What are the laws around security deposits?

I doubt that is legal, and the fact that they put it in email means they are a moron.
Small landlords are the sketchiest with security deposits, trying to deduct normal wear&tear/maintenance items. They are gambling that most people don't have the time to go to court over $2k and will negotiate into some sort of deduction.

Usually they are not stupid enough to put things in email, and will make these threats only on the phone where they will then hold negotiations.

When is the new lease start date?

Given they put it in email you could probably just respond something along the lines of "this is not a legal reason for keeping a deposit and I will expect my deposit returned in full" if you do not plan to renew. From there they will probably move the conversation to the phone haha.

The security deposit cannot be held for such a reason. Have your friend read the lease or this:

https://rentguidelinesboard.cityofnewyork.us/resources/faqs/security-deposits/

Even if the lease says different, it’s probably invalid by statute as many such things in rent law tend to be.

In terms of the market coming back with a vengeance, that is accurate. At this moment, I’d expect rents at pre-COVID-ish levels. What were previous leases on the apt, and when were those struck?

When does the current lease expire?

Expires by June 30.

They came down $50. Now asking $2350 (were asking $2400). Current rent is $2000.

It is a small UES studio, 400 sq ft max, on 2nd or 3rd floor of an old walkup building. Per streeteasy, other apartments in this building, above and below, were rented earlier this year for under $2000, though landlord denies it.

If the lease expires June 30th, it’s totally reasonable to ask for an answer a month ahead. A better wording would have been “If do not hear back by May 30th, I will take that as intention to allow the lease to terminate rather than renew at the new rent.”

I have no idea if $2000 or $2350 is a good/bad rent for said apt. However, if $2000 was struck last year or two and the increase this year is just $350, then that’s either a market-level increase or else they overpaid initially.

But yes, $70 ppsf in annual rent for space that sells for $1000 ppsf seems ridiculous compared to what I pay. Faced with those choices, I’d do everything within my power to buy ASAP rather than rent, or get myself into a better rental bracket. The $2000 vs $2350 issue seems second-order.

But yes, $70 ppsf in annual rent for space that sells for $1000 ppsf seems ridiculous compared to what I pay. Faced with those choices, I’d do everything within my power to buy ASAP rather than rent, or get myself into a better rental bracket. The $2000 vs $2350 issue seems second-order.

Nada,
Smaller apartment rents are much higher cap rate than luxury large foot print apartments. That is why Related basically has 900-1000 sq ft 2 bedroom apartments. Check out I Union Square South rents. Many people who rent these are not ready or can't afford to buy yet if they buy they want some thing bigger including bigger room sizes. In addition, developers are not really building smaller studio apartments.

Do the landlords in these smaller walk-up rental make too much money - not necessarily as it is higher risk of squatters / credit issues vs higher end rentals, more labor to rent out smaller apartments and dealing with higher number of tenants for given square footage.

Cost of new build in NYC is very expensive due to density, traffic, labor costs, high DOB regulation and slow speed of various utilities etc. Hence, these old walk up rental buildings continue with many illegal split up bedrooms etc,

It's not to hard to conclude that high end condos are really shitty investments as rental properties.

300, I wasn’t born into a high end condo. Back when I was a wee tyke, I too faced choices including 1 Union Square South. It was as ridiculously expensive then as it is now IMO. Instead, I found my way into a small “luxury” condo paying ~$40 ppsf. Rents in the building are about the same today.

People are welcome to make whatever choices they like. But for me personally, some combination of:

- find a better deal
- take a lesser apt
- live in a cheaper part of NYC
- live with roommates
- save quickly to buy

would make more sense. That’s all I was trying to express.

save quickly to buy? did not think would hear this from you, a committed renter :)

>>Do the landlords in these smaller walk-up rental make too much money - not necessarily as it is higher risk of squatters / credit issues vs higher end rentals, more labor to rent out smaller apartments and dealing with higher number of tenants for given square footage.

Based on that they should give a decent deal and try to keep my friend, a person with a stable job at a non-profit, who paid all bills on time during the pandemic. But no, they appear to have rented more renovated apartments in the same building for less to people from outside, and now trying to do a huge increase on existing renters.

