The Theft of Affordable Housing: How Rent Stabilized Apartments are Disappearing from Fraudulent Individual Apartment Improvements and What Can Be Done to Save Them

Abstract

One of the largest challenges facing the future of rent stabilization in New York City is the illegal theft of affordable housing through fraudulent individual apartment improvements (IAI). City Comptroller Scott Stringer audited the current system and found, “that fraudulent activity may have expedited the loss of an untold number of rent stabilized units from the City’s regulatory system.” Rent stabilization is set to expire on June 15, 2015 which will force the New York State Legislature to renew debates on the importance of affordable housing as they vote to extend and potentially reform the law.

It is the goal of this article to explain how the present system of rent stabilization occurred in the context of struggle between millions of middle and working class tenants and the real estate lobby and how that struggle has led to an affordable housing crisis. The article will then examine how the courts have reconciled the conflicting messages from the legislature in handling rent overcharges with a focus on unsupervised IAI fraud. Finally the article will recommend several changes in law and policy that would increase transparency to all parties, provide greater clarity in the law, and prevent the theft of affordable housing.

Keywords: Housing, Affordable Housing, Housing Rights, Landlord-Tenant Law, Rent Stabilization, Rent Regulation, Rent Control, Individual Apartment Improvement, Housing Policy

JEL Classification: K11, K42, K23, I28, D63, L85, R31