Its been 6-months since the new major tenant protection laws went in place and the city’s multifamily market is feeling the pain. The hard-hitting reforms severely derailed the amount that landlords can be reimbursed for renovations, eliminating nearly all pathways to flipping regulated units to market rate and greatly expanded liabilities from rent overcharge cases (this decreases the quality of housing as well).
Commercial brokerage Ariel Property Advisors stated that the first two quarters of last year were the slowest for the multifamily market since 2011 with the numbers getting even worse after that. Deal volume fell by 31 percent in the first half of 2019 compared to the same period in 2018, while the dollar volume of building sales fell 51 percent year-over-year in the third quarter. Click the link for the companies that have been affected the most, including one selling its portfolio at a near 34% discount.
A related article features Emerald Equity's desperation to repay its loans. Selling is a scary option considering the plummeting value of rent-stabilized portfolios. The firm hopes to seek a deal with de Blasio to reduce the tax burden and maintain apartments. As a refresher, the new laws limit the recoverable cost of renovations to $15,000 — or $83 per month — over a period of 15 years. Landlords can no longer raise the rent 20 percent when a tenant leaves. And a unit cannot be removed from regulation based on the rent exceeding a certain threshold.