Latest news with #SarahSaltzberg
Yahoo
24-05-2025
- Business
- Yahoo
Thousands of rent-stabilized NYC apartments face foreclosure in tenant ‘bloodbath'
Thousands of rent-stabilized apartments in NYC are under threat of foreclosure as an increasing number of landlords stop paying their mortgages — making the coveted units even more scarce, insiders told The Post. Buildings with a cumulative 176 rent-stabilized units have been foreclosed upon since 2022 – a figure that's been doubling every year on average — with another 2,093 stabilized units have been put on notice by banks in April that landlords are defaulting on their mortgages, according to an analysis by PropertyShark data. 'It's a bloodbath,' said Sarah Saltzberg, co-owner of Bohemia Realty Group, who rents pre-war units in upper Manhattan. Owners lose money on stabilized units, so they leave them empty and skip the listing — or walk away entirely, leading to foreclosures, Saltzberg said. 'The owners are under water — that's why in the past year it keeps happening over and over,' she said. Many of the pre-1974 buildings — the year NYC established the rent stabilization system — desperately need repairs, but owners have stopped investing due to 2019 laws capping rent hikes after improvements at 2% and banning landlords from raising rents by up to 20% upon vacancy — changes that cut property values. Rising interest rates over the past three years also slowed renovations to a crawl. Tenant advocacy groups and Democratic state legislators lobbied hard for these changes, considered the biggest overhaul of New York's rent laws in a generation — arguing they were necessary to protect tenants against rent hikes and evictions. And they succeeded. But NYC tenants could end up paying the price. 'A lot of us might end up displaced — a new owner can come in and kick us all out,' said Coco Portofe, 34, whose East Village rent-stabilized building is the subject of ongoing court proceedings. If a landlord defaults, a new owner has to keep rent-stabilized units stabilized and keep rent the same. But the issue is when no one wants to buy the foreclosed property because the rent-stabilized units make it so financially unattractive, insiders told The Post. In that case, the building's residents could face eviction. 'There are situations where given the rent-stabilized nature of the tenancy, any purchase price over $1 would be ludicrous,' said foreclosure attorney Alexander Paykin. Experts point to a recent case in March, when mortgage lender Santander Bank refused to even take the keys of a foreclosed rent-stabilized building in Harlem, as indicative of what could come. Some fear a repeat of the 1970s, when New York landlords simply walked away from decaying buildings that were no longer profitable to rent out. Portofe's landlord – private equity firm Madison Capital Realty — is accused by its lender, the Community Preservation Corp., of not making mortgage payments on her building since January 2024, court records show. 'I have to pay rent on time, and they are not upholding their part of the bargain,' said Portofe, who pays $2,200 a month for a rent-stabilized one bedroom on East 12th Street. Market rate for one bedroom in her nabe rent for an average of $3,800, according to StreetEasy. A total of 209 rent-stabilized apartments across 15 East Village buildings are part of the lawsuit. Residential portfolio acquired by Madison acquired those units in 2021 as part of a residential portfolio for $153 million — a small part of the real estate investment firm's $22 billion assets under management. Madison Capital is accused of 'intentional misconduct' and 'gross negligence for 'wrongfully' collecting rent and failing to turn over that money to its lender — to whom it's said to owe more than $76 million in mortgage payments, interest and late fees. Madison Realty Capital didn't respond to The Post's request for comment. According to data from the Rent Guidelines Board — 10% of the 643,140 pre-1974 rent-stabilized apartments in New York City — an estimated 64,314 units – are losing money, a figured that's doubled since 2019 and is only expected to grow. Before the rental laws were overhauled, rent-stabilized buildings were a lot more profitable. 'The extent of this rent shortfall will grow over time, risking the long-term sustainability of these key segments of the city's affordable housing stock,' said Mark A. Willis, a senior policy fellow at NYU's Furman Center for Real Estate and Urban Policy. And about to make matters even worse is a tax-lien sale the city Department of Finance is planning to hold on June 3 — the first since the pandemic — to sell the debt of landlords who've been delaying property tax, water or sewer payments to try to stay afloat. Whoever buys up that debt could foreclose on the properties to collect what's owed. Additional reporting by Helayne Seidman
Boston Globe
21-04-2025
- Business
- Boston Globe
What to know about broker fees in New York City
