Rent and lease complaints by tenants spike
August 29, 2008 11:21AM By Adam Pincus
Despite the gleaming new kitchen appliances and marble bathroom, Barbara Kopcho didn't think it was possible her landlord spent what it claimed -- $42,100 -- to rehabilitate her one-bedroom unit in a rent-stabilized building in Elmhurst, Queens.
So Kopcho, an information technology specialist who moved into her apartment in May, researched the appliance prices, as well as estimated costs for labor and materials for the kitchen, bathroom and other work. The cost of the rehabilitation is critical in such a case, because it determines by how much the owner can increase the rent.
"I don't even think they spent $20,000," said Kopcho, who pays $1,450 per month in a building where residents said the average was about $900.
Kopcho filed an overcharge complaint August 25 with the Department of Housing and Community Renewal (DHCR), the state agency that oversees the more than 1 million rent regulated apartments in New York City.
She joined a growing number of tenants accusing their landlords of charging too much for rent or not renewing leases in New York City. Complaints have climbed by 37 percent over the last 18 months, DHCR figures obtained by The Real Deal showed.
Some real estate professionals saw the jump as evidence of a weak economy and better government outreach. Tenants and housing advocates tied the rise to an increase in the number of apartments owned by partnerships backed by private equity dollars that have bought an estimated 66,000 rent-regulated units in recent years.
Residential and commercial property broker Aaron Jungreis, president of Rosewood Realty Group, said a sour economy would lead more tenants to file complaints.
"With rising costs everywhere I think it is easy for them to complain and possibly get a rent reduction and/or hold off paying more rent," he said.
Brandon Kielbasa, a housing specialist with tenant advocates Cooper Square Committee, said tenants had filed a lease violation and an overcharge case against landlord Westbrook Partners. The company, in partnership with other firms, bought 17 buildings in the East Village last year.
"Many tenants have filed complaints with DHCR because of problems getting lease renewals," he said. A spokesman for Westbrook declined to comment.
DHCR spokesman James Plastiras said the average number of monthly lease violations and overcharge complaints combined was running at about 358, a rise from an average of 223 in fiscal year 2006 under the administration of former Republican governor George Pataki.
Plastiras attributed the overall rise in complaints to increased outreach, more media interest and the economic downturn.
An overcharge complaint is filed when a tenant claims the rent has been raised more than permitted legally. A lease complaint is filed when a tenant believes a landlord has unfairly refused to renew a lease or disputed the validity of lease.
Tenants claim landlords are using a rule in the Rent Stabilization Code which allows landlords to raise the rental price in a unit by 1/40th of the cost of a major renovation, known as an individual apartment improvement, to unfairly increase rents by hundreds of dollars.
The Real Deal spoke with tenants and activists representing eight overcharge cases and several lease complaints filed over the past year against five different landlords.
Harold Shultz, senior fellow at the Manhattan-based policy group Citizens Housing and Planning Council, said an increase in the number of complaints may be driven by policy changes, as well as outreach, and the economy. A perception of better results on the part of tenants could push filings up, as well
"With the transfer from Republicans to Democrats, that itself could foster that impression and generate additional complaints," he said.
But he saw some indication that some owners were more aggressive in their pursuit of individual apartment increases.
"I believe on anecdotal evidence we are seeing more individual apartment increases," he said.
Kopcho's landlord, private equity-financed real estate investor and manager Vantage Properties, planned to use the 1/40th increases to raise rents by more than $1,000 per month per unit in select portfolios, according to documents filed by their financiers with the Security and Exchange Commission.
Vantage has joined with banks and private equity firms to buy about 9,500 units in Manhattan and Queens since 2006.
Vantage Properties spokesman Bud Perrone said in an emailed statement that the company spent $42,000 to repair and renovate Kopcho's apartment. He added that no tenant has won an overcharge case against the company.
"It is a certainty that the rent will be upheld," he said. "While any resident can file an unsubstantiated complaint, DHCR has not once found that we overcharged a single resident as a result of a renovation. We meticulously document our work. We maintain receipts. We are transparent, and we act according to precise DHCR guidelines."
