What the industry is watching this Midterm Election
Rent regulation, pied-à-terre tax among key issues
As real estate industry bigwigs join average New Yorkers at the polls this morning to cast their votes on which party should take control of the state Senate, they’ll have rent regulation, tax abatements and pieds-à-terre in mind.
Industry leaders hope to see a Republican-controlled state senate, given the GOP’s traditionally pro-business agenda and continued push for lower taxes. In June 2015, a 43-year-old rent regulation law is set to expire and an important tax abatement is up for renewal. The party in control of the state senate will also determine the fate of a proposed pied-à-terre tax.
The city’s biggest real estate players have donated hundreds of thousands of dollars to Jobs for New York, a Real Estate Board of New York-backed political action committee. Jobs for New York has primarily been supporting Republican candidates, including Terrence Murphy in the 40th district, Sue Serrino in the 41st district and George Amadore in the 46th district.
Jobs for New York is looking to back those candidates who “want economic opportunities and job growth.” according to a spokesperson for the PAC.
Currently, control over rent regulation lies with the state rather than city – due to the so-called Urstadt law, which was enacted in 1971 and named after then-governor Nelson Rockefeller’s housing commissioner Charles Urstadt. Democrats, including Mayor Bill de Blasio, have spoken in favor of repealing the law and giving control of rent regulation back to the city.
Jumaane Williams, a Democrat City Council member from Brooklyn, has pledged that he will fight for the repeal of the Urstadt law and hopes that the next governor agrees with him. Cuomo, who’s expected to trounce his Republican opponent Rob Astorino, has been vocal during his first term on advancing tenants’ rights. In 2012, he created the state’s Tenant Protection Unit, which advocates for tenants and investigates landlords.
“Democrat or Republican, everyone should be supporting the repeal of Urstadt,” Williams said.
But most industry players – especially those whose business is multifamily properties – would like to see that the state senate, rather than the overwhelmingly liberal and pro-tenant city council, keeps control of rent regulation, said Massey Knakal Realty Services’ chairman Robert Knakal.
“A Republican controlled senate will likely not make those laws even further in the tenants’ favor,” Knakal said.
“I’d like to see policies implemented that are good for the real estate market and good for property values,” he continued. “That’s generally good for the local economy.”
One major New York developer, who spoke on condition of anonymity, said that he would like to see the Urstadt law renewed.
“I don’t think rent control is good for the city,” the developer, who has hundreds of units in the pipeline, said. Instead, he suggested that more housing should be created, which would exert a downward pressure on prices.
“Rent is like a Whac-A-Mole,” he said. “Push it down in one spot, it pops up in another.”
The real estate industry is none too fond of the proposed bill, which calls for a tax on properties $5 million and up, excluding primary residences. REBNY has called the bill a “good way to start the collapse of the residential market.”
Douglas Elliman broker Jacky Teplitzky said she thinks the tax would backfire, ultimately hurting the real estate market – as well as the city and state coffers that benefit from real estate sales tax revenue. Over the past two years, foreign investors and people buying second homes have been a “major driving force” in the real estate industry, she said.
“People are going to say, ‘Well then I’m not going to spend $5 million. I will spend less, or maybe I won’t even spend at all because New York City is becoming too expensive.”
E.B. Solomont contributed reporting.