Janna Raskopf
By Janna Raskopf, licensed real estate salesperson at Douglas Elliman
In June 2019, New York State imposed new rental laws called the Housing Stability and Tenant Protection Act of 2019. The law permanently closes loopholes in New York’s rent-stabilization system, allows the system to expand to the entire state and offers eviction protections to renters and manufactured- housing residents throughout all of New York State.
The passing of this bill underscores New York’s goal of protecting its tenants by evening the playing field with landlords. This shift in power has changed the rental landscape as we know it, and it is important for everyone in the industry to understand the new legislation, the processes and a New Yorker’s rights.
Some of the significant changes that the law imposes that will affect landlord-tenant relations include:
Landlord / Tenant Dispute Screening
Denial on the basis of involvement in past and pending landlord-tenant disputes is prohibited. There is a presumed violation if a landlord uses a tenant screening bureau or inspects a tenant’s court records prior to denying the leasehold.
Charge Cap on Tenant Screening
Landlords may charge the lesser of $20 or actual costs of background checks and credit checks. Landlords are otherwise prohibited from charging application fees.
Tenant Providing Credit
Landlords are required to waive fees for background and credit checks if a potential tenant provides a copy of their background and credit check conducted within 30 days and their receipt for payment.
Late Fee Cap
The landlords may not demand payment, fees or charges for late payment within five days of rent due date, and such late fee shall not exceed the lesser of $50 or 5% of monthly rent.
Security Cap
Security deposits are limited to one month’s rent and must be returned within 14 days of the end of occupancy, together with an itemized statement of the portion withheld. Tenants have the right to ask for a walk-through inspection with the landlord before and at the end of occupancy. Prohibited effective July 15, 2019.
Prepaid Rent Cap
Same cap for prepaid rent as exists for security caps and cumulative between the prepaid rent and security: a total of one month.
Receipt Requirement
Landlords are required to provide written receipts upon receiving cash rent (i.e., anything besides a personal check).
Applications
No fees may be charged to receive or review applications, except for background/credit checks, including by cooperatives, who have proprietary leases with their shareholders (not applicable to condo applications by boards of managers).
What Does This Mean for Renters?
A real estate broker who is trained and well-versed in the law can empower tenants and landlords alike while using the laws to their advantage. A broker acting as an authority figure with intelligence and integrity, as opposed to general propaganda, is key.
First, brokers act as an advocate to clients. While landlords can only charge a $20 application fee, some management companies are still charging more. Brokers can help explain and negotiate this on behalf of tenants, which could result in meaningful savings.
Second, landlords can only take first month rent and one-month security. Since paying upfront rent is no longer permitted under the new legislation, having a knowledgeable broker negotiate on your behalf is even more important, since this historically prevalent negotiating tactic has been eliminated. A broker can create a comparative marker analysis on the tenant’s behalf as part of the offer. In addition, they can analyze and offer longer lease terms or different lease length strategies by knowing the historical market patterns to make your offer more compelling to the landlord.
Third, having an authority and an advocate who is working full-time on a tenant’s behalf, in addition to having pre-established relationships with landlords, is invaluable in this ever-changing real estate market. More importantly, having an agent who can use the landlord incentives that are currently being offered to the tenant’s advantage is essential. An agent who is discerning of the market knows when it is appropriate to offer an additional incentive or put a reasonable offer in that the landlord would consider and not reject.
Understanding the laws around rent stabilization and the rights of tenants who have free-market leases vs. rent-stabilized leases is important. Tenants should be able to go back to their real estate agent throughout the duration of their lease with questions so they know how to position any conversations and negotiations moving forward.
How Is the Current State of the Rental Market?
In December, Douglas Elliman Real Estate released its November Rental Market Report for Manhattan, Brooklyn and Queens. Among the passing of the new rental laws, the report showed a continuation of the trends seen throughout the year, with rents rising and concessions falling across all three boroughs, though new leases were down.
Net effective median rental prices in Manhattan have not declined in any month in 2019, and in November, median rent reached the highest levels seen in more than a decade and second-highest level ever recorded. Concessions fell again for the eighth straight month.
According to Hal Gavzie, executive manager of leasing for Douglas Elliman Real Estate, we’ve seen a lot of strength in the rental market over the course of the year, and even though it was a slow month for leasing, November’s report again shows an extension of the same themes. Rents are rising even faster, due in part to price growth at the high end which is largely a product of the softer sales conditions in the luxury market.
In Brooklyn and Queens, extensive price growth was also seen at the high end of the market. Overall median rental prices rose in both boroughs, with landlord concessions down — most significantly for large apartments in Queens.
Jonathan Miller, president and CEO of Miller Samuel Inc. and the author of “The Market Report,” believes conditions in the NYC real estate market right now are ideal for the rental market to thrive, so this month’s results are no surprise. We haven’t seen a rental price drop or an increase in concessions in several months, and it’s certainly looking like the market will finish out the year with that same resilience.
While these new rent laws and market conditions are designed to protect the consumer, at the end of the day, renters are best served by engaging the services of a qualified and seasoned real estate agent.
Janna Raskopf is a native New Yorker who has lived in Manhattan her entire life. Consistently in the top 1% at Douglas Elliman for rentals and in the top 4% for sales, in 2018, Raskopf was Douglas Elliman’s No. 1 Manhattan rental agent.