The property belongs to landlord. Why the sense of entitlement from a renter to get the same deal as supposedly someone else got? Your friend can always find a better deal elsewhere if the asking rent does not reflect the market.

>> $70 ppsf in annual rent for space that sells for $1000 ppsf

$1000 per sq ft sounds way too high for that place. $800 per square foot will get you a studio in a nice coop building with elevator and doorman. This building has no laundry and common areas are falling apart. The apartment has no dishwasher and no microwave.

In terms of saving money "quickly" to buy in NYC, that is out of realm of possibility for a lot of people. One has an advanced degree, makes a decent salary of 120k, 40% goes to taxes, so there is 6k per month to live on. 2k (now 2.3k) goes to rent, 2k on other expenses, save 2k, that's 24k per year. it will take several years to be ready to buy something, at which point you might want a 1br and need more savings. This is before we got to student loans and other possible concerns.

If your friend is a potentially protected class (*) has strong reasons for staying, has lots of time for research, and wants to potentially poison the landlord tenant relationship, then there might be the possibility of claiming some sort of economic discrimination because they are being charged a discriminatory rent compared to other privileged renters who were given a better price. Given the timeframe and long odds of success I'd rather spend my time finding an interesting bargain, but the route may appeal to some.

(*and, really, in NY real estate, who isn't, these days?)

>> save quickly to buy? did not think would hear this from you, a committed renter :)

The numbers drive my commitment. Faced with ($70 ppsf rent - $22 ppsf maint) / ($800 ppsf price) => 6% cap rate, I'd have bought with an Uncle Sam special at 2.x%.

Reading this more carefully, I guess even better than a 6% cap rate?

>> $1000 per sq ft sounds way too high for that place. $800 per square foot will get you a studio in a nice coop building with elevator and doorman. This building has no laundry and common areas are falling apart. The apartment has no dishwasher and no microwave.

>> In terms of saving money "quickly" to buy in NYC, that is out of realm of possibility for a lot of people. One has an advanced degree, makes a decent salary of 120k, 40% goes to taxes, so there is 6k per month to live on. 2k (now 2.3k) goes to rent, 2k on other expenses, save 2k, that's 24k per year. it will take several years to be ready to buy something, at which point you might want a 1br and need more savings. This is before we got to student loans and other possible concerns.

I once had an advanced degree and made a decent salary of $120K/yr. NYC take-home is more like $6.5K/mo:

https://smartasset.com/taxes/new-york-paycheck-calculator

So between:

- Calculate taxes correctly => $500/mo
- Live with a roommate => $1000/mo
- Spend less => $500/mo

I could sock away $4K/mo for a couple of years => $96K. Maybe loosen the wallet a bit and only save $3K/mo for 3 years => $96K. Either way, that's enough to buy a $320K studio whose spend is ~$1500/mo from my POV compared to (say) $2500/mo rent.

For me, the motivation of that $1000/mo differential is very strong. "Suck it up for 2-3 years, and in return you get to keep all the money you saved, plus an annuity in the form of $12K/yr." That's a lot of lolly if I'm only making $78K/yr after-tax; the draw is too strong.

But others want to spend more, consider living w/ a roommate or in location X out of the realm of possibility, etc. That's OK, bless them. Just saying that spending less than $50K/yr after-tax as a single person (which I'm assuming is the case here given the 400 sq ft studio, but it need not be) is well within my personal realm of possibility.

These are my heroes:

https://www.nytimes.com/2022/06/01/magazine/new-york-roommates.html

I actually know one of them…

ionada, so let's say you save for 3 years and buy 400q ft studio. Then a year later you get married and want to live as a couple in a bigger place, or you get a different job in another state, or you don't get a renewal of your work visa and have to move and sell the apartment. You will loose tons of money on transaction costs.

Also in free cash flow calculations you are forgetting student loans, extraordinary expenses such as medical or family needs (visit parents in another state or country once in a while). The scenario of saving much money is this situation assumes a privileged position of one lucky to be in great health, born with the right passport, whose parents were rich and paid for school.

An entry level 2br in midtown/UES is ~5k, so living with roommates does not save you money vs 2350 studio option. And what is acceptable to a 20-something is much less desirable in your 30s. Moving out to a cheaper borough (or harlem) and increasing commute time i think is the only real solution.

