Gothamist Piece by Tyler Kelly
Rent Stabilization has a somewhat checkered history in this City. No element of the system is more bizarre than the "buying out" of longtime renters. Say you're renting a two-bedroom for $600 a month, and the law is gonna keep rent low for a long time to come. Seemingly out of nowhere someone offers you $10,000, or more, in cash, to vamoose. Do you take it? The smart money says No Effin Way, Jose. But what if you're on a sinking ship, financially? Maybe you need that money for a family member's emergency. Maybe you got fired and the unemployment or disability checks aren't enough. Maybe you're not sophisticated in such matters, or think it's easy to find another rent stabilized place. At a certain point, a landlord can make it so crappy for you that you just give up, depressed and disheartened. We've seen it again and again...a building hits the "tipping point," and in a couple years goes from affordable to unaffordable. One man's bargain is another's fortune.
Last time this City went through such an intense period of demand outstripping supply, prices outstripping incomes, the City took up the call. Housing projects. Rent laws. Then we started begging people to stay, with coop conversions and Mitchell Lama and more. And now, it's de Blasio's turn to bat. Will he strike out or hit a double? History will judge.
Oh. And Coop City of 1966! I used to have nightmares about that place. Such a fascinating town along the Hutch. A killer documentary could be made about it. Has it been?
29 comments:
I don't know, but I remember Freedomland, the amusement park that was there before it was built, which as had books written about it and has its own website: http://freedomlandusa.net/
Rent stabilization? A nice idea that's abused a million different ways.
Yeah, key money is an old story. Sometimes landlords would buy out tenants. But in loads of other cases, a building super would "sell" a rent stabilized lease to a new tenant. Or a tenant would sell his lease. Or a stabilized tenant would make a private subleasing deal with a subtenant.
Then there's the legacy issue. Rent stabilized leases can be handed down from one generation to the next. In this city that adds up to a big inheritance -- at the expense of every other rent-payer.
To be fair to all, it should not be possible to transfer a rent stabilized lease to one's child.
no_slappz, I disagree with your last two paragraphs about rent stabilization.
"Rent stabilized leases can be handed down from one generation to the next", but that does not happen indefinitely. There are limits.
By the way, Q et al., there is an article on Gothamist that may be of interest: "After Hastening Gentrification, A Brooklyn Super Has Regrets". Link: http://gothamist.com/2014/05/12/gentrification_brooklyn.php
I shouldn't be surprised at no_slappz comments. This was the same person who was suggesting getting rid of a nature preserve (Floyd Bennett Field) to build more buildings. Way to help our current environment.
Please explain how rent stabilization is abused "a million different ways". I am aware that there is a report that indicates that there is a significant number of people who are holding onto stabilized units that are larger than their current family size, but the report seems to indicate that is more of a problem in Manhattan below 96th Street than in the outer boroughs.
Also, how is invoking succession rights a "big inheritance"? The person who takes over the lease does not own the apartment; he/she has no equity in the apartment, and the apartment certainly is not rent-free.
Are you going to make the argument that if all rentals were decontrolled/destabilized and market rent was charged that the prices somehow would level off, following the principles of ideal economics? Somehow the housing shortage would be less acute?
disco princess, yes, rent stabilized leases are transferable from parent to child. I have friends and acquaintances who've taken over leases handed over to them by their parents.
In one recent hand-over, an alcoholic mother died suddenly and unexpectedly at age 60. Within days of the funeral her daughter moved in and assumed legal tenancy at the mother's rate.
As usual something was afoot. The daughter's name may have been on the lease for years, but she hadn't lived in the building since she was a teenager. She's well into her 30s.
She's the third generation of her family to occupy this rent stabilized unit. She's paying less than $1,000 a month for the apartment, which is in Manhattan in the Kips Bay neighborhood.
disco princess, receiving a rent stabilized apartment from parents IS a huge inheritance.
If you were able to obtain a lease for $1,000 a month in a building where all other new tenants were paying $3,000 a month, your inheritance would total $2,000 a month. Not bad.
