Once a working-class haven, Brooklyn has become one of New York City’s hottest neighborhoods. Areas like Williamsburg, Flatbush and Dumbo have seen a rapid influx of people seeking refuge from Manhattan’s exorbitant cost of living. It started with artists, and then hipsters soon followed. Now, downtown Brooklyn is one New York’s trendiest neighborhoods.
And, as these neighborhoods become more well off, so do local landlords.
That is, of course, as long as you aren’t a landlord who owns and operates one of New York City’s approximately 300,000 rent-regulated apartments.
Faced with restrictions that cap rent increases, landlords and their property managers have found creative solutions to take advantage of greater market demand. One entails switching apartments off central heating systems and onto individual meters. Then, landlords can pass heating expenses on to tenants.
The only problem? This strategy is illegal.
Removing a central heating system in a rent-controlled unit requires the state housing division’s approval, as this would otherwise be considered a reduction in basic building services. Regardless of the system in place, landlords are required by law to pay for and provide heat and hot water to rent-regulated tenants.
An investigation by New York State Homes and Community Renewal’s Tenant Protection Unit (TPU) and Office of Rent Administration (ORA) found landlords in nearly two dozen buildings had made these conversions, affecting roughly 145 tenants. Most of the buildings were in Bushwick, Williamsburg and other parts of north Brooklyn—the borough’s most rapidly gentrifying neighborhoods. Most were also small walk-ups with just 6 to 10 apartments.
Early in the winter, New York Governor Andrew Cuomo announced he’d be cracking down on such practices and the state would be taking “aggressive proactive enforcement steps” to that end. All landlords identified during the TPU/ORA investigation were sent a letter regarding their violations; they must restore the central heating system and reimburse tenants for any heat or hot water costs incurred since the unit’s initial removal. If owners ignore the letters, ORA may grant tenants reimbursements paid out of their future rental payments.
“My administration is committed to protecting the rights of all tenants, and this action is another example of how we are standing up for New Yorkers and holding unscrupulous landlords accountable,” said Governor Cuomo back in December.
The crackdown comes in the wake of heightened complaints that landlords and property managers have been harassing low-income tenants so aggressively that the tenants have no choice but to leave. In other circumstances, landlords and property managers have been caught illegally deregulating rent-controlled apartments in an effort to capture market rent. The problem has been particularly pronounced in Brooklyn, but has also happened in areas such as Upper Manhattan.
Governor Cuomo’s announcement came just two days after the New York Post detailed how infrequently the state’s Human Rights Commission has pursued action against landlords who have blatantly turned down tenants with rent subsidies.
“Landlords and brokers have repeatedly broken the law, even brazenly posting ‘no voucher’ warnings in ads and openly telling would-be renters with subsidies to go away,” writes Greg Smith. Although the Commission can impose civil fines of up to $125,000 per violation, the largest fine issued since 2008 was just $20,000 and most averaged just over $5,000. Violations happened few and far between, though, with the Commission issuing just 157 during that time period, and 62% of violations resulted in no financial penalty to landlords or brokers.
While it may have been relatively easy for NYC’s landlords and property managers to get away with rent-regulation and income-bias violations in years past, the joint effort by city and state officials in this central heating system crackdown is an indication that those days may be numbered. More so than ever before, there will be pressure on public officials to go after building owners and operators for these violations as the cost of housing continues to rise.
Not all states have rent regulation, and the requirements in each state may vary. If you’re a landlord in New York, it is important to familiarize yourself with the rules and regulations. Otherwise the “cha-ching!” you hoped to realize by investing in NYC’s up-and-coming neighborhoods might end up offset by increasingly levied fines.Read more on Legal Considerations