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A wave of foreclosures is coming for landlords in New York City thanks to a combination of factors unless the Democrat-run city intervenes on their behalf, the New York Post Editorial Board wrote on Sunday.
The board noted that early on, as the COVID-19 virus swept through the city and the country, Gov. Andrew Cuomo (D) and President Donald Trump’s administration implemented a moratorium on evictions, while at the same time doing nothing to help landlords who still had payments on property to make but who were no longer collecting full rent from tenants.
“Many of these landlords, particularly mom-and-pop small-building owners, have been struggling for months to make ends meet as the COVID crisis drags on,” the Post board wrote.
“Thousands of tenants haven’t paid full rent. Others, looking to escape the virus, violent crime and plunging quality of life, have fled, pushing up the vacancy rate and forcing owners to grant a concession,” the board added.
At the same time, the board noted, bills for the landlords including mounting property taxes, water and sewage fees have continued to pile up without respite. In addition, other costs have skyrocketed such as cleaning, due to the pandemic.
“The latest nightmare: an upcoming tax-lien sale, where the city sells owners’ unpaid tax bills to a third party, which then moves to collect on them, along with 18 percent interest charges,” the board noted.
This combination of circumstances will likely lead to a tsunami of foreclosures soon, barring any intervention.
The board noted that Cuomo put a moratorium on lien sales but it will expire Tuesday, Election Day. That could mean disaster for owners who currently owe, “and not just small landlords, but also owners of private homes as well,” the board wrote.
The editors recounted the “housing market horrors of the 1980s” as an indicator of what’s to come: “Landlords unable to do basic maintenance, some ditching properties altogether.”
That will lead to further decay in the form of abandoned buildings and “urban blight,” the board wrote. Then, the city may come in and take possession of the vacant buildings, which will remove them from “the tax rolls, depriving it of vital revenue.”
The confluence of bad circumstances has led some building owners and real estate developers to call for a temporary ban on landlord-debt sales for the time being.
“If the City Council doesn’t end tax liens,” the “housing crisis of the 1980s will pale in comparison,” warned Rent Stabilization Association president Joe Strasburg.
Noting further that no one “will be spared,” he added that New York City’s “property-tax base, the city’s top revenue producer, will come crumbling down.”
The NY Post board acknowledged that the city indeed needs to find some way to collect taxes that are owed it. But those can amount to “as much as 50 percent of a landlord’s income,” which is “not sustainable even in good times.”
The board concludes: “Landlords need relief. If they don’t get it soon, they won’t be the only ones to suffer.”
The flight out of the city is real. In August, James Altrucher, co-owner of a comedy club who is also an author and angel investor, noted in an online post he fled the city in June with his family amid rioting and rising violence.
He wrote that, in his view, the city won’t “bounce back” as others have predicted it would following the pandemic.
“I could play chess all day and night. I could go to comedy clubs. I could start any type of business. I could meet people. I had family, friends, opportunities. No matter what happened to me, NYC was a net I could fall back on and bounce back up,” he wrote. “Now it’s completely dead.”
For her part, Rep. Alexandria Ocasio-Cortez, who represents a portion of New York City, has demanded that Cuomo and New York City Mayor Bill de Blasio push for raising taxes on wealthier New Yorkers, even as they flee the city by the tens of thousands.
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