Okay, so you’ve heard some of our issues, but some of
you may be wondering, “HOW did this all come about? How can a new landlord come in, empty half
the building and basically double the rents?”
Well, they had help.
AJ Clarke Realty was the management company for our buildings prior to the current landlord/management agency, Fortune East. Back then we had an actual PERSON to go to with issues, our managing agent, Steve Kaplan. The buildings were well maintained, spotlessly clean, and there was no funny business with rent checks or lease renewals. We thought Steve was, if not the most
personable guy, at least somewhat efficient and accessible. Too many NYC tenants were (and are) unaware
that a building’s management company (and Realtors and landlords too) may not have their best interest at heart;
that they may indeed have a separate agenda that does not include their future
living arrangements. Over a period of about seven years, AJ Clarke
stealthily destabilized a good number of apartments. We can surmise now that AJ Clarke’s REAL role
was to prepare the property for sale.
Here’s how it works:
Say you’re managing a building that the owner is looking to sell and you have X number of rent stabilized
apartments. You know the building will
fetch a higher price if only those apartments were market rate. What do you do? You take a stabilized apartment and offer it
at LESS than the legal rent. This is
called preferred rent. A tenant moves in
thinking they're getting a deal, but when their lease is up, the preferred rent is rescinded. So they are faced with, not only that rent
increase, but the additional percentage tacked on by the Rent Guidelines Board
that year. The tenant moves out and the managing agent can now add an additional 20% vacancy increase. For
instance; if you have an apartment whose rent is registered as $1300 a
month, you give it to a new tenant with the preferred rent of $1000 a
month. When it's time to renew the rent is now $1300, plus the RGB
approved yearly increase (say, 5%). The rent is now $1365. If the
tenant is unable or unwilling to absorb the $365 increase they leave and
another 20% is tacked on. The new legal rent is $1638. Now they don’t
pass on these increases to the
next tenant, maybe they offer it as $1300…until their lease is up. Bang!
The cycle starts anew.
This is perfectly legal.
Our politicians (our rent laws are controlled by Albany, not the city) have bent to the will
of one of the most powerful lobby groups in the state; The Real Estate Board of
New York. Their tireless efforts,
combined with generous donation from real estate moguls (see: http://www.observer.com/2010/ real-estate/tishman-speyer- lead-pack-cuomo-campagin- contributions
) have effectively eroded our rent laws to the point where we are losing an
estimated 20, 0000 units to destabilization a year!
What is going on? How can this be legal? Where is the city agency that oversees all this?
ReplyDeleteWell, the surprise is surely unkind and unfair. The other point of course is that it helped Kaplan keep the buildings full. Why anyone should think that Rent Stabilized buildings should be exempt from the kind of machinations that caused the mortgage/bank crisis is beyond me. Ever since the Schneider Brothers sold the buildings, surely much of what was done was about turning the buildings and apartments over to maximize their value and the return on investment of any investors. Renting an apartment to someone who doesn't realize that he/she may soon not be able to afford the true rent of the place is not much different from giving a mortgage to someone with insufficient credit.
ReplyDeleteThis has nothing to do with the economic situation and variations on the theme have been going on for as long as there have been landlords and tenants. It has escalated when rent regulations were removed, creating two classes of apartments. Tactics haven't changed dramatically in the last 20 years. The laws keep shifting slightly and landlords find new loopholes to get rent regulated tenants out and non-regulated tenants in. You think you've seen everything and they invent something new.
ReplyDeleteI think that I just got this trick.... They raised my next rent almost 8% for 1yr. It is unfair....
ReplyDeleteI need some advice for this
ReplyDelete