Rich Owners 1, Rent-Stabilized Renters 0
While affordable housing advocates had reason to cheer last week with HUD’s blocking of the sale of Starrett City, they may have bigger problems in the long run from a smaller appeals court ruling that was handed down last month in the long-standing case of the East Village family that has been trying to clear…
While affordable housing advocates had reason to cheer last week with HUD’s blocking of the sale of Starrett City, they may have bigger problems in the long run from a smaller appeals court ruling that was handed down last month in the long-standing case of the East Village family that has been trying to clear an entire 15-unit building in the East Village for its personal use. Alistair and Catherine Economakis bought the building at 47 East Third Street in 2003 and told tenants that their rent-stabilized leases would not be renewed; they started eviction proceedings against the six hold-outs in December of that year. After several rounds of suits and appeals, an appellate court in Manhattan ruled in February that the clear and unambiguous provisions of both the Rent Stabilization Law and Code permit an owner to recover an unlimited number of stabilized units for personal use and occupancy without D.H.C.R. approval. The implications of this could be quite profound, it seems to us, given that there are over 200,000 rent stabilized units in Brooklyn alone. Basically, there’s a huge arbitrage play for anyone with the financial means to buy and convert a rent-stabilized building. Does anyone know if this applies by extension to rent control? If so, what about SROs? Would this remove the necessity for a Certificate of Non Harrassment in the case of personal use?
Revising the Limits on ‘Personal Use’ [NY Times]
Photo by alaspoorwho
Anon 11:21, the income caps absolutely apply to Rent Stabilization. http://www.housingnyc.com/html/resources/faq/decontrol.html#undergo
Rent stabilization has permitted me to save enough to consider purchasing a co op, as I am doing now.
Middle-Class Renter, you have the number correct, but there’s a big piece you’re missing. If your apartment’s legal rent is below $2,000 per month, then it doesn’t matter what you make, it cannot be destabilized because you exceeded income limitations.
My belief has always been that this debate is wholly based on asking the wrong question. The question isn’t if rent regulations are bad, per se, but that if society as a whole decides that rent regulations are worthwhile, then why are landlords bearing the cost, instead of society as a whole (i.e., out of the general revenues)?
Such confusion between rent stabilized and rent controlled! The income cap is only on rent controlled units.
And to Anon 11:08, can you explain your distinction “Technically, the ruling didn’t center on the right to reclaim the building for personal use, only on the right to reclaim the ENTIRE building for personal use.” Not sure I get it.
Anon 11:04, Income regulations are part of the rent-stabilization laws. So if I happen to win lotto and make over (I think this is the number) 175k two years in a row, I’m no longer stabilized. And, as a matter of fact, I think basic neccessities such as heating oil, water, etc, should be subject to some kind of regulation.
Technically, the ruling didn’t center on the right to reclaim the building for personal use, only on the right to reclaim the ENTIRE building for personal use.
Tenants had argued that the economakis’ had to go before DHCR since there is a statute to that effect, but the court ruled that the ‘one or more’ apts for personal use in RSC triumphed.
Yes, there is value play, but only if
a) you are a lawyer
b) you don’t mind fighting your tenants for X number of years.
To Middle clas renter. I’m a homeowner and not a banker or a broker. Should I be protected by a law that guarantees that my housing costs (i.e. heat, taxes, water, insurance etc.) never go up by my than a regulated percentage? Regardless of income?
From that article, I understood that the limitation was really on the means of the landlord to occupy the building for his own personal residence and business. On a slightly different note, I have had a few friends who have had either rent controlled or stabilized apartments who chose not to buy because they had these good rents. I always worried about them a little because those apartments are NOT completely safe and they missed the whole wealth creating opportunity of owning real estate, which is the greatest way to build equity and create a stable living situation for one’s self. One of them lived in Styvesant town and unless you are a real saver (I know somebody will say if you saved the money and invested it in xyz security, you would have x % return etc. etc.) you are in trouble. People tend to talk about this issue from the macro perspective – how it distorts market signals and inhibits investment etc (or a moral perspective….give me a break) but it is dangerous to depend on these market controls from the consumer perspective, i.e. having a stable living situation and financial equity. The liberalization of the “personal use” provision I think reinforces my thinking. Also, I’m not saying that renting doesn’t make sense for people but depending on below market rents can be dangerous.
The personal use provision exists in rent stabilization law, and is not applicable to rent controlled units. Plus, the ruling was from an appellate division panel in First Department (covering Manhattan) not the Second (covering Brooklyn), so it is not a safe bet to assume that Brooklyn courts will reach the same conclusion and as a consequence I would not advise buying an entirely stablizied building in Brooklyn on the assumption that it could be converted for personal use without legal challenge. Finally as the article rightly points out, anyone seeking to use this provision to evict tenants should be taking over the building so they can live in it — not to convert it to condos, market rate rental units or the like.