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Assessing New York's Eviction Law: A Concession or Challenge for Landlords?

Is New York's Proposed Housing Legislation a Middle Ground or Further Woe for Landlords and Tenants Alike?

 

After protracted negotiations, New York State's legislative leaders have reached a tentative agreement on a housing plan aimed at addressing the twin challenges of affordability and supply, particularly acute in New York City.

 

The proposed legislation, designed to strike a delicate balance between tenant rights and property owners/developers' interests, has sparked discontent among both camps. Some Democratic lawmakers have signaled opposition to certain provisions they believe weaken tenant protections, while Republican leaders and landlord advocacy groups fear the bill could worsen the state's housing crisis. As it stands, the plan may require modifications to secure full legislative support.

 

Here's an in-depth examination of key proposed measures, opposition from various groups, and potential outcomes if the plan is enacted.

 

Establishing "Good Cause Eviction" Rules with Caveats

 

One central aspect of the proposal is the introduction of "good cause eviction" rules, intended to restrict legal evictions and deter rent hikes beyond a certain threshold. Under this provision, landlords would retain the ability to evict tenants for lease violations but would be prohibited from evicting tenants solely due to nonpayment of rent following an "unreasonable" rent increase without justification.

 

The plan permits rent increases up to the lesser of 10% or 5% plus the consumer price index in non-rent-stabilized apartments. Landlords implementing larger rent hikes without valid reasons would forfeit grounds for eviction if tenants fail to pay rent. Additionally, landlords would be obliged to automatically renew leases unless justified grounds for eviction exist.

 

Modeled after similar laws in neighboring states like New Jersey, the proposal includes notable exceptions. It exempts landlords with fewer than 10 units, buildings constructed within 30 years of the rule's enactment, and units with rents above a certain threshold. Municipalities outside New York City would need to opt in for the rule to apply to their residents.

 

Approximately 50 lawmakers argue that the legislation falls short in safeguarding tenants adequately. A previous 2019 "good cause" bill, which failed to pass, offered broader protections with stricter limits on rent increases and fewer exclusions. Conversely, property owner advocates argue that the burden imposed on landlords could lead to higher vacancy rates and discourage investment in rental housing, including maintenance and construction.

 

Supporters point to the precedent set by "good cause eviction" laws in New Jersey but acknowledge their limitations in preventing evictions due to the absence of a specific threshold defining an unreasonable rent increase.

 

Easing 2019 Tenant Protections to Alleviate Landlord Burdens

 

While the proposed legislation tightens restrictions on rent increases and evictions, it also rolls back previous tenant protections under specific conditions, benefiting landlords of rent-stabilized apartments. Presently, landlords can only raise rents enough to recoup $15,000 in repairs over 15 years, roughly translating to an $89 per month increase per unit, with the increase expiring after 30 years.

 

The new housing plan proposes raising this limit to at least $30,000, allowing landlords to raise monthly rents by up to $167, with higher allowances for units recently vacated by long-term tenants. Landlords could recoup up to $50,000 if the prior tenant resided in the unit for 25 years or longer, with rent increases to cover improvement costs being permanent.

 

Tenant rights activists oppose any revisions to the 2019 law, designed to prevent landlords from unfairly displacing tenants to charge higher rents. However, these restrictions may be contributing to the shortage of affordable housing in New York City.

 

Census data indicates a 1.4% vacancy rate in NYC, a 50-year low, yet this figure excludes thousands of vacant, rent-stabilized apartments landlords struggle to rent out. The New York City Housing and Vacancy survey estimates approximately 26,310 empty rent-stabilized apartments, with some experts suggesting higher figures.

 

Given that rent-stabilized tenants tend to remain in their units for extended periods and landlords require tenant consent for repairs and updates during tenancy, certain units remain outdated for 20 to 50 years. Consequently, landlords face significant renovation costs exceeding $75,000, an expenditure that would take decades to recoup under existing rent increase limits.

 

Real estate lobbying groups argue that revisions to the 2019 law fall short in incentivizing landlords to bring these vacant units back into circulation.

 

Promoting New Construction and Redevelopment

 

According to the nonprofit organization Up for Growth, the New York City metro area requires approximately 340,000 homes to meet housing demand. However, apartment building permit applications have declined since the expiration of a tax abatement program in 2022, rendering many projects economically unviable, particularly amidst labor shortages and escalating construction costs.

 

The new housing deal incorporates the "485x" tax break, aiming to replace the 421-a program, albeit with broader applicability. However, critics highlight past inefficiencies in the 421-a program, prompting lawmakers to address these concerns. The final details of the new tax benefit, including eligibility criteria and affordability requirements, remain under discussion.

 

Additionally, the legislation proposes loosening residential density restrictions, potentially enabling the construction of 30,000 affordable housing units alongside Mandatory Inclusionary Zoning. Another tax break incentivizes office-to-multifamily conversions, potentially yielding an additional 20,000 units.

 

Despite criticisms and uncertainties surrounding the proposed measures, state legislative leaders continue to negotiate the final terms of the housing deal amid ongoing budget discussions. While the agreement may offer some relief to New York landlords, its impact on the city's housing crisis remains uncertain.


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