To me, a single person who has the capability to pay $28k/yr after-tax in rent in NYC is privileged. At an income of $120K/yr, I wouldn’t do it personally even if the stars aligned. Any of:

- uncertainty w.r.t. future marriage / family
- uncertainty w.r.t. job security
- uncertainty w.r.t. visa status
- student loans
- medical costs
- family needs

Would make me even more averse to spending $28K/yr on rent. How about you?

If the stars align, one can save $96K in 2 years. If not, then 3 or 4 or 5 years. Irrespective, spending $28K in rent with $78K in after-tax will hold you back. One can accept that (and spend or not spend), or one can come up with excuses. Everyone is welcome to their choice on the matter. Personally, I’m one to accept and not spend.

>>>These are my heroes:

https://www.nytimes.com/2022/06/01/magazine/new-york-roommates.html

I actually know one of them…<<<

Personally I'd always choose spending a bit more to live alone, in my own space--even if an utter shithole--over living with strangers. The photos in this story illustrate how crappy communal living really is (at least to me). I hate people. Blech.

I fancy myself a misanthrope but I’ve never lived alone. Always with someone(s) but never stranger(s).

Inflation-sized increase would have been easier to swallow than a 20% hike. Problem with a huge rent hike is that the alternative is to spend a whole bunch of money (and time) on moving and furnishing a new apt (furnishing a tiny studio is tricky as furniture needs to be multifunctional and just the right size). Basically, the renter is in a captive position where the landlord is able to extract extra $ from you on top of market price up to the cost of moving + refurnishing.

A casual search on SE reveals a ~$2000 floor on UES studios. Every data source shows ~20% rent increases in Manhattan against leases struck in June 2020 or June 2021. Some LLs definitely do engage in above-market rent increases, but all you’ve described here is a LL increasing rent in line with the market. If $2350 is a stoopid price for the apt today relative to the market, then $2000 was stoopid last year or the year before.

Is this a new revelation? That is the cost of renting. If you aren't willing to move, you may pay slightly above new lease market price at the time of renewal of existing lease.

"Basically, the renter is in a captive position where the landlord is able to extract extra $ from you on top of market price up to the cost of moving + refurnishing."

This is a micro studio in a walk up with no amenities, not even a microwave or a dishwasher. I know that all the large studios in elevator buildings are 2800+, but a month or two ago there was some decent amount of inventory in the tiny size/no amenities category around 1800-2000, including in the same building, and compared to that, 2400 looked egregious. If it is the market price now, then it is what it is. Good to know they cannot confiscate the security deposit at least.

Another friend lives in a larger size studio apartment in a super prime area paying under 2k, but believe it is either rent controlled or rent stabilized. Seems pretty unfair that the rest of new yorkers are subsidizing few apartment lottery winners...

I remain shocked at the lack of discussion, especially from government officials, regarding CHIP holding 42,860 vacant Rent Stabilized apartments hostage.

30, Are they paying real estate taxes on that? If they are forced to rent an empty apartment, wouldn't that be forced taking by the govt beyond what is permitted by current state law for rent stabilization / control?

It's possible that if a landlord is receiving tax breaks by being in the stabilization program, they are violating terms of their program agreement by not putting a stabilized unit on the market within a reasonable time after a vacancy.

Arron, I think after Stuytown fiasco of owners who ignored the conditions of the tax breaks, many fewer people are violating the conditions. These landlords are holding back as rental law passed a few years back put a cap on the renovation cost of the units which can be recouped. Unless a new law is passed or previous reno cap is increased, it is unfortunate that these rental units will remain vacant in a tight rental market.

It happened due to large amounts of fraud by landlords submitting false renovation expenses. And the current ad campaign by CHIP is falsely stating repairs being required to make it seem like "small landlords" will be forced to spend over $90K to put 500SF 1BRs in rentable condition.

30, Why would these landlords forgo rent if it made economic sense to repair? My main point it that forcing the landlords to rent out would be a taking beyond permitted by current law and why would you support that? It is not that permitted rent increases keep up with operating expenses, taxes and inflation. I am sure you know how much it costs to repair in NYCHA?

The CHIP statement of “rentable condition” doesn’t pass the sniff test. Suppose they were renting for $1000/mo last year. Then either:

1) They can rent it for $1000/mo again.
2) They had been previously renting it in a non-rentable condition.

