The Real Deal New York

Landlords didn’t register 50K apartments for rent limits

The building owners are meanwhile raking in $100M in tax reductions: report

November 06, 2015 12:15PM

From left: 572 5th Avenue in Park Slope and Mayor Bill de Blasio

From left: 572 Fifth Avenue in Park Slope and Mayor Bill de Blasio

Landlords across the city have failed to register 50,000 apartments for rent regulation, a staggering number that reveals illegal leases may be a more prevalent problem than officials let on earlier this year.

Roughly 5,500 buildings weren’t listed as rent stabilized, even though the owners have been raking in more than $100 million in tax breaks, according to a ProPublica investigation. The discovery follows a state-led crackdown against some 200 building owners in August, but the enforcement efforts seemingly only scratched the surface of widespread abuse in the city.

A spokesperson for Mayor Bill de Blasio said the administration became aware of the issue after he took office last year and has been working ever since to address it.

It’s unclear how tenants in these unregistered rental buildings are being affected. What is clear is that these tenants are vulnerable: They can only claim rights under a rent-stabilized lease if they know their building’s status and if the state has a record of its status, according to the website.

Landlords who didn’t register used to be ineligible for rent increases; but in 1993 the state legislature eliminated penalties. Most of the buildings were repeat offenders — about 80 percent that didn’t register units in 2013 also failed to do so in other years.

Tenants at another building, 572 Fifth Avenue in Brooklyn, didn’t realize that the complex was supposed to be rent-stabilized, information that would’ve been handy when they received an eviction notice in 2013 since rent-stabilization rules protect tenants against “arbitrary evictions.” The tenants claimed they were accused of not paying rent, even though they’d provided management with a check. The building’s owner, Abe Mendel, who is partners with investor Joseph Brunner, said he’s never tried to evict someone under those circumstances.

City officials could not explain how thousands of buildings could be out of compliance, nor did they address ProPublica’s findings.

The news website cited a related form of abuse where landlords register for rent stabilization — as is required each year by law for the duration of their 421a and J51 tax breaks — but then hike up rent above and beyond what is permitted by the city’s Rent Guidelines Board. The Rabsky Group, the website reports, has been raising rents in the Driggs in Williamsburg faster than stabilization laws permit. For one tenant, rent increases greatly exceeded the 4 percent spikes allowed under the law.

A spokesperson for Rabsky told The Real Deal that the developer hasn’t done anything illegal.  [ProPublica]Kathryn Brenzel