Dear Governor Hochul,
We share the same mutual interest in the success of the New York City housing industry. I’m one of many salespeople representing property owners of rent regulated apartment buildings. I’m writing this letter to you on behalf of an entire industry inclusive of landlords and lenders who are too afraid to publicly tell the truth in fear of reparations, vilification, or rent strikes.
We love New York City. We work, play, live, and pay taxes to the greatest city in the world, and we are here to help.
Our Concern
Have you ever seen a business able to survive on 2025 expenses with 1980s income? Can you name a single business that can survive that?
Rent regulated landlords have been unable to raise the rent in five years. Expenses are rising faster than income and the list of compliance and regulatory requirements continues to grow each year, all of which has a cost attached to it. The rent regulated housing stock is on the verge of complete collapse. The tenants will be the first and most drastically impacted by this. No landlord (big or small) can afford to put more capital into these buildings and throw good money after bad. In many cases they are trying to hand the keys back to their lenders if only they would be willing to take them! After the passing of HSTPA they’re not allowed to raise the rent; the building is worth half of what it used to be and might actually be underwater; who in their right mind would spend more of their time and money on something like that? The landlords are effectively managing the property for the government for free. There is no end in sight – the buildings are becoming less and less valuable by the day.
Rent stabilized apartment buildings cannot be maintained without the ability to raise the rent. The buildings are 80 or 100+ years old. Think about how much medical care an octogenarian needs…bricks are no different.
Impact On Banks
Look at what happened to our leading lending institutions – Signature and New York Community Bank. Banks view rent regulated housing as a toxic asset class and have so much bad debt on their books they don’t even know what to do with it. Hundreds of millions of dollars of underwater loans are coming to maturity in 2025 which will lead to further instability in our rent regulated housing stock.
The Math Of Reinvestment
None of our clients are willing to reinvest in their buildings. No renovations or improvements outside of legal minimums are being made. Rent stabilized units that have vacated since HSTPA have largely remained vacant because it’s economically irresponsible to spend the money to bring the unit into rentable condition. Tens of thousands of units remain uninhabited because the industry will lose less money if they leave it vacant. Average unit renovations can be $100,000 but the law only allows a very modest recoupment of the first $15,000. Spending $15,000 to gut renovate an apartment is objectively impossible. What kind of incentive is that for industry?
Call For Action
Our friends and colleagues who work in other parts of the country do not share the same sentiment about their markets. They work in areas of growth and likeminded partnerships between the government and private sector. The real estate boom in sunbelt states from 2020-2022 created thousands of new units driving up the supply and therefore lowering the rents! Those landlords are now in financial distress because their free-market rents are too low!
Implementing a vacancy reset policy would be transformative for the housing industry, bringing significant benefits to tenants, landlords, and the construction industry. This change would immediately make thousands of rent-stabilized apartments available, addressing the severe shortage of accessible housing.
For tenants, a vacancy reset would create equity in their rental units, effectively turning their leases into a form of quasi-homeownership. By allowing landlords to offer buyouts for vacated rent-stabilized units, tenants could regain the equity they have effectively lost under current policies. These buyouts could range from tens to hundreds of thousands of dollars, giving tenants a substantial financial cushion to pursue homeownership, relocation, or other personal goals.
Landlords, in turn, would have the opportunity to reset rents to fair market value, providing them with the financial incentive to maintain and reinvest in their properties. This would enhance the quality of housing stock while encouraging a healthier, more dynamic rental market.
A vacancy reset represents a rare win-win scenario. Tenants gain financial empowerment and equity, while landlords regain flexibility and economic viability. This policy would not only address housing shortages but also foster a more sustainable and balanced rental market for all stakeholders.
This is a problem that we are all deeply concerned about, and you should be too. The industry is motivated to help. Please come together with us so everyone can benefit – tenants, landlords and future residents of New York City.
Sincerely,
Seth Glasser, for the concerned citizens and real estate professionals of New York City
