Category: Residential Real Estate

Programs for regulating rent, known as rent control and rent stabilization, are in place in several communities around New York State. Rent regulation has two purposes: first, to shield tenants in privately held buildings from unlawful rent hikes; second, to enable building owners to maintain their properties while making a fair profit. Of the two rent regulation schemes, rent control is the more established one. It was first implemented in response to the housing scarcity that followed World War II and is typically applicable to structures built before 1947. In general, rent stabilization applies to apartments that were freed from rent control and buildings constructed after 1947 but before 1974. It also includes buildings that are eligible for tax incentives under J-51, 421-a, and 421-g. The apartments that are eligible for these tax benefit programs are determined by their own set of regulations.

Rent stabilization outside of New York City is also referred to as ETPA, or the Emergency Tenant Protection Act, and it’s legal in a few counties and places (see Fact Sheet #8). Rent stabilization can also apply to housing accommodations whose rentals are set by public benefit corporations, DHCR, and other government bodies, as outlined in the rent regulations.

Rent Stabilization
In addition to limiting the amount of rent increases, rent stabilization offers tenants protections. Tenants are entitled to the provision of necessary services, the renewal of their leases, and are not subject to eviction unless there are legally permissible reasons. Tenants have the option to extend their leases for one or two more years. Tenants can use a number of forms developed by the Division of Housing and Community Renewal (DHCR) to make pertinent complaints. After serving the owner with the complaint and gathering evidence, DHCR must issue a formal order that is appealable.

DHCR has the authority to lower rent and impose civil penalties on the owner in cases when a tenant’s rights are infringed. Should you fail to maintain services, your rent may be lowered. If there is an overcharge, the DHCR may impose interest penalties or triple damages that must be paid by the tenant.

Rent Control
Rent control restricts the amount of rent an apartment owner can charge as well as the owner’s ability to evict residents. Additionally, tenants are entitled to certain necessities. Since tenants are regarded as “statutory” tenants, owners are not obligated to provide renewal leases. Tenants can use a number of forms developed by DHCR to file pertinent concerns. After serving the owner with the complaint and gathering proof, DHCR is authorized to issue a written order that is appealable. Rents may be lowered and civil penalties may be imposed by DHCR on the owner in the event that a tenant’s rights are infringed. Reduced rent is a possibility if services are not kept up. When there is an overcharge, the DHCR may determine the legally collectible rent.

Please refer to an attorney for legal advice regarding your specific situation. Additional information can be found at the Department of Homes and Community Renewal.

This is reported by Marketproof.com.

Fewer condos sold in Manhattan last month than in February, despite an uptick in the luxury market, while buyers in Brooklyn signed contracts for five more units than last month.

“With [March] demand closely resembling that of the pre-pandemic period, we may see some normalization of the market as mortgage rates stabilize,” said Marketproof CEO Kael Goodman.

Citywide, deal volume rose by 7% month-over-month, continuing an upward trajectory for the fourth month

Total dollar volume rose 18% to $796M, the best month since June of 2023The luxury market saw a 26% increase in deal volume from last month and a 7% increase in dollar volume

While the March numbers are upbeat, they fall short of the March average during the pandemic recovery (2021-2023) and align more closely with pre-pandemic (2015-2019) numbers

The upward momentum continues for the fourth month, though at a more subdued pace. Deal volume rose 7% from 262 in February to 281 in March. Deal count in Manhattan and Brooklyn was essentially unchanged, but Queens saw an uptick of 57%. The surge in Queens is attributed to a batch of 23 contracts reported at 134-16 35th Avenue. Total dollar volume increased by 18% to $769M from $676M. The median price per square foot (PPSF) dipped slightly from $1,635 to $1,587, and the median price decreased by 7% from $1.62M to $1.5M. The drop in unit price and PPSF reflects a more significant share of the deal volume originating in Queens, a borough with more modestly priced units.

