New York City’s archaic rent-stabilization and rent-control laws — along with aggressive creation of historic districts and property-taxes that favor ownership — are to blame for the city’s housing shortage and exorbitant rents, according to noted real estate attorney Stephen Meister.
“The rent is too damn high,” he said, “because the laws are too damn stupid.”
Meister, a partner with the law firm Meister Seelig & Fein, who represented investors in the Empire State Building looking to block the building’s initial public offering, added that “it would take the salary of the U.S. president to afford a Tribeca two-bedroom.”
The attorney was addressing the B’nai B’rith Real Estate luncheon at the Cornell Club. Attendees included Stellar Management’s Laurence Gluck, Douglaston Development’s Jeffrey Levine, Cammeby’s International Group scion Avi Schron and Belvedere Capital’s Glen Siegel.
Meister said that the rent-stabilization and rent-control laws had led to a lack of new housing stock, as rent-stabilized and rent-controlled tenants tended to remain in their units and even passed them down to family members. Moreover, he claimed that the Bloomberg administration’s tendency to create historic districts – which protects all buildings within a defined area from development – prevented developers from creating much-needed housing stock, even at sites that had no historical significance.
During the Bloomberg years, the number of historic districts in the city jumped from 64 to 110.
“Historic districts give rise to NIMBYism,” Meister said, pointing to the example of 47 East 91st Street, where film director Woody Allen led a successful campaign to have the city’s Landmarks Preservation Commission reject a design for a planned 17-story apartment tower.
The city’s property tax laws skew heavily in favor of owner-occupied homes compared to rental buildings, Meister said. This meant that developers had no incentive to build more rental units, leading to “extraordinarily low and unhealthy” vacancy rates and sky-high prices.
He called for a repeal of succession rights, which allow family members of a rent-stabilized tenant to inherit the apartment at rent-stabilized rates when the tenant dies or leaves the apartment. If the rules were changed, he said, once rent-stabilized tenants left, a landlord would be able to tear down a building and put up a taller and newer one, creating more housing and ending the scourge of “buildings that are frozen in time like prehistoric mosquitoes.”
He suggested that free-market tenants should organize to increase their political clout, the way that rent-stabilized and rent-controlled tenants currently do. This would allow free-market tenants to push lawmakers to create policy that would allow for more housing at a lower cost.