlords from investing in renovations while managing tenant disputes.
Legislative reform is crucial to bring vacant rent-stabilized units back online, as landlords find little appeal in recovering renovation costs under current laws.
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