That's a huge gift in this city.
That's the same as receiving a check for $2,000 a month. It just emerges in the form of low rent rather than dividends from Verizon.
As far as what should happen with rent stabilized units, they should revert to market rate when the tenant who signed the lease no longer occupies the unit. Spouses should have a joint tenancy, even if they married after the leaseholder obtained the unit.
But there should be no passing the lease to the next generation, which happens often. Why wouldn't it? Anyone who intends to stay in this city would jump at the chance to nail a deal like that.
I'm keeping my eye on you Slappz. So far, you're only providing the conservative and libertarian perspectives. to which you are entitled. I happen to know however that you've been banned from other sites for going over the line of decency. I hope you keep it in check.
As to inheritance of apartments, I too think it's a strange quirk in the law and I'm not sure how appropriate it is in an affordable housing shortage. The assumption seems to be that one generation's income will match their children's. As we all know, this is often not the case at all. The same income requirements need to be enforced. The perverse incentive, of course, is to create a life where your documented income is low in order to hang onto an apartment. To my understanding, that's not the intention of the law.
I also find it interesting, as with many entitlement programs, that the assumption is that it's there for life. This too should probably not be the case. If one's income starts to outstrip cost of living increases, doesn't it make sense that one's rent would go up?
I think a wholesale reexamination of the law to make it more equitable is in order. As I like to say, the government has more power than God. Let them use it justly.
no_slappz, If the case of the daughter who took over her alcoholic mother’s apartment outrages you so much, why not report that to the State? (DHCR is run by New York State, not New York City.) Your complaints sound like those who rage about alleged widespread welfare fraud-recipients who rock iPhones and flat-screen TVs and claim that would justify scuttling the entire program. yeah, let's punish everyone who can benefit from such a program because of the misdeeds of a few. (Yes, I said, "a few", because the burden is on you to prove how widespread this alleged "abuse" of the system is.)
I know how you feel, Disco. He's a major pain in the ass.
I remember well the Welfare Queen nonsense from the '90s. The Repubs had people believing that the world was full of people decadently living the good life in poverty.
Here's a chart accompanying a debunker in the Atlantic:
http://www.theatlantic.com/business/archive/2013/12/this-chart-blows-up-the-myth-of-the-welfare-queen/282452/
The ethical question worthy of an just answer is: are we as a society responsible for all our citizens well-being, and are going to enforce strict rules on the behavior of those receiving assistance. The questions are deep and fraught with moral hazards. I find it particularly sad that we can't seem to have those conversations openly without drawing accusations of bias.
The fact is, people need help. The fact is, government programs are rife for abuse. But the underlying fact is, that abuse is hardly gross enough to stop aiding those who need it. And that's the ethical compromise that conservatives seem destined to argue. They'd rather cut off the foot for an ingrown toenail.
To put it another way, conservatives like to argue for enforcing the laws on guns, rather than restrictions on gun ownership. But when it comes to entitlements, they'd rather restrict them than enforce the laws. It's a perfect embodiment of the problems of our bipartisan country. Selective reasoning.
e.g. - I'll give you my mortgage interest tax deduction when you pry it from my cold dead hands.
Re: Re: disco princess, yes, rent stabilized leases are transferable from parent to child. I have friends and acquaintances who've taken over leases handed over to them by their parents.
In one recent hand-over, an alcoholic mother died suddenly and unexpectedly at age 60."
That example doesn't count as a hand-over. Did the alcoholic mother on her deathbed tell her daughter, “Look, dear daughter, I want you to have my apartment. It’s the least I could do for you.”? Did the decedent put it in her will? I doubt it.
further...what the hell does "alcoholic" have to do with it?
As far as what should happen with rent stabilized units, they should revert to market rate when the tenant who signed the lease no longer occupies the unit. Spouses should have a joint tenancy, even if they married after the leaseholder obtained the unit.
no_slappz, if the spouse of the decedent is not on the lease, then the spouse can invoke succession rights to hold onto the apartment, according to DCHR. (Source: http://www.nyshcr.org/Rent/factsheets/orafac30.htm). So, you’re contradicting yourself here. If the spouse should have joint tenancy, then it makes sense for the leaseholder to have his/her spouse's name added to the lease.