Benjamin Dulchin, deputy director of the Association for Neighborhood and Housing Development, said it was difficult to identify when an overcharge occurred because the renovation costs do not need to be proved unless they are challenged by a tenant.
"We hear anecdotally that there is a pattern of private-equity developers using the self-certification provision of the 1/40th [rule] so that they can raise rents without actually making the investment," he said.
The Real Deal reserves the right to delete any comment it finds to be rude, obscene, racist, sexist, bigoted, irrelevant or repetitive, as well as inappropriate comments about anyone's personal appearance. The Real Deal does not endorse any comments posted on its Web site nor does it verify the veracity of comments or the identity of posters.
Comments
Anonymous
Elmhurst 1br average rent is $1300, not $900
Comment #1 Posted By: Anonymous 08/29/08
Anonymous
1 bedroom in Elmhurst could go for $1500 per month anywhere nears Broadway
Comment #2 Posted By: Anonymous 08/29/08
Anonymous
a market rate rent could be 1,500 but a stabilized average could easily be 900 (or more likely much less) - doesn't seem fair that she has to $1,450 for the same apartment her neighbors pay $900 for.
Comment #3 Posted By: Anonymous 08/29/08
Anonymous
She just moved in May and therefore she was not there earlier within 1970's to be protected under rent stabilized law. Once the tenant moved out, the apartment becomes market rated apartment
Comment #4 Posted By: Anonymous 08/29/08
Anonymous
The Rent Stabilization Code provides that a landlord may increase the monthly rent in a rent stabilized apartment by 1/40th of the cost of individual apartment improvements. Let us assume that the landlord is upgrading the kitchen with new appliances, a new floor, and new cabinets at a total cost of $20,000. In that situation, the landlord could increase the rent stabilized rent by $500 per month, the amount which is 1/40th of $20,000. The $500 adjustment, in this example, is then added to the rent stabilized rent. So, if the rent was $1,100 per month before the improvements were made, the new rent is $1,600 per month. Future rent increases would be based upon the new rent of $1,600 per month. If this tenant with an adjusted $1,600 per month rent were to renew the lease for a two year term after Oct. 1, 2008, then there would be an 8.5 percent increase, as set by the Rent Guidelines Board, on the $1,600 per month rent.
Comment #5 Posted By: Anonymous 08/29/08
Anonymous
The rent increase would be $136 per month so that the new rent would be $1,736 per month. Had there not been an individual apartment improvement, the increase would have been based on $1,100 per month and the new rent would be $1,193.50 per month.
Comment #6 Posted By: Anonymous 08/29/08
Anonymous
Does any body anything about Empire Management, Ramin Shalom, Kings Point Groups Associates...
Comment #7 Posted By: Anonymous 08/29/08
Anonymous
Yes I know bout Empire Management
Comment #8 Posted By: Anonymous 08/29/08
Anonymous
What can you tell me about them the good the bad & the ugly
Comment #9 Posted By: Anonymous 08/29/08
Anonymous
He's Isreali....
Comment #10 Posted By: Anonymous 08/29/08
Anonymous
All these issues are so stupid. In a real world (not the psudo-socialist world of NYC rent stabilized housing), when an apartment became vacant the landlord would charge whatever the market can bear, whether he put $0 into a unit or $50,000. But let me tell you that $42,500 to renovate an apartment - assuming new bathroom and new kitchen plus other improvements - is not unusual or even extreme.
Comment #11 Posted By: Anonymous 08/29/08
Anonymous
#11 - to add to your point - in the real world if a landlord didn't make needed repairs the tenant would move out and the landlord would lose money with a building full of vacant units. This vacancy is what keeps landlords around the country interested in making needed repairs. In our messed up system a landlord is actually discouraged from making repairs - the system is terrible. You could put two college freshmen in a room for 30 minutes and they could devise a better system that protects the rents of the poor and provides decent housing for all.
Comment #12 Posted By: Anonymous 08/29/08
Anonymous
It is not fair that landlords of small buildings (individual owners) have to be responsible for the tenants who claim they cannot afford the rent. The govenrment should help them if they really are in need through programs like Food Stamps & Medicad and not owners. Super markets have one price for everyone.
