2019 NEW YORK STATE RENT LAW

NYSTUDENTS ANALYSIS

How could the ‘strongest tenant protections in history’ end up hurting international students?

July 2019

– INTRO

In this past June, the old rental law in New York expired and the new rental law passed.
The passage of the new law has caused a wide range effect. While the highly reported and debated issues are all around landlord rights in NYC and the limit of rent-raise on rent-stabilized apartments, there is a group of tenants whose upcoming lease are already in danger due to this change of law. 
The focal point is whether the rent can be paid in advance for applicants.
In NYStudents, we have been working hard to help students study abroad in NYC. Today, let us sort out the ins and outs of things and the countermeasures.

Bill S6458

On June 14, Governor Cuomo signed the Bill S6458, which allowed what we call 2019 rent law to be effective.
This bill is widely regarded as one that provides the ‘strongest tenant protections in history’. On top of that, different from the previous renting law which needs update annually, this bill is permanently effective.

NYC RGB Adjustment

On this S6458, on June 25, in Lower Manhattan, the New York City Rent Guidelines Board (RGB) passed the latest NYC’s annual rent raise limit for rent-stabilized apartments:
However, the public found out that the new regulations for rent increase were exactly the same as last year.
It’s a story that we as real estate professionals are too familiar with: the rental market is not happy at both ends since the landlord feels that he can’t afford to own his house, and the tenants think it is still too high a rent to pay. 

IMPACT ON FOREIGN COMMUNITIES

The friction between local long-term residents and landlords around rent-stabilized apartments remains the same, but the new renting law already has extra weight on the international students’ communities. 
Below are screenshots of our communication with some of New York’s luxury apartment buildings :
Source：NYStudents USWOO Realty

As of the end of June, most of LIC’s apartments had indicated that they will no longer accept applicants that want to pay one year’s rent up front. Luxury rentals in Manhattan, Brooklyn followed up quickly in implementing this rule. 

In other words:

UNDER THE CURRENT RENT LAW, LEASING WITH 1 YEAR RENT PRE-PAID IS IMPOSSIBLE!

In the face of this unpredictable effect of the new rent law, our clients base which is mostly made up by international students showed their deepest disbelief and confusion. 

“My God, suddenly we cannot select pre-pay as our payment method for our leases. Life is now officially even harder on us who study abroad.”

Client A, freshman of Fordham Graduate School, looking for a room in 101 West End with his friends.

“I read the text of the bill. It didn’t say a word about ‘pre-pay’ . What happened?”

Client B, seeking to renew his lease in Jackson Park.

“Well, what I want to rent is new buildings like Sky, Jackson Park. They certainly don’t fall into the category of rent-stabilized buildings which almost all dates back to the days before 1974. Why are they being controlled by this new law?“

Client C, still deciding.

Don’t panic, please stay with us and let me explain to you the recent changes in rental-related laws in the following chapters. Recommendation of countermeasures from us would also be provided. 

The Housing Stability and Tenant Protection Act of 2019

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Security deposits

Security deposits are now limited to one month’s rent, and landlords must return them within 14 days of the tenant leaving the unit — along with an itemized statement covering any deductions made.

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Days before a notice of rent raise

Landlords must give at least 30 days’ notice to tenants if they intend to raise the rent of a unit by more than 5 percent. The longer a tenant has been in place, the more notice a landlord must give of a large rent increase: 60 days’ notice for a tenancy or lease of one to two years, and 90 days’ notice to a tenant who has lived in a unit for at least two years or has a lease of at least that length.

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Rules related to eviction

If a tenant has been evicted, judges are now permitted to postpone that eviction for up to one year (up from six months) if the tenant can’t find somewhere similar nearby to live. Housing courts also must consider how an eviction will affect the tenants’ health and well-being, including the school attendance of children who live in the unit.

Unlawful evictions of a tenant are now a misdemeanor, subject to a fine of $1,000 to $10,000.

Instead of 10 days to fix lease violations, tenants now have 30 days.

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Fewer Application Fees

Application fees on apartments are limited to $20, even if they include a background check.

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The Prohibition of Blacklisting Certain Tenants

The blacklisting of purportedly troublesome tenants by landlords is now prohibited.

Reports from mainstream media such as The New York Times will generally list above policy guidelines as the summary of the new law. 

