What recent piece of legislation do you think will impact rental owners the most?
LISA RUSSELL
The legislation and legal actions against revenue management software (Yieldstar/LRO) will have an impact on rental owners who saw 30% rental rate increases during the 2020-2022 leasing cycles. Covid created a black swan event that raised rental rates to unprecedented levels. Now in 2024, these
same properties are struggling as rental rates decline down to pre-pandemic levels. Owners/operators will need new ways to set and monitor pricing should the legislation pass to remove or block these revenue management systems.
ROBERT KNAKAL
A recent piece of legislation that will impact rental owners the most is the Corporate Transparency Act (CTA). If you hold title to rental properties through an LLC or another entity, the CTA requires you to report sensitive data to the federal government, including facts about your entity and its owner’s personal identifying information. If you don’t report this information, the CTA’s
penalties are very severe, including a $10,000 fine or two years in prison. The federal government may not stop there. They have already proposed similar disclosures when properties are bought by an LLC using all cash. The CTA will peel back significant privacy protections for rental owners, thus having a bigger impact on them than any other legislation.
GARRETT SUTTON
NYC legislators are trying to determine which proposals they can agree on. There is a huge gap between what the industry wants and needs and what policy makers want regarding tenant protections. For the industry, a real estate tax abatement program is needed in order to build rental housing. Given the current cost of construction, even if land was free, it is likely not economically feasible to build a rental building. Policy makers are looking to confiscate and restrict private property rather than deal with creating more supply. As I told our mayor and our governor, all of NY’s housing issues are solved with increased supply. During the pandemic, folks moved out of NYC in
droves, vacancies rose sharply (tantamount to supply increases) and rents dropped by an historic 30%. There are several ways to increase supply but many of those approaches seem to be off the table. In exchange for the new tax abatement program, policy makers want “good cause eviction,” which essentially means an owner would be required to offer a renewal lease to every tenant with rent caps on potential increases regardless of market conditions. If implemented, many market participants believe this would drive all institutional capital out of the market and exert further downward pressure on multifamily property values.
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