Comment #13 Posted By: Anonymous 08/30/08
Anonymous
DHCR's claim that the increase is due to increased outreach is ludicrous. After posing as the champions of downtrodden tenants, Spitzer's handpicked holdover commissioner is kicking the can down the road on one of the most important issues facing tenants today - narrowing the definition of "demolition" instead of letting the current Landlord-friendly definition stand. Wake up tenants, this group is still carrying the water for the wealthy LL's lobby. Don't be fooled - here's the new boss, same as the old boss.
Comment #14 Posted By: Anonymous 08/30/08
Anonymous
re: comment #10 - that is far out of line. the question is in regards to property management.
Comment #15 Posted By: Anonymous 09/01/08
Anonymous
Companies such as Vantage, Pinnacale etc that purchased enourmous portfolios in afew years, with absurd business plans of turning over high percentages of the below market rentals in a short time have done a disservice to the long term, responsible landlords in this business. First, there is insufficient management expertise experienced in the regulatory minututae available to these firms to responsibly managage these suddenly created huge portfolios. Second, by bringing to bear enourmous capital in highly concentrated bursts in low-income neighborhoods to buy-outs, legal proceedings, apartment renovations and high rent turn-overs, there has been an escalating backlash among the political and advocacy class that will redound to the detriment of those of us who are long-term and careful owners. There has already been much media hype on this (witness today's NY Post Article on East Village tenants who have been 'insulted' and 'harrassed' by the owners $125,000 buy out offers). Just wait till the NY State Senate goes Democratic. Many of these new portfolio owners will have their comeuppance but not without dragging the rest of down with them. J. Sbiroli - Ventura
Comment #16 Posted By: Anonymous 09/02/08
Anonymous #9
The city needs homeowners, not renters or landlords. I hope landlords are harassed out of existence by both tenant activist groups and Democrats after this fall's elections. My advice to "responsible landlords" is to convert your property to condos (or sell to a company that specializes in such conversions) and get out of NY real estate market. Landlords, tenants, and politicians that represents both sides are the cancer of New York city. We need a city full of homeowning voters.
Comment #17 Posted By: Anonymous #9 09/02/08
Anonymous
It would be great if every unit in the city was a condo. With so much supply, I could pick up a 2000 sq. ft. apartment for 100k. With the culture in the city stagnating due to the slowdown in incoming and outgoing residents and the precipitous drop in real estate value, we could one day be aspire to stand alongside such havens as Columbus or Buffalo.
Comment #18 Posted By: Anonymous 09/02/08
Anonymous
The people who make NYC different from Columbus and Buffalo for the most part live in co-ops, not even condos. Hell, I'm not talking about Wall Street movers and shakers or celebrities owning co-ops on Central Park West. No. I'm talking about well-known authors, publicists, musicians, etc. Now, of course we also have that whiny old gaggle of self-defined anarchists, activists and 'non-traditional' artists stuck in East Village walkups. Let them move to Jersey. They can still come to their old Manhattan hangouts and whine to their hearts' content.
Comment #19 Posted By: Anonymous 09/02/08
Mark
The person who wrote comment #11 hit it right on the head! I'm actually a landlord of a rent-stablized building in the Bronx and I have serveral tenants that live in 3 bedroom apartments paying $696.03 for one of them, $874.73 for another and $1,023 for the other when the fair market value here in the Bronx (Gunhill Road, by Montefiore Hospital) is about $1,700 for a 3 bedroom apartment (still cheap compared to other boroughs). They always sign 2 year renewals adding about $25 average in increasse while my expenses keep going up!!!!! At this rate, they will never catch up to what the actual rent should be. Therefore, I do the bare minimum required by Law when it comes to repairs. They get what they pay for right? Sounds harsh but I'll be damned if I'm gonna spend good $$$ on an apartment that pays peanuts for rent. And thats what alot of landlords do and I don't blame them. Its just that the numbers dont add up. Therefore, comment# 11 is very true.
