Landlords, advocates go toe-to-toe on good cause eviction

 Would a rent cap and automatic lease renewals erode New York’s housing stock? Or give tenants stability and the leverage they need to get repairs?

That question highlighted a long state Senate hearing Friday on the possible impacts of good cause eviction. The measure, which tenant advocates hope to pass before the eviction moratorium sunsets Jan. 15, would let tenants challenge an eviction for nonpayment if the rent rose by at least 3 percent or 150 percent of the inflation rate, whichever is higher.

Landlord groups liken the measure to rent control and say it will lead to “permanent tenancies.” At the hearing, moderated by Sens. Brad Hoylman and Brian Kavanagh, owner groups argued that limiting rent increases and allowing for automatic lease renewals — another component of the bill — would be another blow to the affordable housing stock.

Landlords cannot repair apartments without raising the rent, they said, and longer tenancies would stunt unit turnover, reducing the pool of available housing and driving up rents for the few units that open up. Economists say rent control discourages developers from building rentals, further limiting supply.

“Strict regulations lead to reduced quality and lower quantity of rental housing,” said Joseph Condon, general counsel for landlord group the Community Housing Improvement Program. “There’s no example throughout history showing otherwise.”

Condon pointed to the 2019 rent law, which severely limited the rent increases landlords could impose to pay for upgrades of stabilized units. The law has forced apartments into “purgatory,” he said: Rents don’t cover the cost of repairs and owners have been forced to mothball units that need work, reducing available units during an affordable housing crisis.

Landlords said the restrictions have pushed smaller landlords to sell their portfolios to bigger firms. Some anecdotal evidence supports that contention, and sales of rent-stabilized buildings did tick up after the rent law passed and before Covid hit.

Baruch Guttman, director of operations at development firm Vision Development, said the rent law has likewise driven away investors and stunted development.

“Prospective buyers and investors currently see New York real estate as a bad bargain,” Guttman said. “To help solve the affordable housing crisis and housing supply shortage we need to be able to profit from ownership.”

Ellen Davidson, staff attorney at the Legal Aid Society, rebutted those claims.

“The regulated stock is better because tenants have the right to renewal leases and they can fight for better repairs,” she said.

Rent-stabilized tenants sometimes lack leverage to get repairs done because they are loathe to give up apartments with below-market rents. But Davidson underscored that good cause eviction does not provide the same level of regulation.

“I wish this were rent control, but frankly, it is not,” Davidson said.

The attorney said critics of the legislation can look to New Jersey, which has had a good cause law in place for decades, as evidence that the policy does not disincentive investors from buying.

“New Jersey has development, New Jersey has evictions,” she said. “We have not seen a steady stream of landlords leaving New Jersey.”

The New Jersey law provides tenants a defense against eviction when there is an “unconscionable” rent increase. But unlike New York’s proposal, it does not put a number to that increase.

Robert Magee, an attorney for the city of Albany, which passed its own version of good cause last summer, said it has not yet seen evidence that it increased housing maintenance violations. He noted, however, that the law has not been in place for very long.

Magee did note that among eviction petitions filed in Albany City Court last year, nearly half of those buildings had open violations, compared to just 16 percent of all residential properties. That shows buildings in which a tenant is facing eviction are more likely to be in a state of disrepair.

“[Good cause] provides an incentive for the landlord to invest in the tenant, invest in the building to give them a good place to live,” he said. His argument is that owners will be more willing to maintain units if their tenants are entitled to lease renewals.

Long-term tenancies can help to build relationships between landlords and tenants. However, tenants in rent-stabilized apartments, who are entitled to lease renewals, have often complained that landlords try to get them to leave by neglecting to make repairs.

At the hearing, lawmakers and real estate interests raised concerns that by removing landlords’ power to not renew leases, good cause legislation would result in more eviction hearings, overburdening the already backlogged courts.

“The court system will be overwhelmed more than it is now if nearly every lease termination needs to be adjudicated,” said Lisa Damiani, executive director of the Coalition of Western New York Property Owners.

Davidson said a Princeton University study of good cause legislation in four California cities found that filings and evictions had decreased in cities that had passed the legislation compared to those that had not.

“This suggests that those concerns are overblown,” Davidson said.

https://therealdeal.com/2022/01/10/landlords-advocates-go-toe-to-toe-on-good-cause-eviction/