Ask Real Estate: Why Do My Rent-Stabilized Neighbors Own Vacation Homes?

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Q: About a decade ago, my rent-stabilized Upper West Side building converted to condos. Some tenants bought their apartments and others kept their rent-stabilized leases. Some of my neighbors who rent also own homes in places like Miami, the Dominican Republic and Colombia. They pay shockingly low rent, like $1,200 for a three-bedroom, and don’t have to pay the assessments for capital improvements that owners pay. It seems to me that they are getting subsidized rent when they could afford to pay market rate. Shouldn’t these apartments be reserved for people who really need them? And is this legal?

A: To keep a rent-stabilized apartment, you must live in it 183 days a year and pay your rent. Beyond that, you are free to do what you wish with your money.

“If they maintain their apartment as their primary residence, they can own the Taj Mahal,” said Dean M. Roberts, a real estate lawyer in the New York City office of the law firm Norris McLaughlin & Marcus.

The tale of the rent-stabilized tenant with a house in the Berkshires is something of New York City lore, and often used to point out the shortcomings of rent regulation. But there’s a flaw in that argument.


Rent stabilization is not a housing subsidy. Landlords do not receive public money or tax credits for providing these units. Instead, these rules were designed to address a persistent housing shortage (the citywide rental vacancy rate in 2017 was 3.63 percent) by capping rents and providing tenants with protections. Although high-income deregulation does limit high earners, the rule only kicks in once rent hits $2,700. In a market where landlords can demand huge rent increases simply because there are not enough affordable apartments to go around, rent stabilization provides what its name implies: stability.

“Are there people who have vacation homes and have fuller, richer lives because they have a rent that’s not strangling them? Yes,” said Benjamin Dulchin, the executive director of the Association for Neighborhood and Housing Development, an advocacy group. “I don’t think that’s a bad thing at all. That’s the way the system’s supposed to work.”

Just as you made a choice to invest in New York City real estate when the option arose, your neighbors chose to invest their money elsewhere. The sponsor of those rental apartments presumably pays assessments for capital improvements, so owners are not subsidizing the renters. And when you eventually sell your apartment, you will likely see a sizable return on your investment, since sales prices, just like rent, continue to rise on the Upper West Side.

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A version of this article appears in print on , on Page RE2 of the New York edition with the headline: Shouldn’t Rent-Stabilized Apartments Be Only for People Who Need Them?. Order Reprints | Today’s Paper | Subscribe

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