Adding economic insult to property rights injury, this permanent tenancy also comes with a limitation on the amount an owner is able to increase the rent, i.e. rent control. There is a rebuttable presumption that a rent increase is unreasonable if an annual increase exceeds CPI+5% or 10% whichever is lower. The issue of an unreasonable rent increase would be raised in the context of a failure to pay rent by the tenant or an objection by the tenant to any increase in an offered lease renewal. This would put property owners at a significant economic disadvantage with each passing year, as they not only fail to realize economic return from their property, but also struggle to meet operational costs such as property taxes, heating, oil, and water bills, which are not limited by an annual cap. It would deter renovation of the property, both internally and externally, leading to dilapidation of housing and neighborhoods in a way that has already been seen with rent regulated buildings in New York City.
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