Which is it? If owners would rather take $0/mo in place of $1000/mo in a tantrum show, that’s their right, and so be it. Not sure if govt official should be saying anything: no point in engaging with tantrums. Eventually CHIP LLs (or their heirs) will tire of pounding sand while losing $500M/yr in revenue.

Nada, Exactly. This is owners choice. The city will pay a lot more in maintenance per unit if NYHCA were to be repairing. They should focus on fixing NYHCA.

nycha.

Here is some info on NYCHA.

"On a per-unit basis, NYCHA’s self-reported management cost reached $1,052 per unit per month in city fiscal year 2019, up from $893 in fiscal year 2015 – an annualized growth rate of 4.2 percent. These costs are as much as 30 percent higher than the cost to operate comparable private sector apartment buildings."
https://cbcny.org/research/nychas-2020-operating-budget#:~:text=On%20a%20per%2Dunit%20basis,growth%20rate%20of%204.2%20percent.&text=These%20costs%20are%20as%20much,comparable%20private%20sector%20apartment%20buildings.

Reading through CHIP’s advocacy:

https://vacancynyc.org/

>> Here is the kicker though, a rent-regulated apartment with a rent lower than $1,500 is losing money simply on operating costs. That includes maintenance, labor, fuel, utilities, insurance, administrative costs, mortgage payments, and a host of mandatory inspections under city laws. And that estimate was before inflation skyrocketed, potentially adding more than 10% to costs. By far the biggest cost for these apartments is property taxes, which is where roughly a third of a rent check goes.

Err, when did “mortgage payments” become an operating cost?

>> Some may say, “why don’t you just rent out the unit without making improvements?” The answer is because it is not legal to do so. Under the current laws, tenants in occupancy can live in apartments where the plumbing, electrical or lead conditions may not be up to the current housing code standards. The owner has no power to make these improvements unless the tenant agrees. But when the tenant leaves, the owner has a responsibility to fix all of these things before they rent the unit back out.

So perhaps set capital aside over the years for each instance of disrepair due to lack of access. Or else, pay less.

It kinda sounds like the market was setting prices based predicated on abusing the old vacancy rules. The legislature had enough, and the owners feel like the rug was pulled out from under them. Did I get that right?

I am guessing if any LL wants to sell 300 or 30yrs their property for $0 to get them out of their “predicament”, they can make a go of renovating it and renting it out profitably.

I analyzed a few properties some time back after the current rent law was passed. If the current laws don’t change, permitted rent increases remain below operating cost increases, and real estate taxes keep on going up (actual assessed value is significantly less than max taxable value) zero may be too much unless one factors in vacancy reno kickers and real estate taxes not increasing much etc. Projected cash flows positive for 10-15 years but start to hit negative after that. Naturally it is very property and assumption dependent analysis. One element missed by the current law is owner’s unpaid labor when they renovate.

I think it is generally correct but I am not sure a majority of the landlords were "abusing". The ABUSE is increasing of taxes by more than the rent roll by the city and not increasing the rent to fully offset operating cost when they know NYCHA is costing more to maintain that what CHIP landlords are paying. And NYHCA maintenance is generally much worse than rent stabilized/controlled housing.

"It kinda sounds like the market was setting prices based predicated on abusing the old vacancy rules. The legislature had enough, and the owners feel like the rug was pulled out from under them. Did I get that right?"

Have taxes and increased any differently than market rate units, condos, and coops? From what I have seen and experienced over the past -~20 years, rent stabilized increases seems about the same as market rate increases in aggregate, but with lower volatility. Taxes have increased more. Is there an argument (legal or otherwise) as to why rent stabilized unit should bear a different tax burden? Like market rate, rent stabilized owners are in it for profit not public policy, so why should they suffer any differently?

As their rent increases are capped.

The rent law should have included that real estate tax increase can by no higher than the allowed rent increase.

Why RE taxes specifically and nothing else? The law seems to provide for consideration of RE taxes along with a slew of other considerations (including interest rates):

https://rentguidelinesboard.cityofnewyork.us/rent-guidelines/explanation-of-the-rent-guidelines-process/

As both Real Estate taxes and Rent increase decisions (political appointees) are essentially decided by the city. So one hand takes away more than the other hand gives. And real estate taxes are supposed to linked to rent directly in city's real estate convoluted tax determination.

