New state regulations could benefit tenants, “negatively impact landlords” and discourage investment in apartment buildings, according to a local bank.
New York State in June passed The Housing Stability and Tenant Protection Act, regulations that seek to give tenants more protections, but also reduce options to pass on costs from landlords in affected buildings.
First of Long Island, a 52-branch bank based in Glen Head, calls this a “substantial change to the laws that have governed landlord-tenant relations” in New York.
While much of the impact is in New York City, the bank said the new rules also could impact construction as well as tenants, landlords and developers across the state in affected buildings.
The new rules limit the ability of landlords to increase rents on affected buildings, reducing the ability to “recapture the cost of individual apartment and building-wide capital improvements.”
Legislators touted the new regulations’ ability to protect tenants and prevent abuse by landlords.
“This sweeping legislation provides the strongest tenant protections since the rent laws were enacted decades ago,” Senate Deputy Leader Michael Gianaris said after the legislation passed the New York State Senate.
The rules restrict the ability of landlords to deregulate impacted rental units based on vacancy, the earnings of occupants or reaching a defined rent threshold. And that could raise costs for landlords who invest in affected buildings.
“The Tenant Protection Act could negatively impact landlords and the value of regulated buildings,” according to the bank, “and may discourage developers from investing in new residential multifamily construction throughout New York State.”
The bank said that “this may lead to a weakening of the financial strength of some borrowers and deterioration in the value of certain collateral.”