close
close

Proposed NYC leasing cap for co-ops fails

June 11, 2024 – The debate focused on Carnegie House, a cooperative that is confronted with a significant increase in rent.

The New York Post and the New York Real Estate Board (REBNY) painted it as a handout for “millionaire co-op owners.” Advocates painted it as a lifeline for the 25,000 New Yorkers who live in cooperatives that don’t own the land on which their buildings sit and therefore face periodic and potentially crippling increases in their income. “land lease.”

“They” were a pair of bills introduced in the state legislature that would have placed a cap on increases in long-term land leases. The bills were sponsored by Sen. Liz Kreuger (D-Manhattan) and member of the Assembly Linda Rosenthal (D-Manhattan), who said in a statement: “Some residents have difficulty selling their homes, especially at the end of a leasehold term, because purchasing an apartment with an expiring ground rent is too risky for potential homebuyers. This legislation will protect residents from exorbitant increases and ensure they get a fair deal when negotiating rent increases once the ground rent expires.”

(Buyers from land leasing cooperatives typically pay 20% to 30% less for the purchase, but then face higher monthly maintenance costs to cover the rent of the land.)

REBNYs Zechariah Steinberg told the Post that the proposed legislation was “an unconstitutional solution in search of a problem.” He added: “It is simply bad public policy to give a legislative benefit to the millionaire cooperative owners who bought their homes years ago at discounted prices with full knowledge of these leasehold agreements.”

When the state legislative session ended last week and the smoke cleared, neither bill had gained enough support to become law. However, The real deal According to reports, the Senate and Assembly signed a separate bill sponsored by Senator Toby Ann Stavisky (D-Queens) and Rosenthal that will allow the city’s 100 leasehold cooperatives to renew or extend their lease terms at any time (as long as their contracts contain provisions allowing such extensions or renewals), as a way to provide greater certainty for shareholders. The bill is not nothing, but it is small consolation for those who were hoping for a firm cap on future land rent increases.

Much of the debate over the proposed legislation passed Carnegie House, a 324-unit postwar co-op at 100 W. 57th St., where its lease expires in March 2025, making it virtually impossible for shareholders to sell their apartments. Although it is a mid-range building, the location is good Billionaires Row some assumed it is home to wealthy people who don’t need legal relief for their soon-to-increase rents on the land. The new owner of the land, who was not involved in drawing up the current lease, says the new rent should be based on what he paid for the land – a quadruple of the previous valuation.

A group advocating for the bill, the Land Lease Cooperativehas said it will continue to push for legislation to protect middle-income shareholders from exorbitant increases.

Back To Top