I’m still on the Albany bill; I can’t stop talking about it. On the one hand, I’m representing a landlord right now and have had to know the law inside and out so I protect her and keep her from inadvertently doing something illegal. I am, above all else, an obnoxiously ethical trusted advisor. And on the other hand, people in my work community, real estate, will NOT stop talking about how terrible it is and how annoying it is and how no one will ever earn money again and the whole world is going to end. I’m getting tired of straw man arguments said by people on their proverbial soapboxes. You do realize this is why people hate us, right? Which makes our jobs harder? Harder than this bill does? No? I’ve lost you? Cool.
Yes, there will be fallout from this new bill. Whenever laws change that affect how a long-term play is actually going to go, it’s going to suck for those who made said plays based on old information. I have the utmost sympathy for those people. Your agency was taken away from you, and you made choices with incomplete/incorrect info. It sucks. If you’re reading this, please reach out, as I’d love to talk to you and figure out anything I can do to help. I’m actually pretty darn good at real estate and problem solving.
That being said, MOST (not all) of the major players whose representatives I spoke with, who had secured buyouts from tenants in order to luxury-ize buildings, are massive. They spend millions to make tens of millions. They will be fine; they are just reworking their business strategies. As an agent said to me today, they “smell blood in the water” and are “grinning from ear to ear.” Sound like someone who is just distraught over these new laws? Not to me, it doesn’t. But to the landlord who apparently told an agent he can “no longer afford” to fix one of his building’s boilers due to these laws, my response is a resounding “really????” These laws have been in effect for three weeks. How could you possibly have been so affected that you are no longer able to maintain the boiler? Have you not been doing what every investment class tells you and putting a portion of your rental income aside for these inevitable repair needs? Did every single one of your tenants simultaneously stop paying rent for some reason tied to this law? Because rents aren’t going DOWN. That’s not how any of this works! I honestly can’t even wrap my head around what this landlord even means. I think he should sell his building, because he clearly isn’t cut out for this business.
Landlords aside, for those of us who work as brokers/realtors/agents there are some downsides and there will be some growing pains, but whining isn’t really my thing (jk jk). Since I’ve already covered what I don’t like, here are some potential upsides for real estate agents that the industry isn’t discussing, because it doesn’t mesh with their “boo hoo, the world is ending” storyline.
The potential positives that the industry isn’t seeing about these new laws:
The first was actually brought up by the attorney who came to speak to us about the new laws. Landlords are now obligated to try to find a new tenant if the current tenant breaks his/her lease and moves out. In the past, since they were guaranteed rent from the lease-breaker, landlords would often just leave the apartment empty for the duration. Because that led to people having to pay the remainder of their lease because they were not allowed to sublet and had to move for whatever reason, it’s no longer an option. This could potentially increase revenue for agents by giving them more opportunities to list apartments. Guys, remember how up in arms you are about how our maximum rental commissions could be cut? Here’s your answer!
Strengthening the DHCR is a good thing! Most people who work in real estate have no idea how the DHCR works, but I do. Right now, if someone believes a landlord has committed an overcharge or some other similar offense, it turns into a game of “he said/she said” where the landlord has to pay attorneys and the tenant . This is honestly great for everyone involved, but it’s good for agents because it makes it straightforward from the get-go. Working with a landlord who has a rent stabilized apartment you’re renting? Cool, the new law sets out very clearly what guidelines need to be followed regarding rent increases, and what documents are needed to prove it. You can ensure the landlord has these things, and then know your name will never come up in a complaint where an attorney goes, “Oh yeah, that guy’s a piece of work.” You will never get yelled at by a landlord for embroiling him/her in a DHCR complaint, because everything will be out in the open. Makes your job easier, makes everyone’s lives easier.
Agents have complained that these laws will make it harder to build new development, and if we don’t keep building, we die as a city. Sure, but we can still build new development. It just isn’t quite as easy to kick rent stabilized tenants out to knock something down. But look at the huge number of new development units stagnating on the market. Look at the concessions being offered, the discounts, the developers all but begging people to come take a look. Look at how it’s been responsible for driving down the price of resale. If it’s harder to build new development, it will be rarer and more desirable. Which will hopefully incentivize people to make it well thought out and what people actually want (instead of another few thousand of the same white box) AND will make it easier for agents to sell. Trying to unload something of poor quality that’s overpriced? Hard.
This last one is kind of odd, but it touches on my last post about a fundamental disagreement on the role of rent stabilized housing. Landlords consistently misused IAI and MCI increases in order to increase rents and bring apartments out of stabilization and into the free market. In doing so, they increasingly made these apartments like free market/luxury apartments: dishwashers, washer/dryers, nicer fixtures, etc. At the same time, more and more buyers have been choosing to rent longer instead of buying. And then there’s the part of real estate complaining/lore where “all these millionaires are staying in stabilized places.” Well, if we keep rent stabilized places super basic, then people who can afford more amenities will likely choose to go for them! Will I buy a place when I can afford it? Absolutely! I’d much rather own a home than rent, even if I have a “good deal” in stabilization. Let’s get buyers active by keeping stabilized places for those who want stability but can’t afford to own.
There’s still a ton to figure out with the new laws. Even I am having some trouble navigating them. But again, I think catastrohpising and (smugly) celebrating each have their issues, so let’s just acknowledge the good and the bad and move forward together.