, “But there should be no passing the lease to the next generation, which happens often. Why wouldn't it? Anyone who intends to stay in this city would jump at the chance to nail a deal like that.”
If one’s decendents are already established and they are already living elsewhere in better accommodations, they wouldn’t be jumping at the chance to invoke succession rights, especially in this neighborhood (if we were to refocus this discussion on how this issue impacts this area). Would you be jumping to invoke succession rights in Patio Gardens? Tivoli Towers? Ebbets Field?
Hi, Q, as you can probably tell, I think the arguments no_slappz presents is full of hooey, and is unable to give the sources to back up his assertions. For example, I don't understand how this is true:
"If you were able to obtain a lease for $1,000 a month in a building where all other new tenants were paying $3,000 a month, your inheritance would total $2,000 a month. Not bad.
That's a huge gift in this city.
That's the same as receiving a check for $2,000 a month. It just emerges in the form of low rent rather than dividends from Verizon."
disco princess, in the case of the apartment handover from the alcoholic mother to her daughter, there was, as far as I can tell, no apparent violation of existing laws.
Some background. The family has lived in the building for three generations. The family once ran a bar on the ground floor, and alcoholism became a family theme.
The recently deceased mother never lived with the father of the woman who now lives in the rent-stabilized unit. Meanwhile, the daughter hasn't lived in the apartment for many years, which voids her claim of residency.
However, it appears her mother added her daughter's name to the lease at some point. So, the lease transfer appears -- on the surface -- as a legal transfer. But due to the daughter's absence of many years it's not.
Meanwhile, the landlord isn't fighting her in court as far as I know.
Regarding the issue of the mother's alcoholism -- it was the cause of her sudden death. She drank herself into an early grave. From her appearance I didn't think she was in such dire straits, but the building super told me dropped dead in the apartment and her body was a mess when he went in the EMT guys.
He was undoubtedly correct. I went to the wake at the nearby funeral home and saw the worst looking corpse I've ever seen. She was green. I thought they were burying Kermit the Frog.
disco princess, perhaps I wasn't clear about spousal lease arrangements. If someone living in a bargain-rate rent stabilized apartment gets married, the spouse is and should always be a legitimate co-tenant, even if the original lease-holder dies.
It is the intergenerational gift of handing down a lease that is wrong. Obviously the existence of a black market in rent stabilized units is proof of their huge value.
On a related note, a lawyer I know handles some clients who jump through hoops to make it appear that their income is below the $175,000 threshold that causes an apartment to become deregulated.
Is the attorney helping his clients to game the system? Yes.
Meanwhile, the value of the rent-stabilized discount in PLG is going to increase as new buildings are built. Yes, the smart person would jump at the chance to obtain a cheap unit in any building in the area, because the area will improve. Maybe the smart person would rent to a subtenant while waiting for the area to become the next Park Slope.
Re: However, it appears her mother added her daughter's name to the lease at some point. So, the lease transfer appears -- on the surface -- as a legal transfer. But due to the daughter's absence of many years it's not.
It IS a violation of current laws. I just recently went through this process myself. Management asked me for proof that I had been living in that unit for at least two years prior. I had been legitimately living there for more than two years. My name was down as one of the residents of the unit. Yet, I was still able to produce the documentation. (My driver's license for example, backs that assertion up.)
re: Maybe the smart person would rent to a subtenant while waiting for the area to become the next Park Slope
Subletting, especially since this would be done illegally would seem like more trouble than it is worth. What if the subtenant screws you over? What if the landlord were to find out and take legal action against you? What legal recourse would you have?
Re: It is the intergenerational gift of handing down a lease that is wrong. Obviously the existence of a black market in rent stabilized units is proof of their huge value.
I disagree with you and the law also disagrees with you.