"The RGB consists of nine members, all of whom are appointed by the Mayor. Two members are appointed to represent tenant interests. One of these serves a two-year term, and the other a three-year term. Two members are appointed to represent owner interests. Like the tenant members, one serves a two-year term, and the other a three-year term. Five members (including the chairperson) are appointed to represent the general public. One of these serves a two-year term, another a three-year term and two serve four-year terms. The chairperson serves at the pleasure of the Mayor. Thereafter, all members shall continue in office until their successors have been appointed and qualified."

CHIP claiming all units need new plumbing, electric, kitchens, baths, and lead paint remediation before they can be rented again is 100% bullshit. Note that units already at market rate with the same conditions magically don't need these same repairs.

30, Are you such a proponent of socialist rent stabilization as you want to but those apartment buildings much cheaper?

but = "Buy"

Note that Assessed Value of rental buildings is already based in Landlord's Income and Expense Statement so buildings with limited income already do pay less Real Estate Taxes.

The biggest issue is that many buildings transacted as prices which didn't make sense based on the purchaser's assumption the would be able to force out Rent Stabilized tenants and greatly increase the rent. There has been widespread tenant harassment and in addition widespread fraud submitting falsified repair bills greatly in excess of actual expenses. It is ironic that there were multiple cases of landlords caught submitting expenses in the range CHIP is claiming it costs to put units in rentable condition, in court it turned out actual costs were in the $2x,xxx range (yet they continue with the identical lie).
https://therealdeal.com/2019/02/07/stellar-management-overcharged-tenants-with-unjustified-renovation-costs-judge-says/

This is why the law changed. Note that the well funded Real Estate lobby had every opportunity to negotiate a better result than it got in the 2019 change. It wasn't some secret, surprise midnight session in a "smoke filled back room." But rather than negotiating their stance was "no changes to the current law and we're not budging on that" even when the majority of legislators made clear they were going to enact some changes to curb some of the egregious behaviors going on. Also note that after their "my way or the highway" negotiating tactic totally failed the President of REBNY who led the effort abruptly"retired."
https://www.rebny.com/content/rebny/en/newsroom/in-the-news/2019/REBNY_President_John_Banks_Retired_Jim_Whelan_New_President.html

Not Correct: The city decides what multiple to put on the rent and even then rents only decide market value. Assessed value in many cases is significantly less than Market Value and it can increase by 8/30 cap.

"Note that Assessed Value of rental buildings is already based in Landlord's Income and Expense Statement so buildings with limited income already do pay less Real Estate Taxes."

Real estate taxes for rent stabilized buildings have gone up by more than allowed rent increases. As per your above statement, it wouldn't happen.

To avoid any confusion, I mean " Assessed Value/Taxable Value", which can be a fraction of market value, is not directly linked to Rents. You can look at any Notice of Property Value.

Look at 1308 and 1314 Eastern Parkway as examples.

Yes, it's obvious 1308 Eastern Parkway is just another hapless Mom and Pop owner being absolutely crushed by Rent Stabilization.
Date Rent
06/02/2022 #8 $2,499 Rented 3 beds•2 baths•0 ft²
05/27/2022 #9 $2,650 Rented 3 beds•2 baths•0 ft²
08/03/2021 #8 $2,650 Rented 3 beds•1.5 baths•0 ft²
06/04/2021 #9A $2,650 No Longer Available on StreetEasy 3 beds•2 baths•0 ft²
04/30/2021 #A9 $2,650 No Longer Available on StreetEasy 3 beds•2 baths•0 ft²
03/09/2021 #9 $2,650 No Longer Available on StreetEasy 3 beds•2 baths•0 ft²
05/02/2020 #8A $2,700 Rented 3 beds•1.5 baths•0 ft²
03/04/2020 #7 $2,700 Rented 3 beds•1.5 baths•0 ft²
01/28/2020 #8 $2,700 Rented 3 beds•1.5 baths•0 ft²
01/09/2020 #8 $2,500 No Longer Available on StreetEasy 3 beds•1.5 baths•0 ft²
01/07/2020 #4 $2,383 Rented 3 beds•1 bath•0 ft²
12/03/2019 #8A $2,500 No Longer Available on StreetEasy 3 beds•1.5 baths•0 ft²

30, You are avoiding the main point that taxes paid are not linked to rents, where you were plain wrong.