While March’s performance improved month over month, the deal volume represents a 56% decrease compared to the average of 439 deals per month during the pandemic recovery period from 2021 to 2023. The demand in March 2024 aligns more closely with the 289 average during the pre-pandemic period from 2015 to 2019.

Of the 281 deals citywide, 133 (-1%) were in Manhattan, 107 (+5%) were in Brooklyn, and 41 (+57%) were signed in Queens.

LUXURY

The luxury segment saw deal volume jump by 26% month over month, reaching a nine-month peak of 43 contracts. The total dollar volume grew by 42% from $300M to $427M. The median price rose 7% from $5.9M to $6.4M, and the median PPSF was unchanged at $2,631.

One High Line led in deal volume with six contracts over $4M. The West Chelsea complex found buyers for 95 of 235 residences since sales launched a little over a year ago. Corcoran Sunshine Marketing Group handles sales and marketing.

125 Perry Street led in dollar volume with three contracts totaling $112M, or 26% of the luxury market. The West Village boutique has sold 3 of the 7 residences. Compass handles sales and marketing.

Of the 43 luxury deals this month, 40 were in Manhattan, and three were signed in Brooklyn.

Story by Janaki Chadha, Politico      

NEW YORK — Five years after Albany Democrats overhauled the state’s rent-stabilization laws, real estate executives are looking to weaken the reforms — bolstered by data they commissioned that validates their case.

New findings from a survey of 781 property owners and managers covering about 242,000 units contend the 2019 changes led to disinvestment and substantial vacancies in rent-stabilized housing. A significant share of respondents said it is “economically infeasible” to invest in needed upgrades to their buildings. The study, obtained by POLITICO, was conducted by consulting firm HR&A Advisors on behalf of the Real Estate Board of New York and the Rent Stabilization Association. While the findings are unsurprising, real estate leaders are using them to fuel their argument against the 5-year-old legislative changes.

The issue is now entering the early stages of negotiations in Albany, amid broader discussions around a wide-ranging deal to tackle an acute housing shortage.

Tenant activists and progressive lawmakers are already pushing back on any attempt to reverse the reforms, which starts out as a tall order in the Democratic-led state Legislature.

“This data indicates that the 2019 rent law changes are having increasingly negative impacts on rent-stabilized apartments and tenants,” James Whelan, president of REBNY, said in a statement. “State lawmakers should follow the data and advance policies that facilitate the rehabilitation of dilapidated apartments in a manner that results in quality affordable housing without recreating the dynamics of vacancy decontrol.”

Real estate groups argue the 5-year-old changes — which eliminated or significantly curtailed avenues to raise rents on the city’s roughly 1 million rent-regulated apartments — have left landlords unable to rehab apartments and rerent them when long-term tenants move out.

The idea — called “self serving” by a leading tenant activist — has gained traction among some moderate Democrats: A bill introduced last year by state Sen. Leroy Comrie and Assemblymember Kenny Burgos would allow rent-stabilized landlords to reset rents at vacancy to facilitate renovations. The current law allows only very limited increases if an owner is making an apartment or building improvement.

Some prominent legislators see Comrie’s introduction as a non-starter and question the industry’s claims.

“They’re saying, let’s turn the rent-regulation system on its head because we have many units that are in dire disrepair — I don’t buy that,” said Assemblymember Linda Rosenthal, chair of the body’s housing committee. “Many of my colleagues oppose that vehemently, so I don’t think it will gain much traction, and it shouldn’t. This is not the time to be trying to undo tenant protections.”

The survey found that for owners with small portfolios that are primarily rent-stabilized — those under 11 units — 25 percent of their apartments are currently vacant.

That statistic is in stark contrast to a city-issued survey that found a vacancy rate of just 1.4 percent in 2023 across rental housing more broadly.

There are also fewer total vacant apartments than there were in 2018, but longer-term vacancies — defined as three years or more — have increased, the REBNY-commissioned survey found. And nearly one-third of respondents cited “economic infeasibility” of unit improvements after a long tenancy as a reason for continued vacancies.

