New York Bill Seeks to Cap Co-op Ground Lease Rent Increases
A bill sponsored by Sen. Liz Krueger and Assembly member Linda Rosenthal is being pushed for in Albany. The proposed legislation aims to cap annual rent increases for co-op ground leases and guarantee lease renewals. The bill, supported by a coalition of co-op shareholders, would limit annual rent hikes to 3% or the Consumer Price Index (CPI) and provide shareholders with the right to renew the ground lease and first refusal if the landowner opts to sell. However, it faces opposition from the Real Estate Board of New York (REBNY), which argues that it interferes with private contracts.
Key Takeaways
- The bill in the New York legislature aims to cap annual rent increases for co-op ground leases and ensure lease renewals.
- Sen. Liz Krueger and Assembly member Linda Rosenthal are sponsoring the bill, which is backed by a coalition of co-op shareholders. It would restrict annual rent increases to 3% or CPI, whichever is greater.
- Shareholders would also have the right to renew the ground lease and the right of first refusal if the landowner decides to sell the underlying property.
- The Real Estate Board of New York opposes the bill, stating that it interferes with private contracts and disproportionately benefits wealthy Manhattanites.
- The bill would not apply to co-ops on city- or state-owned land purchased prior to January 1, 2023, but would apply to commercial co-ops.
Analysis
The proposed bill in Albany, led by Sen. Liz Krueger and Assembly member Linda Rosenthal, could have significant repercussions for co-op shareholders and private landowners in New York. If enacted, this legislation would limit annual rent increases for co-op ground leases and ensure lease renewals, potentially benefiting wealthy Manhattanites. However, it is facing resistance from the Real Estate Board of New York, which believes it interferes with private contracts.
The bill may impact the housing market, driving up property values for co-op shareholders due to the capped ground lease rents. On the other hand, it might discourage potential landowners from privately controlling ground leases, affecting the availability of housing. In the short term, tensions between co-op shareholders and private landowners could escalate, potentially influencing other states to consider similar regulations.
Did You Know?
- Co-op Ground Leases: These are long-term leases of land, usually 50 to 99 years, on which a building is constructed. Co-op ground leases are a specific type where the tenant is typically a cooperative housing corporation, owning the building and selling shares to individual residents.
- Cap on Annual Rent Increases: The proposed bill would limit annual rent increases for co-op ground leases to 3% or the Consumer Price Index (CPI), protecting tenants from excessive hikes.
- Right of First Refusal: The proposed bill would give co-op shareholders the right of first refusal if the landowner decides to sell the underlying property, providing the co-op with more control over the sale.