Renters whose leases expire sometime in the next few months may have the upper hand in negotiating future terms with their landlords.
It’s unclear when the spread of the coronavirus — which has infected more than 20,000 people in New York — will slow down. Mayor Bill de Blasio indicated Sunday that he believes things will get worse in April and again in May, and Gov. Andrew Cuomo has said social distancing could last for months. With such uncertainty, landlords may be eager to renew existing tenants of market-rate apartments rather than try to find someone willing to pay more.
“Depending on how things play out, they are not going to want vacancies until this blows over,” said Jed Wilder, a broker with Compass. “The tenant could potentially have leverage to say, ‘Hey can you keep me? Can you give me a lower increase?’”
Bond New York’s Douglas Wagner said he knows a portfolio manager who sent out dozens of lease renewals in hopes of ensuring that his apartments remain occupied.
“I would think most people are going to opt for stability, as much as they can,” said Luise Barrack, who leads Rosenberg and Estis’ litigation department. “Stability is a good thing when everything is so out of the norm.”
Last week Cuomo ordered that all employees of non-essential businesses work from home, including real estate agents. Evictions have also been halted, which makes tenants who pay reliably all the more valuable to owners.
“As long as you are not able to commence eviction actions, if somebody doesn’t pay, there isn’t going to be a tremendous amount of leverage that the landlord has,” said Jeffrey Schwartz, founder and managing partner of law firm SSRGA.
Schwartz, who is part of an investment group that owns roughly two dozen buildings, noted that with many non-essential businesses being forced to shut down, some tenants will be unable to keep up with rent payments. He suggested tenants have a candid conversation with their landlords about how the pandemic is affecting their ability to work.
“I certainly can’t say to them, ‘You can live rent-free,’” he said. “For me, I’m looking for a light to see that there’s a way, when this is over, for the tenant to climb out of this hole.”
A few state legislators, including Sen. Michael Gianaris and Assembly member Linda Rosenthal, have called for a freeze on rent payments. Gianaris was planning to introduce a bill to enact such a freeze.
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The Community Housing Improvement Program, which primarily represents small to mid-sized multifamily building owners, is asking the state to consider providing direct subsidies to tenants struggling to pay rent.
The group is also asking for a delay in property tax payments due in July. Jay Martin, its president, said his organization is referring landlords to a financial aid program launched by the city last week to provide interest-free loans to small businesses.
“The government at some point is going to have to address the loss of ability of tenants’ being able to pay rent and the cascading effect that will have on owners,” he said.
Write to Kathryn Brenzel at kathryn@therealdeal.com