RSA supports the bill introduced by Comrie and Burgos. REBNY is not pushing that specific legislation but said it agrees with its general goals, and sees it as one potential approach.

“There’s no way to adjust rent at vacancy anymore in the rent-stabilized universe,” Basha Gerhards, senior vice president of planning at REBNY, said in reference to landlords’ reported drop in operating income. “So do we allow some form of rent reset in exchange for the apartments being improved and the violations being cleared? It’s a question we are posing.”

State lawmakers are under pressure to take action on housing issues this year as the city struggles with the lowest rental vacancy rate in 50 years and residential construction slows amidst the absence of a key multi-family housing tax break.

The rent reforms approved in 2019 — on the heels of Democrats winning a sizable majority in the state Senate — sent shockwaves through the real estate industry and sounded a death knell for its longstanding hold on the state capitol under Senate Republicans.

The survey found owners still need to make upgrades — things like replacing boilers or kitchen appliances — but are pursuing fewer improvements since they lack the funds.© Bebeto Matthews/AP

After Democrats took control of the chamber, they eliminated “vacancy decontrol” — a mechanism that allowed units to leave the rent-stabilization program when they reached a certain threshold and became vacant. They additionally got rid of a provision that permitted landlords to raise rents by 20 percent when apartments became vacant, and significantly restricted rent increases attached to building and apartment improvements.

Those provisions had led to the loss of tens of thousands of rent-regulated apartments before the 2019 reforms went into effect.

The survey found owners still need to make those upgrades — things like replacing boilers or kitchen appliances — but are pursuing fewer improvements since they no longer pencil out financially. For example, RSA members filed 763 individual apartment improvements in 2023, down from 3,311 in 2019. For individual apartment improvements, the maximum landlords can spend on renovations that would be eligible for a rent increase calculation is $15,000 over 15 years.

“Whether it’s big systems like rewiring or plumbing, or bringing [units] up to code, complying to lead paint regulations — that’s well over $15,000 for an apartment, so there’s just no incentive,” said Frank Ricci, an executive vice president at RSA.

The city’s Department of Housing Preservation and Development estimated last year there are only 2,500 low-cost apartments that are both in need of repairs and have been vacant for a year or more. The agency says that figure is significantly lower now, based on the latest housing and vacancy survey, though it has not yet released a specific number, according to Gothamist. Ricci argued smaller buildings are under-surveyed by the city survey.

“By and large, there are just not that many vacant rent-stabilized apartments in New York City right now,” said Cea Weaver, campaign coordinator for the Housing Justice for All coalition, pointing to HPD’s data. “It’s very politically convenient and self-serving to say, oh we’re in trouble because of the [2019 reforms.] But it’s like no, you’re in trouble because you speculated on buildings that are 100 years old and a pandemic happened and other costs changed.”

Weaver and other progressive activists said they’re nonetheless taking the push very seriously — and reject any attempts to include it in a broader housing agreement, even if that deal includes a longstanding priority known as “good cause” eviction. That measure would effectively limit rent hikes in market-rate apartments.

“For the left, we know what rollbacks have felt like — we experienced that in the bail reform fight,” said Jasmine Gripper, co-director of the Working Families Party. “We’ve been communicating to elected leaders that this is a non-starter.”

• Manhattan median rent in October was $4,195, down 3.6 percent compared to September
• Apartment listings were up over 30 percent last month, creating competition for owners

From Brickunderground.com, Jennifer White Karp, November 9, 2023

There’s some good news for apartment hunters: A lot more rentals were available last month in New York City compared to a year ago, a surge in inventory that caused rents to drop just slightly. If you’re looking for a new rental, this is likely to be the trend going forward.

It’s largely due to the calendar —the market has passed the peak summer rental season. Manhattan median rent for new leases in October was $4,195, down 3.6 percent compared to September, according to the latest edition of the Elliman Report, which looked at the Manhattan, Brooklyn, and Queens rental markets. There were larger monthly drops in median rent for Brooklyn (5.7 percent) and Queens (9.4 percent).