1. Invoking succession rights is not a gift.
2. Invoking succession rights is not handing down a lease. Again, in the example you gave, on the surface just because the mother listed the daughter as a resident of the unit does not mean that she wants the unit to pass to her daughter when she dies (unless she were to have said so explicitly). It just means the daughter is an authorized resident of the unit. The daughter didn't have to invoke succession rights to get the lease in her name.
3. The existence of a black market for a particular object doesn't automatically mean that the laws in place that apply to said object should change. For example, just because there is a black market for "loosies" doesn't mean that all stores (including bodegas) should be banned from selling cigarettes. There isn't empirical data for how widespread the problem is. Eliminating succession rights is just throwing the baby out with the bathwater.
disco princess, you seem to be quibbling with me while mostly agreeing with me.
In the example of rent-stabilization abuse that I gave, I know the daughter did not live in the building for the last two years of her mother's life, which ended unexpectedly.
However, the daughter most likely had something like a driver's license or some other documentation that supported her claim of residence. My driver's license doesn't show my current address.
The current owners of the building, who bought it about three years ago, have not taken her to housing court. Frankly, I'm surprised because the owners have been litigious with other tenants who were paying substantially more rent than the daughter.
As for your claims about succession rights, well, a good deal is a good deal, and when you can hand over a good deal to another person, that's a gift.
If you're unclear that receiving a lease -- out of the blue -- that allows you to rent an apartment for a small fraction of the rent paid by others in the same building is gift, well, I guess we define "gift" in different terms.
It may not be a gift in the eyes of the IRS, but as NY city renters, we know it's a gift.
Clarkson says: To put it another way, conservatives like to argue for enforcing the laws on guns, rather than restrictions on gun ownership.
Here in NY City, where there are loads of laws restricting guns, gun ownership and gun purchases, the only people who seem to have guns -- based on their tendency to fire them -- are criminals who use them in the commission of crimes.
Then, to combat gun crimes, the police employed tactics like Stop & Frisk to scare thugs into leaving their guns at home. Well, that worked. However, as a result of ending the Stop & Frisk practice, it's pretty likely we're going to see an increase in gun crimes, despite even more laws that stop people from buying guns legally.
But when it comes to entitlements, they'd rather restrict them than enforce the laws.
You've confused things. You're going for some kind of false equivalence, suggesting that restricting access to guns is equal to restricting access to social programs.
They're not even close. And as far as restricting access to social programs goes, the issue isn't the outright cheaters, the defrauders of the programs. They exist, but their efforts don't add up to big expenses.
It's the policy of opening the door to more and more recipients that spins the meter. Lowering the threshold to qualify.
Of course the government has the power to tax, so it can always bail itself out by raising tax rates. But when a private industry lowers its standards, trouble follows.
The mortgage industry. Everyone with a pulse was allowed to borrow money to buy a house, no matter how bad their credit rating, how weak their job security, and no matter that they didn't have a dime for a downpayment.
As if the mortgage interest deduction means anything when rates are at 4% and the owner barely has a job.
It's a perfect embodiment of the problems of our bipartisan country. Selective reasoning.
No. It's proof that elected officials can succeed only if they give away taxpayers' money. Any candidate who says "no, you can't have more of other peoples' money" won't make it into office.
e.g. - I'll give you my mortgage interest tax deduction when you pry it from my cold dead hands.
The mortgage interest deduction artificially raises the price of a house, and the use of the deduction artificially lowers the periodic expense of ownership.
Nevertheless, without the deduction, housing would cost less.
However, the daughter most likely had something like a driver's license or some other documentation that supported her claim of residence. My driver's license doesn't show my current address.
what does your DL's address have to do with this situation?
management will ask for proof that the person meets residency requirements, and they will want to see more than one piece of proof. you don't even know the details about what she presented as proof? are you even sure that what she did wasn't on the up-and-uup?
Re:As for your claims about succession rights, well, a good deal is a good deal, and when you can hand over a good deal to another person, that's a gift.
If you're unclear that receiving a lease -- out of the blue -- that allows you to rent an apartment for a small fraction of the rent paid by others in the same building is gift, well, I guess we define "gift" in different terms.