On the first glimpse, it is easy to think that the restrictions on the deposit directly lead big landlords to believe that it is not OK to accept the 1-year rent all at once, which lead to the policy changes we are suffering from.

There is a problem with this thinking, the deposit is not equal to the pre-paid rent, and these terms apply only to [rent-stable] apartments.

Look elsewhere in the texts. Read the bill carefully, and there is a crucial paragraph:

CORE TEXT

The text in green is the law we should look into. The paragraph before it lists the various types of apartments under the rent regulation defined in  New York City in the past decades. Then comes the fatal judgment:
Except the categories of apartments listed above
All other apartments on the market, cannot take a deposit, or advance payment bigger than one month’s rent.
This explains why even new developments like Jackson Park and SKY are still being “taken care of” by this law. As a landlord, you just can’t take money in advance – even if your applicants want to do this.
It seems that Albany didn’t give enough consideration for hundreds of thousands of international students that comes to New York each year to study. 
But the problem may not be that simple.

NEW YORK’S PERENNIAL HOUSING CRISIS

Not to mention international students, even local NYC students is having a hard time find an apartment. 
Last year’s New York Times survey came to an amazing conclusion: 110,000 students in New York City were “homeless.”
You can view this article here.
The number of students in New York City that meet the Homeless standardi is even larger that the population of Albany.
Entering 20th century, New York has long been plagued by housing shortages.
In the early 20th century, the population of New York City surged and rents soared. In this regard, the mainstream attitude of the New York municipal community is:
Rising asking rent? 
For a free market, this is not a problem, supply and demand will be balanced in the end.
The arrival of two world wars broke this confidence.
The need for war has plundered a lot of resources and manpower, hindered the construction of residential buildings, and caused a shortage of housing in the United States . New York, as a center of heavy industry, shipping, finance and talent, suffered more .
New York City’s vacancy rate during World War I touched the number of 1%. 
What does that mean is 99% of the houses on the market used to rent are already full of people. 
In 1920, the federal government passed the Emergency Rent Act that turned all New York City apartments became “rent-controlled” apartments overnight. 
In 1942, the federal government passed the “Emergency Price Control Act”, the city of New York thus frozen the rent of all New York rental apartments, ordered the landlord to maintain the level of rent on the same level as of March 1 earlier that year.
After the war, New York City still retained the “rent-controlled” apartment system. In the 60s and 70s, rent-stabilized apartment-related legislation was gradually formed, and these two systems formed the basis of rent regulation in New York. However, some of the less stringent legislative choices in 1994 and 1997 have greatly reduced the effectiveness of New York City’s affordable housing efforts.
With this history in mind, it is not hard to understand why the rent of New York City is so high. Looking at the rent price in New York over the past 100 years, we came up with this graph:

WHAT DOES ALL THIS MEAN?

After a period of stability after the WWII, it was basically a madness for the rental market. At the peak of the 1990s, the rent was so high that it almost seems to be unreal.
After the financial crisis, it was reduced and returned to rationality.
The latest New York City rental housing vacancy rate: 3.63 %.
This is far below the national vacancy rate of 6.9%.
This also shows that even if the government works hard, it is still unable to get rid of the reality of renting a house.
Therefore, instead of asking why studying in New York is so difficult to rent a house, it is better to accept reality and think about how to quickly have a foothold.

CAN’T PREPAY, WHAT OTHER PAYMENT METHODS CAN RENTERS CHOOSE?

1. PROVE OF PERSONAL INCOME

If you come to New York to rent a house from another state and have a legal job with an annual income that adds up to 40 to 45 times the monthly rent, then you can apply your apartment and choose to pay it normally.
Of course, in this case, you may also need a letter of recommendation from the previous landlord, as well as credit history.
Three major credit record inquiries: Experian (TRW) Equifax (LBI) Transunion (TU).
The credit scores of the three credit record companies will be displayed on the general credit history report. Generally speaking, the credit rating requirements for renting a house are not too high, and 640 points or more are usually acceptable, but you have to.
If you open a credit card for more than half a year and repay it on time, in general, the score will definitely reach this level.
How to rely on the student ID to open a credit card, accumulate credit in advance, welcome to contact the New York International Student Network WeChat public number background, ask for the latest “2019 New York Freshmen Handbook”.

