New Rent Laws: Blackstone Fights Back

So I recently mentioned a few ways landlords are dealing with the new rent laws. The laws limit the rent increases for stabilized apartments which drastically affects a landlord to renovate apartments beyond necessary repair. Things have gotten so tight that some landlords are keeping certain units vacant until new laws are in place. One of those landlords is the Blackstone group who purchased an 11,000+ unit apartment complex in Stuyvesant Town and Peter Cooper Village for $5.5 billion in 2015 is keeping up to 50 rent-stabilized apartments vacant. Additionally, all non-urgent renovations will be stopped. I'm all for giving the best quality and affordable housing for everyone but I also understand Blackstone has to protect their investors and bottom line. There has to be a happy medium where rent limits are reasonable for tenants but also to where a landlord is incentivized to provide more than the least living conditions.

The plot thickens -> Blackstone and Ivanhoe (it's partner in the deal) received a $144 million interest-free loan in financial assistance from the city, and other financial perks in exchange for preserving 5,000 affordable housing units at the complex for two decades. It made one of the largest rent-stabilized deals in history. The deal was structured so that Blackstone would never pay a single penny of the principal — since, at the end of the 20-year term, the balance would be zero on the zero interest rate loan. Authorities are now investigating the terms of the deal seeing the Blackstone is "warehousing" apartments. Another financial perk included a waiver on a $77 million mortgage transfer tax.

A report estimated that 1,800 of the 5,000 affordable apartments would not have been deregulated through 2035 — even without the agreement. The new restrictions on deregulating rent-stabilized apartments, passed in June, bring that number to zero, further calling into question the efficacy of such an agreement. Blackstone said it intends to honor its agreement but needs to figure out adjustments first.

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