It may not be a gift in the eyes of the IRS, but as NY city renters, we know it's a gift.
it wasn't a gift for the daughter whom you alleged she swooped in out of the blue to invoke succession rights. that's fraud, and i think you'd agree that it's fraud and i think you'll agree that fraud=/=a gift.
disco princess, I guess you cannot acknowledge that a getting a great deal on an apartment due to rent stabilization laws is a gift.
What if you were living in a one-bedroom apartment that you were renting for $700 a month and your brother-in-law called up and said he'd let you assume his rent-stabilized lease on a Manhattan apartment at his rate, which was $350 a month.
Would that seem like a gift? That happened to me back in the 1980s. It was a gift.
As for the daughter of the deceased tenant, I'm trying to keep the story as short as possible. My understanding of the situation comes from the building super who is involved with the nitty-gritty details of tenants and leases and legal actions taken by the building owners and tenants.
The daughter is in, and no legal effort to cancel her lease has been undertaken. Her mother died about a year ago. One of the last times I saw the women alive was while she was talking the ear off the guy who runs the neighborhood liquor store. That scene occurred so soon before her death that she may have been buying her last bottle of Jameson's.
Re: disco princess, you seem to be quibbling with me while mostly agreeing with me.
no_slappz, anyone who reads my comments on this board will see that I am not agree with you, and will understand the logic to explain why I do not agree.
Using the brother-in-law example to prove your point (when your original quibble is that children should not be allowed to invoke succession rights) shows you are grasping at straws. You have no hard evidence; you have no statistics. You haven't made your case. End of story.
Long live rent stabilization! :)
slapz be trollin'.
Slappz is a pain, but his close reading of the posts and comments suggests that he is just misguided, not a troll. I find this conversation between him and Disco illuminating, so I haven't been deleting his comments, as is often my wont.
Slappz represents a sizable minority of New Yorkers who are more than happy to take advantage of a law (snapping up that rent-stabilized apartment that wasn't legal for him to take, for instance) while simultaneously knocking the very law that made his current financial profile possible. He seems to have no problem taking the ethical temperature of others (alcoholics for example); too bad his own moral thermometer is broken.
No worries. As long as he sticks to the conservative arguments and away from the race-baiting that used to be his stock and trade, I'm allowing it to stand. For now.
Clarkson writes: Slappz represents a sizable minority of New Yorkers who are more than happy to take advantage of a law (snapping up that rent-stabilized apartment that wasn't legal for him to take, for instance)
Wrong. My tenancy in my brother-in-law's former apartment and my assumption of his lease was completely legal. We followed the rules, which need to be changed, made more restrictive.
...while simultaneously knocking the very law that made his current financial profile possible.
Rent-stabilization laws are generous to a fault, and easily exploited -- legally.
The Manhattan building in which I lived was a six-floor walk-up, and I was on the sixth floor. But hey, for $350 a month, I had no objection to taking the stairs.
Meanwhile, as older tenants died and their units went to market rate, the building improved. Maintenance became a priority. Everything worked and was attended to.
There was turnover for other reasons. Pregnancies among women on the upper floors. That's why I left for Brooklyn.
He seems to have no problem taking the ethical temperature of others (alcoholics for example); too bad his own moral thermometer is broken.
The "ethical temperature" as you call it, isn't the issue. As the rental rates in NY City prove, when the government caps the rental rates on One Million Apartments, there's an unintended financial consequence. Like squeezing a balloon.
The people in those Million Apartments are going to hang on as long as possible, especially if those apartments are in areas that have improved and market rents have risen.
Loads of those people -- I know some -- have second homes elsewhere, which they can afford because the city place is so cheap. Thus, it's clear those people can pay more to live in the city.
Or, they can give up the rent-stabilized apartment and do their part to take the pressure off those who are having a tough time paying their rent.
Oddly, you favor this system, which by its design, hurts those it's supposed to help.