Comment #20 Posted By: Mark 09/02/08
Mark
Only way to change this is to either get rid of Rent-Stablization or have the Government, City or State pay the differance of what is a reasonable rent for this time and age of high expenses. But we all know this isn't going to happen so the quality of life issues continue!!!
Comment #21 Posted By: Mark 09/02/08
Anonymous
be very weary of DHCR. Even if you get the judgement as I did, DHCR will make it hard for you to claim it. Does it make sense that this city has allowed developers to dump their rent-stabilized tenants to do renovations. The apartments then are no longer under the City government control. The apartments have had nothing done to them, they were $200 a month apartments and now are on the market for $2,000 a month. I believe it is definitely not outreach or media driving tenant complaints. The apartments in New York City are actually hazardous, lawless and overpriced places. The real estate is not worth even an 1/8th of what it goes for. The coop unit owner, now landlord, has not been educated to perform such duty and there is no law requiring them to do so. Bloomberg has made a terrible mess of the city. He rezoned and instituted zoning so as to purge the middle class out of the market. When you get rid of Bloomberg and his gang the tenant complaints will start to diminish.
Comment #22 Posted By: Anonymous 09/03/08
Mike
Some people, especially the poor and middle class might not understand this concept but....the RENT STABLIZATION Laws are actually doing a DIS-SERVICE to the poor and middle class and actually forces and promotes poor quality of life issues and poor living conditions because Landlords have no incentives and motivation to "beautify" their building and apartments if tenants still get away with paying peanuts for the apartment because of the 1/40th of the cost rule even if you invested 10k-15K to beautify the apartment but at the same time needed to raise the rent at least $1,000 to stay in business yet 15K isn't enough to justify a $1,000 increaase...are you kidding me? How unfair is that and mind you, the apartment looks amazing yet technically you couldn't charge a $1,000 extra on the rent because of this stupid rent stablized laws.
Comment #23 Posted By: Mike 09/07/08
Anonymous
I see she moved into her place on May... I bet no one forced her to move in there. If she thought rent was too much for the property, why she even moved into the place?
Comment #24 Posted By: Anonymous 09/25/08
Anonymous
#9 -- I lived in unit owned/managed by Empire Management (700 Fort Washington) for 4 1/2 years and I never had a problem. I know a lot of the long-time tenants didn't like them, but I moved into a renovated unit so I never needed anything fixed (at least nothing that I couldn't take care of myself). I even got my entire damage deposit back when I moved out. However, I cleaned like a fool, didn't change the paint color on any of the walls, and I patched all of the holes where I had hung things on the walls. For the rest -- The system of control/stabilization is not perfect, but it is what allows my wife and me to afford an apartment in New York City. Keep in mind that I have never benefited from a controlled unit, but the fact that I do not have to think about moving every year because of a $500/month rent increase is nice piece of mind. In New Jersey, where stabilization does not exist, my previous landlord raised our rent from $1,855/mo to $2,375, forcing us to move because we could not come up with the additional rent.
Comment #25 Posted By: Anonymous 09/30/08
FM tenant who works for landlord
Just reading over a few of the comments and I have to agree with Mike on his comments about costs. I work for a landlord in the city and in all of the buildings we own, a majority of the apartments are still rent stabilized. We don't own any high-end luxury buildings; however, a lot of our properties are high rise, doormen buildings and are nicely kept. We also have a lot of fair market tenants paying VERY high rents, who are entitled to a nice place to live. Going through the numbers every month, I assure all of you that costs are indeed EXCESSIVE (you don’t need to own/manage a nice building to know this!) It is easy for us to deregulate an apartment because the costs of renovation are a lot (add the 1/40th renovation cost to the previous rent and it goes well beyond the 2K mark to deregulate). I also believe that we maintain our buildings well – given the fact that we have a lot of RS and FM tenants.
Comment #26 Posted By: FM tenant who works for landlord 10/13/08
FM tenant who works for landlord
I also have to say that Mike is accurate in saying that most landlords do not want to put in extra costs for RS tenants paying “peanuts” in rent. We too, do the bare minimum required by Law when it comes to general repairs in a RS apartment. And why not??! Why should we put in $$$ for a RS apartment unless required?? Would we get away with that for someone paying FM rent at $5900? Heck no – but I’ll tell you this – we bend over backwards for our FM tenants - they aren’t the ones putting in petitions to lower their already-extremely-affordable rents. Nope.
