A Landlords Road to Bountiful
New Yorkers have many blessings to count this Thanksgiving. The subway series ended without bloodshed. There's money in the budget for 50 new public toilets. And the light at the end of the rank, dark tunnel that is the Giuliani administration is in sight.
But among the city's most generously blessed classes this season are landlords. Nothing unusual thereany time a group of private citizens controls an essential and scarce commodity like housing, can outrageous fortune be far behind? But this year, a few remarkable bits of bounty came the way of rental-property owners. Consider what landlords have to be grateful for this holiday.
Topping the list are government officials big and small. Start with the city's Rent Guidelines Board (RGB), which in June gave owners of stabilized apartments the biggest boost they've had in four years, a 4 percent rent hike for a one-year lease and 6 percent for a two-year lease. Owners are also indebted to the RGB for preserving what's called the poor tax. For the first time in years, there was a chance that the board would ditch the regressive "supplement" that tacks extra charges on cheap apartments. But landlords avoided being so cheated when the RGB once again passed a $15 monthly surcharge on apartments renting for under $500 a month.
Next in line is Governor George Pataki, who deserves at least a dozen roses for his move to rewrite rent laws in a forum that's beneath the radar of the public, or even the state legislature, for that matter. This spring, Pataki's Division of Housing and Community Renewal (DHCR) announced that it was "revising" the rent codea revision so generous to owners, one tenant attorney calls it "Christmas for landlords." The pending plan would lard landlords by allowing new surcharges for things like washers and dryers and denying rent reductions for diminished services like a smaller maintenance staff. Surprise inspections would be replaced with scheduled checkups. Worst of all, DHCR would scrap the rent-registration system intended to keep landlords honest. Voluminous, indecipherably bureaucratic, and presented at hearings with scant public notice, the clandestine rewrite promises to be a landlord bonus worth waiting for.
Owners can be grateful that the Albany senate retains a GOP majority. Northern Bronx voters in particular, who reinstated landlord pal Guy Velella in the midst of page-one news about his alleged role in a bribery-for-bridge-painting-contracts scheme, deserve special thanks. While Velella didn't carry his usual monolithic mandate, his reelection helped ensure that the Republican-controlled senate will remain a reliable font of antitenant law.
There are other small blessings too numerous to count: the reduction in the number of courtroom hours when Manhattan tenants can sue their landlords, the postponement of Mayor Rudy Giuliani's massive rezoning plan that would stunt the skyscraping ambitions of megadevelopers, the continued deep-sixing of a City Council resolution that could help give local leaders more power over landlords . . . the list goes on.
Not all favors came directly from the public trough. The most profitable landlording stems from the city's endemic housing shortage, and owners are now enjoying the lowest vacancy rate in 12 years, 3.19 percent. More fortuitous for landlords is the fact that the market is tightening even as 60,000 additional apartments have become available in the last few years. People continue to migrate and immigrate to this city in numbers that outpace housing production.
And that, in turn, means mad money for those who own the housing. Just two weeks ago, a study reported that rents below 96th Street in Manhattan average $2984, with studios costing about $2100. In August came news that rents in some neighborhoods have spiked 67 percent over the last decade; citywide, average rents rose 36 percent from 1991 to 1999.
This year, a landlord didn't need to be Donald Trump or Sam Lefrak to reap bountiful rewards. Anyone able to mortgage a tenement could hit the heights with a simple plan: Boot or buy out as many longtime tenants as possible, and rent up. Youngsters who still haven't cut the cord to daddy's wallet will pay $2100 for a super's quarters-turned-studio in a dusty downtown walk-up. Pop a "penthouse" through the top of a tenement for added income. Bust down a few walls in what used to be apartments for two or even three familiesthe slumbering buildings department is unlikely to take noteand make a killing on a "mini-loft." Or take a bigger place and carve it up like so much Thanksgiving bird into warrens for dotcommers, nascent Wall Streeters, or a gang of students.
As long as the market is hot, the supply tight, and pols friendly, landlords will gorge. And they'll always have room for dessert.
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