Alarm bells are only just starting to ring about a huge threat to the city’s housing stock: the growing crisis of older rent-regulated apartment buildings, especially the smaller ones largely owned by “mom and pop” landlords.
Pre-1974 rent-stabilized units, mainly in the outer boroughs, now house about 1.7 million New Yorkers, but many of theses buildings are in deep financial distress water: The rental income doesn’t cover their ongoing expenses, or soon won’t if the Rent Guidelines Board keeps holding increases to below the rate that those expenses are rising.
A good number of landlords have only made ends meet by delaying payments on property taxes and/or water and sewer bills, and city Department of Finance efforts to collect on that debt stand poised to trigger a wave of foreclosures likely to spark a disastrous downward spiral.
After putting tax-lien sales on hold early in the pandemic, the department was set to hold the first one in years on May 20, only to postpone it to June 3 as it began to realize how bad things may be.
In these sales, the city gets cash upfront while the lien purchasers gain rights to collect on the debt; they can start charging high interest rates plus penalties.
Owners struggling to pay that, along with all their other bills, wind up deferring even vital building maintenance; some eventually just walk away, abandoning the property and all its debts; others lose the building to foreclosure.
Tenants suffer as everything falls into disrepair, and can suffer more if the building winds up owned by unscrupulous and predatory speculators.
Meanwhile, the entire structure can deteriorate so badly that full repairs start to cost more than replacing the whole building.
As Sean Campion of the Citizens Budget Commission noted in testimony to the Rent Guidelines Board last week, market prices for these pre-’74 buildings are now falling as the net income (rents minus expenses) collapses.
This crisis is exacerbated by destructive city and state housing actions — costly climate-change and sanitation mandates, rents never collected after the COVID “eviction moratorium,” units the landlord has to stop renting because the 2019 state Housing Stability and Tenant Protection Act makes it impossible to finance renovations after a longterm tenant finally leaves . . .
Plus, Housing Court is so clogged that even open-and-shut eviction cases take forever.
None of this gets mentioned as Democratic mayoral wannabes debate the city’s housing crisis; these landlords, many of them minority and/or immigrants, just don’t carry the political heft of the professional “tenant advocates.”
The CBC’s Campion warned the RGB that continues to OK below-inflation rent increases will only accelerate the crisis; other reasonable moves pushed by a landlords group, the Small Property Owners of New York, include:
- Fix Housing Court so deadbeat tenants aren’t living rent-free for years while awaiting eviction hearings.
- Amend state housing laws that limit owners’ ability to upgrade apartments.
- Expand existing and create new targeted emergency-rental-assistance programs.
- Cap property taxes and other costs equivalent to the caps that the Rent Guidelines Board puts on rent increases for stabilized apartments.
The Finance Department would also be wise to put off any lien sales for months at least, not just two weeks, because it’s now guaranteed to trigger a slow apocalypse for this vital housing stock.
If something doesn’t break soon, New York is on track to lose a huge chunk of its affordable apartments.
This story originally appeared on NYPost