Advertisement Few places outside New York City have systems like this. When broker fees are combined with other up-front costs, such as a security deposit, the price of moving in the city can easily stretch beyond $10,000. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up But the Real Estate Board of New York, an influential industry group that is suing to stop the FARE Act, and many others in real estate say that the new law is unfair and will lead to confusion and higher rents. Here is what to know about broker fees in New York City: Why do broker fees exist? Before sites such as StreetEasy took off over the past decade, renters typically relied on word-of-mouth, "for rent" signs, newspapers and Craigslist to find apartments. Hiring a broker who had access to special listings and familiarity with the housing market could help cut through much of the clutter. Advertisement The fee — usually one month's rent or 15 percent of the annual rent — compensated brokers for their services. Today, with detailed online listings available, many renters believe brokers don't do much. Brokers testified during City Council deliberations over the new law that that's not necessarily the case: They still take photos, acquire floor plans, craft marketing materials, answer renters' questions, set up showings and often even put together the listings renters rely on. Sometimes landlords pay the brokers to create listings, which may be posted as having "no fee" for tenants. In March, roughly 57.5 percent of rentals listed on StreetEasy did not require tenants to pay broker fees, according to the company. Landlords might also distribute information broadly, knowing that brokers will use it to create their own listings. In these cases, brokers might ask tenants to pay. The FARE Act would prohibit this. About 5,800 new leases, on average, were signed in Manhattan each month last year, with more than 40 percent coming over the summer, according to data compiled by Jonathan Miller, president of the appraisal firm Miller Samuel, which tracks lease signings. Who wants to stop the law? Many people in the real estate industry characterize the FARE Act as a poorly worded political stunt designed to pander to renters. They say forcing landlords to pay broker fees will lead to higher rents to cover the fees, making New York City even more expensive. "It's not just a small addition to the rent every month," said Sarah Saltzberg, owner of Bohemia Realty Group, one of the plaintiffs in the lawsuit to stop the law. "It then is compounded over years." Advertisement REBNY, which filed the lawsuit, argues that the city law should be invalidated because the state is responsible for regulating the conduct of brokers. The group also says that it may become harder to find apartments in an already constrained market if brokers stop creating listings with information from landlords because they can't charge tenants a fee. Didn't the state already get rid of broker fees? Sort of. After state legislators passed tenant-friendly rent laws in 2019, a state agency interpreted those laws in a way that barred many tenants from having to pay broker fees. The Department of State found in 2020 that broker fees, which were not specifically mentioned in the 2019 laws, must be collected from landlords unless a tenant hires a broker to find a unit. But REBNY sued in state court, saying that the department had acted improperly, and the fees returned. Who supports the law? The law was crafted by Chi Ossé, a Brooklyn council member whose own frustrating experience hunting for an apartment helped inform the legislation. The City Council passed the law in November, with 42 of 51 council members in favor. Because Mayor Eric Adams took no action on the bill, it became law in December. Ossé said the law would help tenants who were already struggling to afford the cost of living in the city. He acknowledges that, in some cases, the rent might go up, but maybe not as much as real estate industry groups are claiming. "Landlords still need tenants in their homes," he said. "The market is set by what tenants can pay." StreetEasy agrees, saying that its data does not support the idea that rents will rise beyond normal market increases if listings no longer require tenants to pay broker fees. Advertisement The average up-front cost of moving in the city — including a broker fee, one month's rent and security deposit — was nearly $13,000 last year, the most since 2017. Many New Yorkers find it too expensive to move even when they need to. Caroline Burton, general manager at StreetEasy and a vice president at Zillow, which owns StreetEasy, called the law a "major step forward for housing affordability in NYC and a change renters want and need." The law also has the support of New York Gov. Kathy Hochul, who disagreed with REBNY about the conflict with state law. She said in an April statement that "renters should not have to face the burden of paying thousands of dollars up front for an apartment, especially when they often are not requesting the services." So what happens in June? Judge Ronnie Abrams of the Southern District of New York is still considering REBNY's request to halt the enforcement of the law. If the law does go into effect, it might lead to higher rents and less inventory, according to REBNY. Supporters such as Ossé, though, say the bill will make it a lot easier to move. Violators, he said, will be fined, and he is working with the city to think about ways that bad actors might try to work around the law. This article originally appeared in .
