Comment from a real estate agent Shloma Hecht: “Some owners have used methods to squeeze money out of their rent-controlled apartments that are both unethical and legally questionable.” Full story
In Crown Heights, we are fortunate to have many rent-controlled buildings. Unlike “free market” buildings, rents in rent-controlled buildings are capped by the city. Their owners can charge less than the legal maximum rent, but not more.
While this is incredibly beneficial for renters, some owners find that their apartments are being offered at rents so low that they would actually lose money if they rented them out. The result is that many of these valuable rent-controlled apartments never even come to market.
Before 2019, owners used some workarounds that allowed them to rent out the units and still benefit financially.
First, there was a way to destabilize these rent-controlled apartments. Landlords who renovated their apartments could add 1/40 of the construction costs to the statutory base rent. This allowed them to drive the rental prices of their apartments above the destabilization threshold while ensuring that the apartments were modernized and in good condition.
In addition, the owners could also charge as much rent in advance as they wanted. Many charged the standard rent and a security deposit first, some charged the last month’s rent on top of that. However, others charged six months in advance, sometimes even a whole year.
That changed in 2019 when New York passed the Housing Stability and Tenant Protection Act (HSTPA). The HSTPA required landlords to accept no more than the first month’s rent and one month’s security deposit. It also removed most of the ability of stabilized building owners to increase rent between tenancies. The only other allowable fees are broker fees — which, of course, are charged by brokers in exchange for the hard work they put into finding tenants.
(FYI: Landlords are also required to return security deposits within 14 days of tenants moving out, and the processing fee is capped at $20 – good to know!)
Great for renters. Not so much for owners.
This has led some owners to feel pressured and resort to methods to squeeze money out of their rent-controlled apartments that are both unethical and legally questionable.
These landlords have started charging their tenants broker fees – even though they don’t hire brokers or do the work that brokers do. They simply add an extra month’s rent and call it a “broker fee” to offset the stabilized price.
This is unfair and wrong. A Chosson and Kallah have so many new expenses at the start of their new life together. Instead of benefiting from rent-controlled housing – designed to meet the needs of New Yorkers for whom rent prices are an incredible burden – they are unnecessarily forced to pay thousands of dollars extra to landlords who are taking advantage of the situation.
It’s greed. And it has to stop.
Nobody told you to be a landlord. If it’s not profitable to own the building, then sell it. Petition the city to change the law or elect people who will do it. But don’t burden our young people who are just starting out.
There are so many property owners here in Crown Heights who do good for our community, who care about the people who move into their buildings, and who want to keep the neighborhood accessible to younger generations, but some have let their profit-driven focus get them off track.
As the new year approaches, I urge all property owners to get back on track and look out for our community. Stop charging the wrong brokerage fees and do the right thing.