2. FIND A PERSONAL GUARANTOR

A personal guarantor, as the name implies, is a person who is willing to make a guarantee for your house with personal financial resources, usually your relatives or good friends.
The conditions for meeting the guarantor are quite high: individuals with US income need to earn 70 times more than the monthly rent, and some cases will be as high as 80 times or more. Some properties also require guarantors to be New York, New Jersey and Connecticut. A resident of one of the three states.
No matter who you ask, the following documents are always needed:
  • At least four recent payrolls
  • Two-year tax return
  • Recent bank statement
  • Social security number, state ID or passport
  • Proof of liquid assets (such as stocks, securities and bonds)
If the guarantor is uneasy about the privacy issue raised by these sensitive personal information, he or she may choose to negotiate with the building and have them ask the above documents from them.

3. FIND AN INSTITUTION GUARANTOR

以租房担保公司“Insurent”为例，需要支付一个月的租金做保险费 (premium)，就能有足够的资质租到理想的房型。
市面上提供租房担保产品的公司有以下五家：
  • Insurent
  • The Guarantors
  • Jetty
  • Leap
  • Rhino
一般而言，大楼会有指定合作的担保公司，所以从它们当中挑选的时候，也要考虑到自己申请的公寓的政策。

ANOTHER CONFUSION CAUSED BY THE NEW RENT LAW

S6571A

When the 2019 new rental law came out, the landlord generally complained that the media has disclosed that there have been reports that at least two landlord organizations have already intended to appeal directly, and the new law is unconstitutional.
The Wall Street Journal also warned the economic impact of the new bill.
In addition, the vague wording of the apartment under the 421-a Tax Exemption Act in the 2019 Housing Rent Stabilization and Tenant Protection Act also caused an uproar in the real estate sector.
During the deliberation stage of the bill, a clerical error accidentally placed all market-priced 421-a tax-exempt bill apartments under permanent rent control, causing real estate developers to be in turmoil.
The 421-a Tax Exemption Act is an important economic stimulus to support the upgrading of communities such as LIC and is an important consideration for many Condo owners to buy a home.

Developer Durst Organization has an important project under construction in the Astoria area. After hearing the final adoption of the new rental law, the spokesperson said “it can’t be built.”

In response, after the passage of the new rental law, the State Senate quickly passed a remedy bill to clarify the rent control of the apartment buildings applicable to the 421-a Act – maintaining the previous preferences and not regulating these apartments. Rent.
Developers and homebuyers are now relieved.
The widespread impact of the new rent law and the “patching” of subsequent legislation are indeed unexpected, and we will continue to follow up on the latest housing rental guidelines around New York City.

ABOUT USWOO REALTY

USWOO Realty （美窝房产）is a real estate company under the OSSC Corporation dedicated to the North America real estate market. The company currently has more than 300 full-time real estate agents in the United States, headquartered in Boston, USA; also has branches in New York, California, and other places.

Since 2012, USWOO Realty has grown along with the various websites dedicated for the international students across the country and has long been committed to serving international students who study, live and work in the United States. In the past few years, the company has accumulated more than a thousand rental deals, with a turnover exceeding 60 million US dollars. Our business portfolio has been expanding along the way. We cover residential rentals, house buying, and selling, commercial real estate. Recently we have set our foot into the investment and construction site of the real estate business. 

We have a unique perspective and resource advantage – at USWOO, team members have overseas study experience and are generally from well-known institutions in North America. We are closely following the trend of the US property market, and have long-term cooperation with top real estate developers. We also maintain close contact with other students’ organizations to listen to the real needs of our customers. Technically, we are the first professional real estate service provider in the industry to successfully use VR (Virtual Reality) technology on a large scale, so that each customer can watch the room remotely. At the same time, relying on the OSSC Corporation, we are also happy to provide a one-stop solution for young professionals who are studying and living in the states. 

NYStudents is a rental brand of USWOO.  In 2018, it continued to lead the Greater New York area rental market, ranking first in terms of market share among the brokerage companies in the similar category. In the Greater New York area, we have been working closely with mainstream real estate property developers and apartment management groups to provide exclusive listings and preferred services for a long time.

In our view, the core of USWOO’s real estate services is to combine our understanding of the overseas property market with specific needs through excellent communication.

Communicate well so that we can serve you well, this is USWOO.

We cannot act as your attorney (and we are not attorneys) and makes no representations, expressed or implied, that the information contained within this article can or will be used or interpreted in any particular way by any governmental agency or court.
– USWOO@nystudents.net –