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In more bad news for the owners of rent-stabilized buildings in New York, applications for some rent increases put in before this year's rent reform legislation came into effect may not get the green light.
The New York division of Homes & Community Renewal has said that applications for rent increases under the Major Capital Improvement program that were still pending when the Housing Stability and Tenant Protection Act of 2019 came into effect will be subject to some of the new rules, The Real Deal reports.
The legislation, which the state legislature passed on June 14, significantly altered the way the owners of stabilized units could increase rents under the Major Capital Improvement programs.
The owners of these types of assets can now only increase the rents if they make improvements on buildings where stabilized units make up 35% of the homes. And according to the state, the 35% rule will apply to any applications that were still waiting for approval when the new law was signed.
Belkin Burden Wenig & Goldman partner Martin Heistein told the publication applying the 35% rule retroactively is “outrageous.”
“[It] completely violates any notion of fairness or due process,” Heistein told TRD. “To apply this rule retroactively, I think HCR is wrong, and it’s going to result in a great deal of litigation.”
Since the changes to the rent regulations came into effect, sales volume in the city’s multifamily market has slumped and some landlords who were banking on big returns have missed loan repayments.
And now, many in the industry are questioning what the legislature will target next.
“For those who think the legislature has shot their gun, and is now going to go away somewhere and stop with new, destructive ideas, I think you should actually read what they are saying,” Muss Development President Jason Muss said at Bisnow’s New York City State of the Market event last week. “A lot of people are saying, well, actually [market-rate] apartments are potentially another target when they move to the next thing."
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