Comment #27 Posted By: FM tenant who works for landlord 10/13/08
FM tenant who works for landlord
Listen, there is nothing wrong with rent stabilization (& I know I’m venting at this point) but it’s just those who simply take advantage of the system that give it a bad name. Having a place to live is a need – but living IN Manhattan is NOT (it’s a luxury for most). For those of you who can’t afford FM rents or have issues paying your already LOW RS rent – LEAVE. No one is adhering you to the cement. (gosh - i wish i could say this to some of my tenants)
Comment #28 Posted By: FM tenant who works for landlord 10/13/08
Anonymous
First off, I would like to address all of the comments to this article. How can anyone post a response on a subject they are completely ignorant on? Try reading some of the fact sheets on the DHCR websites to be better informed on the facts about rent stabilized apartments and vacancy increases? This applies to both tenants and landlords. Secondly, I would like to address comment #24; You shouldn’t just assume she couldn’t afford her apartment rent, that is not the issue here. The purpose of her submitting an overcharge complaint may have been to defend herself as a tenant. If more people in this city knew their rights they would prevent these large companies from manipulating NY state laws and taking advantage of people. As New Yorkers our goal should be to try and sustain affordable housing and rent stabilized apartment bldgs in New York!
Comment #29 Posted By: Anonymous 10/16/08
Anonymous
My water is dark brown with chunks of sludge in it. It is staining the sinks, and wash cloths it has large chunks in it. There is no way I or anyone else could or would brush your teeth or shower i this water. IT IS DISGUSTING. i CANNOT WASH MYSELF MY CLOTHES OR DISHES IN THIS WATER. THIS IS UNACCEPTABLE. IT MUST BE REMEDIED IMMEDIATELY.
Comment #30 Posted By: Anonymous 11/09/08
Anonymous
Rent is way too high because of this fake Market scam that apartments are worth so and so - so landlords out of greed charge way too much for rent and these apartments are NOT worth it - they are not mansions. Just in the late 90s a three bedroom house was $900 a month - and now because of greed scam a one-bedroom apartment is $900 and much over and this is too much to pay every 30 days(month), and these landlords, even if they don't repair anything, are going up every year on the rent - this should be against the law. Greed is destroying our economy and country. America used to be the most fair well-ran country and now since those beast in the white house and so many immigrants/foreigners being allowed here bringing their evil ways and filled with greed - they are given property and charging way too much rent - we are starting to look like the horrible countries they come from - and This needs to stop now in America.
Comment #31 Posted By: Anonymous 12/18/08
Anonymous
What they're doing is pushing rents over $2,000 by renovating when the previous tenant moves out, thereby causing the apartment to become decontrolled. Then they lower the rent to market rate, if necessary. The apartment is then no longer rent stabilized and is not protected by NYC rent stabilization laws.
Comment #32 Posted By: Anonymous 01/20/09
Anonymous
Oh my and this is the real kicker..can you expect a gullible and recessive response from a tenant who moved into your development during one lease signing, made his or her own repairs over that period and then have them pay for whatever costs you may have filed in your next rent increase application??? Wow, you stagger me... meanwhile YOU the management have forgotten over and over what my said rent is on any lease, new or old?!
Comment #33 Posted By: Anonymous 01/25/09
Anonymous
I lived in a building for 2 years and had nothing but headaches from them. We were paying full market value for our place and had adequate heat maybe 2 days a week. Seemed like the only time the heat was ever on was when the Inspector came. What a coincidence.
Comment #34 Posted By: Anonymous 02/17/09
Anonymous
I posted #34. I forgot to put that it was Empire Management.
Comment #35 Posted By: Anonymous 02/17/09
Anonymous
I live in Illinois and rent a building from a landlord. I found out that the water is not drinkable after i moved in. What are my options?
Comment #36 Posted By: Anonymous 07/16/09