While not new, investing in rent stabilized apartment represents a unique niche real estate investment segment. Traditionally wealthy families favored this space because of the buy and hold cash flow potential. Tenants tended to stay in their apartments for long periods of time and landlords reaped the benefits of stable predictable growth.
As laws begin to change, more savvy investors saw an opportunity to bring these rents to market based on new legal precedents. They found that there could be significant upside to the valuation of a rent-controlled building if they could only convert the rents to a more market level. In some cases rents could be doubled or tripled, representing a tremendous amount of unlocked value.
Aggressive Landlord Tactics
Most states with some form of rent control also have a Tenant’s Bill of Rights outlining specific rights of tenants in that state. Many times these rights provide tenants the right to have a comfortable, clean and private space to live. Many landlords found this very comfort to be a determent to turnover, tenants relocating, which would be the event they needed to raise rents. Furthermore, many landlords purchased these properties via Private Equity Fund, which have a finite life. This combination of factors led landlords to use very aggressive and sometimes illegal tactics to remove tenants.
First, landlords will try to remove illegal and non-paying tenants. Tenants occupying an apartment via sublet or some other arrangement not called for in their lease or tenants that fail to pay rent on time or at all will be the first tenants to hear from aggressive landlords. While controversial, these tactics tend to be legal. Landlords will be equipped with a team of lawyers to process evictions as rapidly as the state will allow. Landlords will also begin raising rents where they feel an increase is allowed.
Going beyond the legal tactics, tenants may also notice landlords become much slower in fixing items in rent controlled units. Landlords that make the space less livable via reducing heat, not fixing leaks, unnecessarily invading privacy, etc. are breaking the law.
Tenant Defenses to Rent Decontrol
The best thing to do in a situation where the landlord begins a targeted campaign against the tenants is to organize a tenants association. As a group, tenants have a louder voice and can more affordably represent themselves. Many lawyers will represent a tenants association on a deferred fee basis and in many cases if tenants win the landlord must pay their legal defense bills.
The next thing tenants should do is to know their rights. Understanding the tenant rights in the state or city they reside and reading their lease are important steps to understand what the landlords and the tenants have agreed to.
Finally, read the newspaper regularly and consult an attorney or the Pro Se office of the court. Even if tenants cannot afford to hire an attorney to represent themselves, most consultations are free. Small Claims courts usually handle tenant disputes and tend to be extremely tenant friendly.
Don’t let aggressive landlord ruin a living environment. Tenants should know their rights and defend them.