Strange but true: After amputations, some people can still feel their missing limbs. Amputees’ brains, it turns out, retain a detailed map of the lost body parts — even decades later.
A similar phenomenon exists among rent-stabilized tenants.
Their phantom limbs are the six-figure buyouts they used to get before the state legislature took them away in June 2019. Because legislators and then-Gov. Andrew Cuomo touted the action as great for tenants, and because many tenants were not paying close attention, they did not realize the pot of gold at the end of their lease was gone.
Six years later, building owners say their rent-stabilized tenants continue to inquire about buyouts, not realizing that vacating their apartment no longer offers much value to landlords.
“We have young children, and the costs of finding a new home in New York are prohibitive given our current financial situation,” one renter recently emailed his property manager. “Perhaps a buyout arrangement could be mutually beneficial. While we are not in a position to move without substantial assistance, I’d be open to vacating on a relatively short timeline if the terms are right.”
The building manager, who posted the exchange on X, replied, “I’m sorry … but since the passage of 2019’s HSTPA, I cannot substantially raise the rent on vacant apartments. And though we actually lose money every month on your apartment, we lose less money leaving it rented to you. Accordingly, no buyouts are available.”
Although this represents a missed opportunity for landlords, some seem to relish telling tenants that the HSTPA — which substantially devalued their buildings — hurt renters as well.
“We get these [buyout requests] every now and then,” one posted on X. “Always a chuckle.”
“Get these all the time!” wrote another. “They are clueless!”
A quick explanation:
Before the 2019 Housing Stability and Tenant Protection Act, landlords could remove a unit from regulation — and rent it on the free market for substantially more money — if it became vacant and their legal rent was at least $2,775. Getting the legal rent to that threshold was often possible because a vacancy allowed landlords to raise the rent 20 percent and to do renovations that triggered another substantial, permanent increase.
The HSTPA eliminated the 20 percent hike and made rent increases for improvements small and temporary. Instead of being profitable, renovations became break-even propositions at best and money-losers at worst — to the point where landlords left some run-down units vacant when tenants left.
The new law also did away with luxury decontrol, meaning units would remain rent-stabilized even if their rents exceeded a given threshold. Longtime tenants who expect to cash in their lease like a nest egg are belatedly finding out that the 2019 law ended that chance.
In rare situations, buyouts still make sense. Seth Glasser, a partner at Marcus & Millichap’s NYM Group, told of a client who bought out a tenant from a $500-a-month three-bedroom that would fetch $3,500 a month if moved from rent control to rent stabilization, which is still possible under the law.
The difference of $3,000 per month is what you’d earn on $450,000 invested at an 8 percent return. The landlord, knowing renovations would cost about $100,000, paid the tenant $250,000.
The champions of the 2019 law knew it would kill buyouts for rent-stabilized units. It was a sacrifice they were willing to make to keep rents low for future tenants. Many tenant activists considered buyouts bad for tenants who were vulnerable to low-ball offers or simply did not want to move.
Activists in early 2019 persuaded the City Council to pass a law banning unwanted buyout offers, which they viewed as harassment.
But Glasser said buyouts were typically about $50,000 and benefited both sides, as shown by the example of the rent-controlled unit.
“The tenant walked away with life-changing money. The landlord got a viable unit back,” Glasser wrote in an op-ed. “And now, that three-bedroom can house a new family — or multiple roommates — instead of sitting in the hands of one person paying 1980s-level rent.”
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