If you look back at my comments on rent stabilization, you won't find me in support of the status quo. Quite the contrary, in this day and age it should be quite possible to make the program more equitable. I've also stated that I think rent stabilization is better applied to people than to actual apartments - meaning, if you start to make more money you gotta pay more. That's the (intended) structure of a progressive tax code, and rents should be progressive as well.
BUT...that system could be just as easily manipulated, and as with many entitlements creates perverse incentives. Frankly, Slappz, you don't know as much about me as you claim. And by the way, it's true, I didn't know brothers could give their lease to sisters without restarting the rent clock. I would think that any time the lease changes names, the landlord could make capital improvements and charge a higher rent.
But you see, I've never been fortunate enough to have a rent stabilized apartment. Moving to find cheaper rent is a NYC right of passage for most of us immigrants. However, we have never, ever lived in a situation as crazy as this one.
Clarkson writes: in this day and age it should be quite possible to make the program more equitable.
It is possible. However the people in those one-million rent-stabilized apartments aren't going to vote in favor of the changes that would make the system reasonably fair.
I've also stated that I think rent stabilization is better applied to people than to actual apartments - meaning, if you start to make more money you gotta pay more.
That IS how it's structured. You're hitting on Luxury Decontrol -- which now kicks in when you make over $200,000 a year for two years in a row.
Previously, the threshold was $175,000. As you can see, the threshold gets re-adjusted upward, which minimizes the number of apartments that are decontrolled.
But with lease succession rights, nothing has changed.
That's the (intended) structure of a progressive tax code, and rents should be progressive as well.
Oh. So if you believe a person should pay a rent that's indexed to his income, then what's to be done when that person buys a home?
Should he have the right to buy a house at a price that reflects his income, no matter how low his income and no matter how upscale the house/apartment and its neighborhood?
In fact, we endured some of that when, in the interest of "fairness", banks were lending huge amounts of mortgage money to people with lousy credit ratings, poor job security and no down-payment money. It didn't work.
The collapse took about 30 years to hit -- 30 years from the start of the Community Reinvestment Act that Jimmy Carter inflicted on the nation, which followed with the ending of Banking Regulation Q, which proved to be the trip-wire for the start of the Savings & Loan Crisis.
BUT...that system could be just as easily manipulated, and as with many entitlements creates perverse incentives.
Yes, when a government committee creates a plan aimed at social engineering, there's always trouble.
Rent-stabilization for the lease-signer and a spouse works okay. But it has to stop there.
My stabilized rent was $350 a month for a tiny apartment on the Upper East Side. After I left, it was decontrolled and renovated -- nicer interior, but no bigger. The new rent was $1,350 a month. Thus, I was receiving a gift of $1,000 a month -- that was over 20 years ago.
Buying? Who cares? That's not the point of this conversation.
The point is...tenants, sharecroppers, peasants...always at the whims of the landlord and the market, have too few rights. If you decide to be a landlord, and granted their are many reasons to do so, you must make a decision. If you go market rate, fine. And if your tenants are making a high enough income, fine. They came in at market, they can go out at market. BUT...for lower income folks, particularly those on fixed incomes, the current system needs "social engineering." The market is incapable of assigning need...only demand.
But no, you're wrong to suggest that rent stabilization follows people. It does not. If folks in Lefferts "decide" to move from their affordable apartments, there is a needle in a haystack chance of finding another in this City. Your best bet is to become homeless, wherein other safety nets kicks in. It's pathetic.
The increases in rent are designed to be pegged to cost increases. If that's managed properly, a landlord should have no reason to bitch. Except that they see their neighbors making more on unregulated apartments. Envy and greed kick in. But that was their choice when they bought the places. Don't like it? Sell. And perhaps it's time the government step up its limited equity programs so more tenant associations can buy and go coop.
Your bit about the Carter administration? C'mon - let it go. Reagan won...twice, if your recall. At any point a combination of banks and regulators could have seen the crashes (S&L and mortgage) coming. There's plenty of blame to go around.
I don't even know why they print economics diplomas. They seem pretty worthless.
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