Should people living on rent get a few years’ relief? Amidst this question, New York, the largest city of the United States, has taken a big decision. The rent of about 10 lakh rent stable apartments in the city will not increase for the next two years. About 24 lakh people are expected to get direct benefits from this. Mayor Zohran Mamdani has called it a historic step towards making the city more affordable. However, landlords say that this will make it difficult to cover their costs and many buildings may fall into financial crisis. At a time when fares are increasing rapidly even in the metro cities of India, the question is arising whether such a law is needed in India too?
Rent of about 10 lakh houses will not increase for 2 years
New York City’s Rent Guidelines Board decided to freeze rents by a 7-1 majority after several months of hearings and expert opinion. This decision will be applicable to rent stable apartments with one and two year lease. Due to this, about 40 percent of the housing stock of the city i.e. about 10 lakh apartments will be affected. These are mostly buildings which were built before 1974. After the board’s decision, the people present in the meeting celebrated and called it a big victory for the tenants.
Highlights of the news
- The rent of about 10 lakh rent stable apartments in New York will not increase for 2 years.
- This decision is expected to provide relief to about 24 lakh tenants.
- This decision will be applicable on 40 percent housing stock of the city.
- Landlords claim that 50 thousand flats are already vacant in the city and about 1 lakh apartments are in financial crisis.
- In the last 5 years in India, fares in many metro cities have increased by 30 to 60 percent, while in some areas by more than 100 percent.
Relief to 24 lakh people, Mayor said – this is a historic decision
New York Mayor Zohran Mamdani had promised not to increase fares during the election campaign. After the decision, he said that this is a historic victory for the tenants of the city. According to him, with this, people will be able to run their household without worrying about increase in rent, meet the needs of their children and easily afford essential expenses like medicines. According to New York State Tenant Block, about 24 lakh people will benefit from this decision. The rent of these apartments was increasing by about 3 percent every year from 2022.
Why are the landlords protesting?
Real estate organizations and many landlords have strongly opposed this decision. He says that the cost of electricity, water, insurance, property tax and maintenance is continuously increasing, while the rent will not increase. According to him, this will make it difficult to run many buildings. The New York Apartment Association claims that about 50 thousand rent stable apartments are already lying vacant in the city because the owners do not consider renting them out as a profitable deal. According to the board’s data, about 1 lakh such apartments are already in financial crisis.
Story of a landlord increased the debate
During the hearing, a female landlord also expressed her problems. He said that he had inherited a building consisting of seven flats from his parents. She charges $1,191 to $1,412 in rent every month. They get around $1.04 lakh in rent in a year, while the total expenses, including the water bill of $14,000, have reached around $1.05 lakh. He says that if the rent remains frozen then the building may go into the possession of the bank.
Rent is increasing rapidly in India too
Even in big cities of India, rent has spoiled the budget of the middle class. According to Enrock Research, rents in many areas have increased by 30 to 60 percent in the last five years. In some premium areas this increase was more than 100 percent. Earlier, working families used to spend 20 to 25 percent of their income on rent, but now many families are spending 40 to 50 percent of their income on rent. Its impact is clearly visible on savings, children’s education, health insurance and future financial planning.
The rent of 2 BHK flat in Whitefield and Outer Ring Road of Bengaluru has increased from Rs 18 to 22 thousand to Rs 45 to 55 thousand in five years. The rent of 3 BHK flats on Golf Course Road and Sohna Road in Gurugram has increased from Rs 35 to Rs 40 thousand to Rs 75 to 90 thousand. The rent of 2 BHK flats around Lower Parel and Bandra Kurla Complex of Mumbai has increased from Rs 50 to Rs 60 thousand to Rs 1.20 lakh to Rs 1.50 lakh per month.
Can such a law come in India also?
New York’s decision has come at a time when the debate on rising rents and expensive housing is intensifying across the world. In India too, the sharp rise in rents in metro cities is increasing the pressure on the middle class. However, whether the New York model can be directly applied to India or not is a matter of separate debate. At present, it is certain that this decision of New York has raised the question whether any new policy or law is needed in India also to provide relief to the tenants.
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