The New York State Legislature passed a comprehensive package of landlord-tenant laws in 2019. These have made profound changes to the way apartment rentals work in New York City. They’ve arguably shifted the balance of power in landlord-tenant interactions. With these new laws on the books, tenants have much stronger protections.
Landlords, however, are chafing at some of these reforms. For example, renovations are about to become much more difficult. Before these laws were passed, New York City’s landlords could pass on some of the cost of improvements to their tenants. Previously, landlords could pass on 6% of the costs of building-wide renovations to tenants. Now, that figure has been capped at 2%, and one-quarter of the units must also be inspected and audited. Within 30 years, landlords won’t be able to pass any of these costs on to tenants.
The figures for renovations conducted on individual units are bleak, too. Only $15,000 of the costs of improvements can be passed on to tenants over 15 years. This may sound like a lot. However, permit fees alone amount to $6,000 in New York City. Landlords know that they won’t be able to recoup their investments in their properties easily. Over the long-term, this will discourage them from maintaining and improving their apartments.
Real estate industry professionals are organizing to oppose these laws. Landlords, property managers, and real estate agents all realize that they are unsustainable in the long-term. Much of New York City’s housing stock is 80 to 100 years old. These apartments need upgrades if they’re going to be comfortable and safe for tenants. Landlords can’t assume the cost without knowing there will be a return for their efforts.
These new laws also neglect to keep balance in the landlord-tenant relationship. Good landlords value the tenants and seek to retain good ones. However, they need to be able to protect their investment from less than desirable tenants, who can become destructive and damage the landlord’s investment. Making it difficult for landlords to make money will have undesired effects. It will drive landlords who play fair out of the marketplace. For now, the business community is looking for better communication with local and state legislators. They want a marketplace that values everyone.