The new Housing Stability and Tenant Protection Act has tightened tenant protections and has helped ease the pressure on tens of thousands of families who were at risk of losing their own homes due to rising, and often increasingly unaffordable, rents.
But these new laws have made the ownership of multi-unit residential structures exceedingly challenging, and fearing a significant loss of income, or the lack of an adequate financial return, many landlords are threatening to head to “greener pastures.”
“[Landlords] declared an intention to divest from the New York City marketplace or disinvest in their rent-regulated buildings,” an Op-ed in Crain’s New York recently advised. “Others have considered warehousing units rather than risk renting them to tenants who they believe will never let go of an affordable apartment.”
Matt Dunbar, vice president of external affairs at Habitat for Humanity NYC, believes there is an opportunity for Albany to shift the paradigm and to create new laws that would assist landlords, while also protecting lower-income apartment renters. He proposes that Albany and the City should “choose to establish new limited-equity homeownership at scale.” In other words, landlords would be able to provide people the opportunity to purchase their apartments in co-op form. Although buying is not an easy option for lower-income families, Dunbar suggests that the government would give these purchasers an array of benefits that would help facilitate the acquisition of their homes.
“A 2020 homeowner legislative package could include proper pre-purchase and building management education, technical assistance, guidance on financing, legal services, ongoing monitoring and stewardship services, and increased capital for homeownership repairs and rehabilitation,” Dunbar opines.
“Like everything else in political life, proposals like these always sound rosy but, when it comes to the implementation, reality always manages to rear its ugly head ... in one form or another,” noted Ricardo M. Vera, a partner at Newman Ferrara LLP, a New York City real-estate law firm.
“Putting aside the astronomical funding costs, and the question as to where all this money will supposedly be coming from, cooperative ownership is far from a panacea,” he added. “In fact, cooperative living is fraught with day-to-day problems. And once professional landlords divest themselves of their properties, tenants will be the ones left holding the bag.”
Vera continued, “Unless these properties are carefully and competently managed, with enough resources to meet operating expenses and possible emergencies, the potential for buildings falling into structural disarray or going into some form of foreclosure, or even bankruptcy, would appear to be very real." He concluded, “We need to know and hear more. At a minimum, this concept should be carefully vetted and tested.”
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To read the full proposal in Crain’s New York, click here.
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