Two words: vacancy tax | NYC: More than 60,000 Rent-Stabilized Apartments Are Now Vacant
The City news website in NYC reports that "More than 60,000 Rent-Stabilized Apartments Are Now Vacant — and Tenant Advocates Say Landlords Are Holding Them for ‘Ransom’." From the article:
During a worsening housing affordability crisis, New York City landlords are keeping tens of thousands of rent-stabilized units off the market — a phenomenon tenant activists call “warehousing.”
An internal state housing agency memo obtained by THE CITY shows that the number of rent-stabilized homes reported vacant on annual apartment registrations rose to over 61,000 in 2021 — nearly doubling from less than 34,000 in just a year as the city emerged from COVID lockdown. ...
The Coalition to End Apartment Warehousing, a collective of tenants and 15 community organizations, has been calling attention to the trend, claiming that landlords are fabricating housing scarcity to manipulate legislative changes in Albany. “Creating fake scarcity to raise prices is not a fair way to run the housing market, and it deprives New Yorkers of needed housing,” coalition members wrote in a recent op-ed. ...
The Housing Stability and Tenant Protection Act of 2019 (HSTPA) repealed both vacancy bonuses and vacancy decontrol. It also sharply limited how much landlords could pass along the costs of renovations to tenants through rent increases, practices that housing advocates and lawmakers criticized for spiking rents and fueling displacement.
Prior to 2019, landlords could make a lot of money by emptying out rent-stabilized apartments. HSTPA essentially revoked any financial incentive to do so. ...
But landlords are still legally permitted to keep their rent-stabilized apartments empty indefinitely.
It still has loopholes ("D.C.’s problems with vacant, blighted properties haven’t gone away, residents and officials say," Washington Post), but DC's vacant residential property tax is 5x the regular rate. It does move properties back into the market.
And they aren't a universal solution ("Cities Now Use Taxes to Fight Blight. Is It Working?," Governing). They work better in strong markets, where the demand to develop and the demand to rent are both high.
In weak markets, vacancy taxes encourage demolition, because of low demand, and demolition generally isn't the best way to move revitalization forward ("Demolition isn't always a solution").
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Labels: housing market, property tax assessment methodologies, public/social housing, real estate development, rent control, rental housing, tenant-landlord relations
posted by Richard Layman @ 6:54 PM&Permanent Link
6 Comments:
Given what a clusterfuck that is the DC Vacancy tax, I very much doubt it is driving much behavior
I'd say it's just more strong market effects; income limited apartments are inherently weak markets. At least for the landlords and rental income. The tax credits and various subsidies are a good way to get rich.
Talking to one developer on ward 1; he wants more homeless shelters as they make excellent (low cost) assets to pass to his kids and then they can sell in 15+ years.
Not sure you aw this:
https://www.theregister.com/2022/10/25/realpage_rent_lawsuit/?td=rt-3a
District Dig also has a piece up on DCHA.
When I first moved to DC in 1987 there were stories about the shelter mafia. It's still with us 35 years later. And it's true in other cities too, eg NYC.
https://www.washingtonpost.com/archive/opinions/1990/08/31/pitts-hotel-final-checkout/0e09af10-24b4-466f-93ff-930d1821b285/
https://www.thecity.nyc/2020/1/30/21210555/a-long-line-of-red-flags-trailed-embattled-homeless-operator
2. I didn't see that article but I did see the ProPublica? one on rent rate software leading the rise. I appended it to the cited entry on tenant protections. Will read, thx.
3. Will look up the DCHA article. Thx/2.
Oh, the tax. I do think it's effective for one off situations where legacy ownership lets a property languish for years. Less for capitalized developers.
One property across the street has been vacant for about 10 years. The lady I think is in a nursing home, which probably gives it an exception. The family is probably waiting on the estate revaluation as they've had at least since the 60s, maybe the 50s or earlier. (There were many legacy white families in the neighborhood into the very early 2000s. I worked the 2000 Census there as it happens, and I interviewed one household that had been there for 65 years.)
But on that side of the block, at least 3 properties in similar situations.
Argh. Charlie I'm sorry. I accidentally deleted your comment. I thought I was deleting the spam one. Any chance you can rewrite? I didn't get to read it.
Not a problem. I had a link in there, but I don't remember it either.
Larger complaint (off topic) was what is criminal justice reform bill for DC -- mandatory right of jury trial for misdemeanor offenses. That is essential de criminalizing all those "crimes".
Mayor, MDP not happy.
On vacancy, what you want to see is high turnover. In DC, some weird stuff keeps houses empty for years. Some of these factors are unique to DC (embassy houses, etc) others are nationwide (bad chain of ownership).
Same as the DCHA vacancy issue -- you have to understand it in the context of redevelopment.
Mandatory right to jury trials for misdemeanors isn't "practical" from a resource standpoint on the CJ side, let alone the number of jurors required. Holy s*. It would bring the system to a halt.
While I am not an adherent to the Republican trope that cities are cesspool of crime, this type of action could bring that on on a city like DC. To willfully stoke disorder is like Jayapal's letter. A really bad sign of bad judgment.
Wrt vacant properties, yes, they contribute to blight. In weak markets, there aren't as many levers other than a receivership statute and motivated nonprofits focused on stabilization.
Sadly in strong markets big governments don't seem to be good at nuance. I do think the occasional exercise of eminent domain would straighten up the act of recalcitrants overall.
I do remember some of those embassy properties...
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