NY Times reports on tenant harassment in NYC

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Gretchen Morgenson at the NY Times has a story today about the strategic harassment of tenants--many of them migrants--by big real estate companies in New York City.  I posted about this last month here.  

As Morgenson explains, it's part of a financial plan to make big bucks on the backs of low-income tenants. 

Private investment firms have been amassing what may seem like unusual stakes in New York real estate: they have bought hundreds of apartment buildings with thousands of rent-regulated units across the city that produce decidedly meager returns.

As regulatory filings and promotional materials show, the companies expect to generate higher returns quickly by increasing rents after existing tenants vacate their units. Their success depends upon far higher vacancy rates than are typical in rent-regulated apartments in New York.

Some residents and tenant advocates say that they began seeing what they consider a pattern of harassment of low-income tenants this year and suspect that it is a result of the new owners' business models. Tenants have been sued repeatedly for unpaid rent that has already been received by the landlords; they have been sent false notices of rent bills, lease terminations and nonrenewals; and they have been accused of illegal sublets.

The companies dispute the charges of harassment and say they are protecting their rights.

Nevertheless, tenants must answer the notices in court, but many have responded by moving out, court documents indicate. When they vacate the apartments, the owners can increase the rents substantially.

. . .

[T]he New York City Rent Guidelines Board says the vacancy rate on rent-regulated apartments is 5.6 percent each year. Buildings with vacancy rates far higher suggest resident harassment, tenant advocates say.

Vacancy rates have risen above 20 percent in some buildings owned by Vantage Properties; in some Normandy buildings, the rates exceed 30 percent.

. . .

In a group of buildings in Queens with 2,124 apartments, Vantage has filed almost a thousand cases in housing court against tenants since October 2006, according to Robert McCreanor, director of legal services at the Immigrant Tenant Advocacy Project of the Catholic Migration Office in Sunnyside.

Mr. McCreanor said he searched public records for similar actions by the previous landlord. He found no more than 350 in any year. "What's offensive about these business practices is they seek to generate above-average profits by displacing poor people and people who are vulnerable," Mr. McCreanor said.

. . .

. . . Jose Ricardo Aguaiza, 45, who works as a doorman in Manhattan, said he has lived in the same apartment in Woodside for 14 years and never had a problem until Vantage took over in 2006. Since July 2007, Mr. Aguaiza has been sued by Vantage three times, twice for nonpayment of rent that he was able to demonstrate the company had received.

"They refused to give me a renewal contract," Mr. Aguaiza said. "And in court, the lawyer from Vantage offered to give me three months' free rent for moving out." Mr. Aguaiza said he turned down the offer.

On April 10, Mr. Aguaiza and five other rent-stabilized tenants living in Queens sued Vantage. The plaintiffs say the company has engaged in deceptive practices that violate New York's consumer protection laws. Five more tenants are joining the suit.

. . .

The turnover Ms. Williams cited is in keeping with a description of Vantage's strategy in a 2007 document filed with the Securities and Exchange Commission after its purchase of 455 rent-regulated apartments in Washington Heights. The filing described the company's business model as a "recapturing" strategy. Under the plan, Vantage expected in its first year to turn over 20 percent to 30 percent of the units, five times the typical vacancy rate. Vantage aimed to recapture 10 percent of the units each year afterward.

Only 5 of the 455 units were empty at the time of the filing. All but one unit was regulated, with average monthly rent of $752, or 65 percent below market.

Once the apartments become vacant, the document said, Vantage will renovate the units and raise rents "to market levels." That will generate enough cash to service the $70 million in debt that comes due in 2014.


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This page contains a single entry by David Bennion published on May 9, 2008 7:50 AM.

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