Housing Stability and Tenant Protection Act of 2019
The Housing Stability and Protection Act of 2019 was established in an attempt to reduce the barriers that low-income tenants face in securing housing in New York City. As of June 14, 2019, any new property leases in the New York City market, including those for condos and co-ops, must abide by new regulations. We’ve provided the following details regarding the Act and the evolving market response.
What Changes Will Impact Relocating Employees?
Application fees collected by the landlord — in both co-ops and rentals — must not exceed $20 per individual, compared to the typical $100-$150 application fees previously collected. Third parties such as management companies, brokerages, and on-site companies can continue to charge more than $20, but some speculate this will change. Condo boards are considered a third party as well, so their typical application fees of $750-$2,500 continue.
The fee for a background/credit check must now be waived if the applicant can present a background/credit check that was completed in the previous 30 days. The landlord may require a receipt for the credit report as proof of purchase. Landlords do not have to accept reports obtained from free credit monitoring websites.
Additionally, landlords are no longer permitted to search public records for potential tenants’ involvement in past eviction cases. This will limit the ability for New York landlords to maintain a tenant “blacklist.”
Landlords can no longer collect more than one month’s rent and one month’s security as a deposit to secure a lease. This is a big change, as some New York landlords had been collecting as much as three month’s rent or more before this Act was established.
Exceptions to this deposit limit cannot be made for short term or furnished rentals, so we expect that landlords will be taking this into account when determining monthly rental fees.
Pet deposits are no longer permitted and will likely cause rental rate hikes as well.
Landlords must return full or partial security deposits and/or provide a written list of itemized deductions, as applicable, within 14 days of the end of the lease. We anticipate this might be changed, as landlords are arguing that they don’t have a full record of monthly tenant expenses (e.g., utility bills) at that time
Late fees are now capped at $50 per month. Previously there was no limit, and we often saw fees as high as $100-$300 starting on day three.
Landlords are not allowed to charge a penalty for early lease termination. Instead, the landlord must make a “good faith” effort to sign a new lease. If they are unable to do so, the tenant remains responsible for rent until the end of the lease term, unless otherwise agreed in the lease. If the landlord or the tenant finds a qualified applicant to take on the lease and the landlord incurs no lost rent, then they cannot charge a penalty.
Potential Challenges for Foreign Nationals
Prior to the new regulations, landlords had the option to charge a larger security deposit or require pre-paid rent when the tenant had no US credit history. While this new deposit limit initially seems like good news, there may also be challenges for international tenants due to this change. We anticipate some landlords will be hesitant to rent to foreign nationals who cannot provide a US credit report when they are no longer permitted to minimize their risk through the collection of a larger deposit. However, with proof of enough income, an institutional guarantor that insures the lease for a one-time cost of a little more than one month’s rent, or a local qualified personal guarantor, many landlords will continue to rent to foreign nationals without issue. Station can assist with recommending several institutional guarantors if required by the landlord. Those with bad credit or borderline financial qualifications (e.g., they earn less than three times the monthly rent) will have limited rental options.
What Steps Are We Taking to Assist?
Depending on the neighborhood, vacancy rates in New York City are currently between 1% and 2%. Station is actively reaching out to all major NYC landlords in order to determine their new practices when leasing to foreign nationals. We are also working with landlords to proactively negotiate favorable terms for international tenants so we can continue to provide the largest selection of available properties possible. We will continue to educate those relocating to New York City on these new regulations, so property availability expectations are properly set. We are assisting with any necessary extra steps such as understanding landlord requirements and then helping provide guidance on fulfilling those requirements including securing a guarantor. As always, Station continues to assist in marketing each client as the best prospective tenant for their desired property.
We will keep our clients updated on other observed market trends, as landlords are just starting to react to these new regulations, and we expect ongoing changes.
DISCLAIMER: This document is meant to provide an overview of the Housing Stability and Tenant Protection Act. It is not meant to provide legal advice and should not be relied upon as legal advice or as a complete legal opinion concerning any provision of the Act. Further, the Act may be subject to further amendment and clarification. All readers should consult with their attorney before taking any action in connection with any of the information provided herein.