New York lawmakers are closing a “Frankensteining” loophole in the state’s housing laws that allows landlords to combine empty rent-stabilized apartments and jack up the monthly price.
The practice has become increasingly common for owners of rent-stabilized properties looking to get around strict rent laws that largely prohibit them from raising rents beyond a prescribed percentage. Tenant advocates and Democratic lawmakers in New York City say allowing landlords to set new, higher rents on units they fuse together incentivizes them to deliberately hold units off the market — known as “warehousing” — while they wait for adjacent apartments to empty out.
Once apartments are combined, landlords can set whatever rent they want. State law also allows owners to take newly merged apartments out of rent-stabilization if one of the units was unregulated.
The Assembly passed the anti-Frankensteining legislation late Tuesday, weeks after the Senate approved its own version.
“We’re losing many, many units to Frankensteining and warehousing,” said Assembly Housing Chair Linda Rosenthal, a Manhattan Democrat who sponsored the bill. “It’s becoming harder even for people who are middle income to live here anymore.”
The fate of the measure is now in the hands of Gov. Kathy Hochul, whose office did not immediately respond to a request for comment.
If signed into law, the legislation would force landlords to set the rent on combined, rent-stabilized apartments based on the sum of the two most recent prices and would ensure any apartment that includes at least one stabilized apartment remains regulated.
Just days after Gothamist reported on apartment “Frankensteining” last year, the state’s Division of Homes and Community Renewal issued a proposed a rule change to curb the practice.
The Gothamist story featured an East Village building where at least 10 of the 22 rent-stabilized units had been combined to create five large apartments with much higher rents. One of the apartments was going for $9,000 a month — up from $1,324.60 and $1,778.54 before they were fused together.
Landlord and real estate groups have blasted the measure, with the Rent Stabilization Association, which represents property owners, telling City Limits the bill would remove “the last remaining method” landlords have for increasing revenue and investing more money in their buildings.
Some Republican lawmakers pushed back on the measure during a floor debate Tuesday.
But housing organizers, attorneys and everyday tenants say the practice has become more common since the state enacted stricter rent regulations that limited the ability of landlords to increase rents on stabilized units in 2019.
The Frankensteining restrictions were one of a handful of housing bills taken up by the Assembly Tuesday night.
Lawmakers also voted to extend the lookback window for tenants who claim their stabilized rents were fraudulently increased.
Jay Martin, the head of the landlord group Community Housing Improvement Program, said the measure could unfairly punish owners for the actions of previous landlords and have a “chilling effect” on decisions to purchase rent-stabilized buildings.
“The state Legislature continues to show they are more interested in being retroactively punitive than proactively advancing pro-housing solutions,” Martin said.
The Assembly passed the bills less than 24 hours before New York City’s Rent Guidelines Board votes on the maximum allowable rent increase on more than one million stabilized apartments.
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