Are you a property owner that wants to sell their condo, investment property or needs to rent an apartment or retail space in New York City? Call or text me: Sam Moritz, licensed real estate agent, 203–209–3640.
Do you know a property owner that might need real estate help? Refer me! I provide great and professional real estate services across all five boroughs.
Recently, I listed a mixed use building for sale in Bushwick (the building has five apartments and one commercial space). Generally, In NYC, buildings which have six total residential units or less rarely fall under the qualification of being rent stabilized (NYC rent stabilized apartments barely have rent upside following the Housing Stability & Tenant Protection Act of 2019). Buildings which are entirely deregulated (like the five family building I was listing) was a highly sought after asset. It also had some upside: the current rents, a bit below market-rate-Bushwick rental prices, could be increased if the tenants left.
The building was in high demand. You know you have a good listing when buyers call and call, asking for updates about their current offers – which was the case for this listing. But I heard something else too from these buyers: market rate rents would not be achievable immediately because of New York City’s newly-enacted Good Cause Eviction, which would affect the offers they gave me.
Good Cause Eviction went into affect in April of this year. Among other protections, it prevents landlords from unreasonable lease terminations and extreme increases in rent. Here’s a link which explains Good Cause completely.
The piece of the law which affected my listing was the amount the new owner might be able to increase the below-market-rate rents (owners would tell me: we have have expenses too – property taxes and insurance costs are increasing, and market-rate rents help run the building). According to the law (I quote from the link above), rents in market-rate buildings can only be increased by “the rate of inflation plus 5%, with a maximum of 10% total.” The link above also lists the only instances where tenants may not receive a lease renewal.
Good Cause Eviction, for the most part, only applies to landlords who own more than ten apartments. If they live in a building where they own more than ten apartments, then Good Cause Eviction might not apply to them either (please verify with link above).
When I rent apartments, tenants sometimes ask me if I think the landlord will raise the rent significantly upon lease renewal. Perhaps preventing substantial rent increases was part of the basis for Good Cause Eviction.
The truth is, nowadays, I can’t see significant rent increases occurring – unless something semi-unprecedented happens, like another Pandemic which leads to people flocking away from the city, then returning all at once, driving up rental prices. If a tenant were to start a lease in 2024, and no life-changing event occurred for the entire population, the apartment would likely be unrentable next year if the landlord tried to increase the rent by $1000.
As mentioned, we did see insane increases like this happen in the aftermath of the Pandemic: Covid sent the rental market plummeting in 2020. It gradually increased in 2021 as people trickled back into the city. But then, in 2022, renters swarmed back, seemingly all at once, sending the rental market sky-high (too much demand, not enough supply). From 2022 to about this summer, rents were extremely aggressive. (I’ve been a full-time real estate agent since January 2017). But it was all due to an unusual situation: a mass exodus during the Pandemic, a great influx right after. Unless something like that happens again, landlords will not be able to increase the rent substantially on their tenants. Simply, the market just won’t allow for that.
Recently, I had Good Cause Eviction affect my rental business in another way.
In the last few months of this year, I’ve experienced maybe the slowest rental market of my career. August, September, and October are generally all good months (for me) to get apartments rented. But recent months have seen apartments receiving little interest. Many apartments that I’ve listed remain unrented. (I think it’s because the post-Covid high-rent bubble is bursting).
As long as the apartment’s listing agent is competent, and they are marketing the apartment correctly, the only way to get units rented is to reduce the price. I have had one Manhattan apartment listed for months. In October, after already listing it for two months (apartments generally go in less than thirty days), I asked the landlord if we could reduce the price on it (again). He had let me drop it in September, but a month later, after no uptick in activity, I asked again. He said: I don’t want to drop the price right now, because if I drop it too low, I can never get the price back up, because of Good Cause Eviction. He wasn’t prepared to drop the apartment right away – he wanted to try at the current amount for a few more months.
Here we are. Two months later, no tenant. Price too high :-(. Two more months of rent-income loss.
The rent stabilization law five years ago – the Housing Stability & Tenant Protection Act of 2019 – linked here, caused the sales value of buildings which contain all rent-stabilized buildings to drop about thirty percent.
Good Cause Eviction will have some affect on the sales value of free-market buildings, as well. We will see how much in the coming year or years.
Are you a property owner that wants to sell their investment property, condo or needs to rent an apartment or retail space in New York City? Call or text me: Sam Moritz, licensed real estate agent, 203–209–3640.
Do you know a property owner that might need real estate help? Refer me! I provide great and professional real estate services across all five boroughs.
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