If I were to guess why you hate owners of rent-stabilized properties is because they didn't listen to your bearish view in the past and now you want them to suffer and tell them "told you so".

I am trying to have what is fair discussion when it comes to property rights as in it seems that CHIP owners are allowed to keep the apartments vacant unless rent current law. It is their property and their decision. I do not own any rent-stabilized properties and will never own them.

Good debate, kiddos.

It seems that if 300 ran the show, he was would have linked rent increases directly to tax increases circa 1969. I’m not sure why that would have been good policy (or not), would like to hear the argument. Regardless, that doesn’t seem to be law. Just as there is no law requiring renting over a “protest” vacancy.

One thing that is clear, however, is that rent stabilized units have been allowed to increased rents at much higher rates than the market.

Ha. If I ran the show, there would be no rent stabilization / control but I do not run the show. Hence I am not debating the virtues of rent stabilization.

How do you conclude this while keeping in mind that most of these units are lower-end of the rent range?
"One thing that is clear, however, is that rent stabilized units have been allowed to increased rents at much higher rates than the market."

I think a better question is what discount are rent stabilized unit vs similar free market units in say Manhattan? I don't know but curious to know. I realize that in some lesser areas, rent stabilized units may not be at much of a discount vs the market.

It seems your theory is that rents determine Market Value which is then totally thrown out and a random number is assigned to the Actual AV. That's ludicrous.

What actually happens is they take the assessor's calculated Estimated Market Value, multiply by a fixed "Equalization Ratio" (which is currently 45%) to come up with "Market AV", and then raise the final AV based on previous years and the appropriate caps for increases.

Take your example of 1308 Eastern Parkway:
The Income and Expense Statement determines the
ESTIMATED MARKET VALUE LAND 36,000 BUILDING 827,000.
Multiplying by 45% gets you
MARKET AV LAND 16,200 BUILDING 372,150
8-30% limitation - AV gets you to LAND 8,260 BUILDING 189,744

So in fact it is exactly what I said despite your usual nasty yet erroneous commentary. Which is why you have managed to chase most of the posters who disagree with you off this forum.

It seems your theory is that rents determine Market Value which is then totally thrown out and a random number is assigned to the Actual AV. That's ludicrous.

What actually happens is they take the assessor's calculated Estimated Market Value, multiply by a fixed "Equalization Ratio" (which is currently 45%) to come up with "Market AV", and then raise the final AV based on previous years and the appropriate caps for increases.

Take your example of 1308 Eastern Parkway:
The Income and Expense Statement determines the
ESTIMATED MARKET VALUE LAND 36,000 BUILDING 827,000.
Multiplying by 45% gets you
MARKET AV LAND 16,200 BUILDING 372,150
8-30% limitation - AV gets you to LAND 8,260 BUILDING 189,744

So in fact it is exactly what I said despite your usual nasty yet erroneous commentary. Which is why you have managed to chase most of the posters who disagree with you off this forum.

300>> How do you conclude this while keeping in mind that most of these units are lower-end of the rent range? "One thing that is clear, however, is that rent stabilized units have been allowed to increased rents at much higher rates than the market."

Looking at Miller Samuel data on median rent, let’s examine a trough-to-trough covering ~2 decades. I want a trough-to-trough to reduce cherry-picking from the volatility of market rents, and ~2 decades to cover a reasonably long period of LL ownership.

https://millersamuel.com/charts/manhattan-rental-yield-using-median-sales-and-median-rental-price/

Q2 2002 through Q1 2021 is the period I’ll use. Over that time, median annual market went from $27.5K to $36K, a 31% increase total and 1.4% per annum.

Using 2-year rates from the RGB over the same period:

https://rentguidelinesboard.cityofnewyork.us/wp-content/uploads/2019/08/aptorders.pdf

I get a 59% increase in total and 2.5% per annum.

That ignores vacancy increases and repair increases (fraudulent or not).

