For the last five years, James Prendamano, CEO of Casandra Properties, podcast host and published author, has been telling his clients and anyone who would listen about the decentralization of real estate, not only in New York City, but across all major cities. “We started to see this manifest in the last year or so – when the private sector was pumping billions of dollars into single-family residence acquisitions.” James Prendamano adds that they have also told clients to keep an eye out for local laws coming down the legislative pipeline in major cities.
Just this week, the Albany Common Council passed Local Law F of 2021, more commonly known as the Good Cause Eviction Law. There are several components of the bill. In Albany, landlords can no longer raise rents more than 5% a year, and without proper notification, landlords can no longer evict people even at the end of their leases. Moreover, James emphasizes, without the landlord’s permission, the city is now able to go in and make repairs to buildings and bill the landlords directly.
As reported by the Albany Union Times, several landlords criticized the bill, of course their main frustration is a cap on rent increases of 5%.
While these local laws are well intended, says James Prendamano, they will continue to disincentivize investors. After all, we’re already facing a major challenge like the decentralization of the industry itself. In addition, New York already has among the most stringent tenant protection laws. According to the Albany Times Union, dozens of people filled the Common Council chambers speaking for and against the bill. Conor Gillis, a GA representative for the Greater Capital Association of Realtors, questioned the need for the legislation “which comes after the state already passed the Housing Stability and Tenant Protection Act in 2019.”
We vehemently question the need for it, as well. While owner/occupied with 4 units or less are exempt from this, this is going to be jarring to the mom and pop real estate investors out there who are not owner/occupied. Additionally, if they’re capping rent raise at 5% annually, they should also introduce legislation to cap municipal charges cumulatively, like sewer, water charges, and real estate taxes, James Prendamano asserts – to ensure landlords will not lose income year after year.
Similarly, there is also legislation currently being proposed in Buffalo and Rochester at the city level, as well as on the New York state level with Senate Bill S3081.
We will continue to keep you attuned to the local laws and state legislation affecting landlords and real estate investors. We are likely to see the ongoing decentralization of investments to emerging markets with more favorable landlord protections.
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