The Albany Times Union has reported local governments in Hudson, Newburgh and New Paltz backing a statewide "Good Cause" eviction bill and an upstate NY expansion of the Emergency Tenant Protection Act of 1974 (ETPA). This will have major ramifications on commercial real estate (CRE) investors.
This legislation should be followed closely by CRE landlords, investors, developers, brokers, and bankers. While it will likely take time to make its way to Governor Cuomo's desk, keep a watchful eye on Senator Julia Salazar's "Good Cause" legislation. Her bill looks to guarantee lease renewal and will prohibit landlords from seeking eviction for causes including non-payment of rent. REALLY, Senator? CRE brokers, their clients, and bankers should be ready and willing to lobby their elected officials as this legislation will have an immense impact on the valuation of properties. If passed, the added risk for tenants not paying their rent increases exponentially. This additional risk will adversely affect the value for those trying to sell as well as how bankers may ultimately underwrite a property for a mortgage.
On the flip side of Sen. Salazar's bill, it seeks to prohibit landlords attempting to drive out tenants using hefty rate increases. While there's a fine line between too much government legislation on private property and looking out for constituents, there's merit in eliminating this shortcut for landlords.
The ETPA has provided various municipalities with rent stabilization, primarily downstate, on an opt-in basis. The Senator's bill would apply to all units not covered by ETPA across the entire state. New York State is made up of a wide array of rental markets - from very low rural market rents to very expensive rentals in NYC, downstate, and newer construction in the Albany metropolitan statistical area. There needs to be a LOT more input from those most greatly affected before a "one size fits all" expansion of the EPTA covers rental units across the state.
Multifamily developers, landlords, and banks have enjoyed a boom in new apartment construction over the past decade. Critics and legislators alike complain over the cost of rent, yet fail to look inward to see what NYS can do to lessen the hefty tax burden placed on these landlords. This has a significant effect on rental rates. As a CRE investment property broker, it is not uncommon to see financials showing property taxes accounting for 2 and sometimes 3 months' worth of rent per unit. Add this to the rising cost of land and construction, and it becomes very challenging to create the badly needed workforce housing in resort communities like Lake George and Saratoga Springs.
Legislators and Multifamily landlords have a vested interest in a Win-Win scenario versus seeking to pass a statewide Win-Lose bill that will undoubtedly have landlords and attorneys looking for loopholes to avoid an erosion of their property value.
Our qualified and experienced CRE Investment Specialist Brokers at NAI Platform stay abreast of topics such as this to both educate and advise our clients.
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