My point is that on the rent side of the equation, they’ve had it better than market rate LLs. On taxes, maintenance, etc., they’ve had it the same. The marginal buyer sets the price in a market, so LLs were purchasing at prices that assumed aggressive use / abuse of vacancy provision (disrepair / harassment at its worst) and repair provision (unnecessary repairs and/or fraudulent costs at its worst). The problem with “regulatory arbitrage” is that regulations can change on you, and as an investor you need to account for that. E.g., if there is rampant abuse, be prepared / pay a price that makes sense without that abuse.

Same thing happened with taxi medallions, where prices were being set by regulatory restriction (N medallions, no morel) and shady bidding tactics (bid high to increase value of existing portfolio, finance with collateral of increased-value portfolio). When the “regulatory arbitrage” ends, there is a lot of crying.

The same thing will happen one day with the “tax arbitrage” you have noted between different classes of units, in the near or distant future, despite your belief that associated tax reform is too hard to ever happen. Just please be a big boy and don’t cry about it if/when it does ;).

Also, if I extend my Miller Samuel vs RGB analysis back by another 10 years to 1992 (start of Miller Samuel data and another trough year I think), I get a 100% increase in total and 2.5% per annum for both.

Rent stabilization increases seem to have matched market rate increases, only with more stability. Go figure…

Nada, Thank you the data and analysis. Are you using this history of rent increases?

https://rentguidelinesboard.cityofnewyork.us/wp-content/uploads/2021/07/apartmentchart.pdf

If RGB rent increase is substantially similar to free market over 30 years, what explains the lower rent for rent stabilized vs free market? See an old report. Page 3. Manhattan free marker is almost double.
https://furmancenter.org/files/publications/HVS_Rent_Stabilization_fact_sheet_FINAL_4.pdf

Report clearly does not compare similar apartment as presumably free market rental are bigger and better but for the rent stabilization to continue, I would think that there is at least 20% difference in rent once you adjust for quality and size etc.

test

Here is class 2 example for a rent stabilized property 1314 Eastern Parkway.

From the statements:
"The Department of Finance calculates your property's value based on the change in year over year value per square foot of similar properties."

No RPIE in the methodology for Class 2. Even if RPIE is used, the city is free to change the cap rate multiple used to determine market value from net rents.

Also, for rent stabilized building why would DOB market value wildly fluctuate up and down if they were to be linked to RPIE of that property. I can understand up due to renovation?

Tax Year DOF Market Value Change DOF Assesed Value Change
2016-17 $1,790,000 N/A $115,841 N/A
2017-18 $1,973,000 10.2% $125,106 8.0%
2018-19 $2,327,000 17.9% $135,098 8.0%
2019-20 $1,861,600 -20.0% $145,861 8.0%
2020-21 $1,489,000 -20.0% $150,593 3.2%
2021-22 $1,266,000 -15.0% $162,638 8.0%

https://a836-mspuvw-dofptsz.nyc.gov/PTSCM/StatementSearch?bbl=3013990007&stmtDate=20170115&stmtType=NPV

https://a836-mspuvw-dofptsz.nyc.gov/PTSCM/StatementSearch?bbl=3013990007&stmtDate=20180115&stmtType=NPV

https://a836-mspuvw-dofptsz.nyc.gov/PTSCM/StatementSearch?bbl=3013990007&stmtDate=20190115&stmtType=NPV

https://a836-edms.nyc.gov/dctm-rest/repositories/dofedmspts/StatementSearch?bbl=3013990007&stmtDate=20200115&stmtType=NPV

Nada, I will be very happy when that tax arb ends as I always like fewer non-market regulations and more predictability in taxation. New condos will look more competitive relative to $3-4mm BK townhouses.

>>The same thing will happen one day with the “tax arbitrage” you have noted between different classes of units, in the near or distant future, despite your belief that associated tax reform is too hard to ever happen. Just please be a big boy and don’t cry about it if/when it does ;).

Your total lack of understanding of the process doesn't change the process.

I guess you have no explanation.

That’s the data I used, 300.

>> If RGB rent increase is substantially similar to free market over 30 years, what explains the lower rent for rent stabilized vs free market?

I’m not sure of the full history, but I figure it is somewhere between lower size/quality (as you mentioned) and lower rent to begin with for apts in the stabilization program.

Rental equivalents will force up taxes on condos and co-ops