Why affordable housing sits empty

Unintended consequence of 2019 rent law leaves countless units vacant

In an unintended consequence of New York’s 2019 rent-stabilization law, landlords are leaving cheap units off the market. (Getty)
In an unintended consequence of New York’s 2019 rent-stabilization law, landlords are leaving cheap units off the market. (Getty)

I thought landlords were bluffing when they said the new rent law would force them to leave some apartments vacant.

I was wrong.

Yes, there have been articles and TV news segments about units sitting empty after the law capped rent increases that landlords once imposed to pay for renovations.

It still seemed unlikely to me, however, until I ran into a guy I knew from pickup basketball and struck up a conversation. It turns out he’s a landlord.

Two decades ago he inherited a modest rental portfolio. In growing the business, he said, his best decision was to avoid rent-stabilized buildings. Still, he has a few regulated apartments, including one where he pays more than twice as much in co-op dues as he collects in rent. He loses about $1,300 on that unit every month — more if the tenant stiffs him.

“She pays her rent sporadically,” he said in a phone interview. “You have to sue her every two or three years.”

She has received a few “one-shot” grants from the city to catch up on her bills. “I thought one shot means one shot,” he said, “but I guess it means several shots.”

The tenant knows the system well. When she dies, her son might claim succession rights to the lease, just as she once did.

“That will be the third generation,” the landlord said. “It’s conceivable that they will have the apartment in their family for 100 years, operating at a loss.”

Somehow my friend described the situation without a hint of bitterness. Perhaps acquiescence keeps frustration at bay.

Another tenant leases the entire parlor floor of a brownstone in Prospect Heights. It’s an old apartment and not in great condition, but it has 12-foot ceilings and original plaster molding. “It’s beautiful,” the owner said.

But he believes it’s empty most of the time.

“I’m absolutely convinced that he’s not living there,” he said. “He’s living in Bensonhurst with his girlfriend.”

Until two years ago, landlords occasionally went to court to prove a rent-stabilized tenant’s primary residence was elsewhere — a violation that could yield an eviction and a 20 percent rent increase.

But the 2019 overhaul of the law got rid of the vacancy bonus, which incentivized landlords to push tenants out. So the parlor floor with the 12-foot ceilings sits nearly unused, renting for less than the city pays to board homeless people in small hotel rooms.

“Why should I kick him out?” my friend asks. “If I kick him out, I’m not going to get more rent. You have no incentive to get rid of people who aren’t there.”

Hiring a private detective and lawyer to bring a case would cost thousands of dollars. And he would probably lose anyway.

“The tenant has to be really over the line, like his fourth or fifth violation of the lease, to where [Housing Court is] going to consider throwing him out,” he said.

If this sounds like a lousy affordable housing program, hold on. It gets worse. Another unit in his portfolio is empty and will remain so indefinitely.

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The apartment had been occupied by a single gentleman for 40 or 50 years. “Good guy,” the landlord recalled. “He used to come to my office and drink tea.”

He was paying $512 a month, plus a voucher worth $140 or so. When he died two years ago, the owner brought in a contractor to fix up the place.

But just as work began, Albany limited to $15,000 what landlords can recover from rent increases for repairs and upgrades.

The unit needs a gut renovation: new floors, electrical, kitchen, bathroom, windows and more. “We weren’t going to put another $40,000 or $50,000 into it to charge $650 a month,” the owner said. “I just don’t know what to do with it.”

Why not do a patch job — the bare minimum to bring it up to code?

“When you get a tenant in, that tenant has every right to ask you for repairs, and you have no right not to make them,” the landlord said. “Are you going to make enough money after all those repairs to justify the $600 rent?”

But you’re getting nothing now, I said. Wouldn’t you rather have a tenant?

“You run a great risk of putting someone in there who’s difficult enough that the apartment loses money,” he said. “They’re never going to leave and they could call every month on an apartment that’s not in good condition and force repairs.”

One of his tenants, a hoarder, complains about bedbugs. The exterminator bills come to about $6,000 a year.

To avoid such situations, landlords look for a certain kind of tenant.

“A rich tenant who works for Goldman Sachs and lives in London, and you’re reasonably confident that he’s going to return [there],” my friend explained. “So I won’t be stuck with someone who’s grandfathered in.”

The new rent law got rid of income limits. Even Bill Gates qualifies for a rent-stabilized unit now. Not that he would want one, but landlords typically prefer tenants with means. (Discrimination is common against apartment applicants bearing rent vouchers.)

Incidentally, my friend considers himself liberal. He knows how important affordable housing is. “If you’re poor and you hit the lottery with a rent-stabilized apartment, it can do wonders for you,” he said.

He understands tenants’ stress. Once he left a message on the answering machine of a tenant who cleaned houses for a living. It was a benign matter, but his message omitted why he wanted her to call him back. Weeks later he learned that she had barely slept since, fearing he wanted her out.

“I completely upended her life by making a phone call,” the landlord said. “Any little event that happens to people can render them homeless.”

More than 51,000 people live in city shelters. Perhaps twice as many are doubled-up. But my friend’s empty apartment will remain unused.

Some landlords believe lawmakers really thought $15,000 was enough to fix up an apartment in New York City (“No apartment in New York can be renovated for so little,” one small-landlord advocate tweeted.) Or maybe legislators were more concerned about keeping rents low than about units sitting vacant and deteriorating.

My friend, who halted renovations on one Brooklyn building the very day that the rent law passed, said he recently saw one of his contractors’ workers collecting cans.

No one knows how many decrepit apartments are sitting vacant, but one reader tweeted at me that she knows a dozen owners of such units. Landlord groups say dormant dwellings run into the thousands, if not tens of thousands.

“The advice we’ve gotten from everybody is keep them vacant,” my friend said, “and wait for the law to change.”