Rents are likely to remain flat with only small dips for the foreseeable future, says Jonathan Miller, president and CEO of appraisal firm Miller Samuel and author of the report. Don’t expect a sharp decrease—because that’s not how the NYC rental market works.

Even though rents were down on a monthly basis in Manhattan, they were still up 20 percent from the pre-pandemic era. (Manhattan’s median rent in October was also 4.6 percent higher than a year ago.)

Far fewer Manhattan renters signed new leases in October compared to the prior year, an indication that more renters are renewing their leases, which has been a pattern for the past four months. Lease signings dropped 31.3 percent compared to October 2022. Lease signings were also down 8.7 percent compared to the previous month.

Manhattan vacancy’s rate fell below 3 percent just one month after hitting that peak.

Increasing listings

The other part of this tale is rising inventory, which makes more competition for landlords and keeps them from raising rents, at least in the short term. Compared to a year ago, Manhattan apartment listings were up 31.3 percent last month.

Miller says inventory has been rising for the past six months but points out the market doesn’t have a glut like it did during the depths of the pandemic, when the number of available listings was triple what’s available in Manhattan now.

“Inventory is clearly up now but still significantly below the surplus we saw in 2021,” Miller says.

The Corcoran Group also released Manhattan and Brooklyn rental market reports for October. Gary Malin, chief operating officer at The Corcoran Group, notes that a decline in leasing is typical for this time of year, but the slowdown has reached Manhattan luxury rentals. These renters are not usually as price sensitive, he says.

Owners of luxury apartments lowered rents for new leases as a result, “the first pricing decline for doorman [rentals] in over two years,” Malin says.

From Neil B. Garfinkel, REBNY Broker Counsel•

Two multi-billion dollars federal lawsuits are currently being litigated (Moehrl, et al. v. NAR, et al. and Burnett (Sitzer), et al. V. NAR, et al.) that could greatly affect the way NAR members do business. The trial in the Burnett case started this week, and involves the four NAR-affiliated MLSs in Missouri, while the Moehrl case, pending in Chicago, is slated to go to trial next year and involves 20 NAR-affiliated MLSs in numerous states. In addition to NAR, four major brokerage firms were named in these suits: Realogy Holdings Corp. n/k/a Anywhere (the parent company of Better Homes and Gardens Real Estate, Century 21, Corcoran, ERA, Coldwell Banker Realty and Sotheby’s International Realty), Home Services of America, Inc., RE/MAX Holdings Inc. and Keller Williams Realty, Inc. 

Specifically, the class plaintiffs claim that certain NAR MLS rules, including the blanket offer of compensation rule, require sellers to make a uniform offer of compensation to buy-side brokers in order to be able to list their properties on multiple listing services (“MLS”) and help to keep commissions high, and reduce the ability to negotiate for lower commissions. The brokerages appear to have been included in these class-actions because they require their agents to be members of the NAR in order to access the MLS’s where their listings were being placed, and also served in high ranking positions at NAR.  The plaintiffs seek damages, and practice changes which will allow for greater negotiation of the commission rate to be paid in a transaction. 

Two of the Brokerage firms, RE/MAX and Anywhere, recently settled with the plaintiffs for $55 and $83.5 million dollars, respectively.  There are other conditions to these settlements involving practice changes that have been proposed and will be implemented following Court approval of the settlements.  The settlements cover both the Burnett and Moehrl lawsuits, and therefore neither RE/MAX nor Anywhere is participating in the Burnett trial.  The lawsuits against NAR and the two other remaining brokerages are ongoing.  We will provide updates as more information becomes available.  

Separate and apart from these lawsuits, members should be aware that REBNY is also working on making changes to the Universal Co-Brokerage Agreement (“UCBA”). This is not as a reaction to the lawsuits but rather these amendments are independently being reviewed in the constant effort to promote transparency and consumer confidence in the residential real estate transaction.

From REBNY