Exclusive | Thousands of rent-stabilized apartments face foreclosure in NYC tenant bloodbath
Thousands of rent-stabilized apartments in NYC are under threat of foreclosure as an increasing number of landlords stop paying their mortgages — making the coveted units even more scarce, insiders told The Post.Buildings with a cumulative 176 rent-stabilized units have been foreclosed upon since 2022 – a figure that’s been doubling every year on average — with another 2,093 stabilized units have been put on notice by banks in April that landlords are defaulting on their mortgages, according to an analysis by PropertyShark data.“It’s a bloodbath,” said Sarah Saltzberg, co-owner of Bohemia Realty Group, who rents pre-war units in upper Manhattan.Owners lose money on stabilized units, so they leave them empty and skip the listing – or walk away entirely, leading to foreclosures, Saltzberg said.“The owners are under water – that’s why in the past year it keeps happening over and over,” she said.Many of the pre-1974 buildings — the year NYC established the rent stabilization system — desperately need repairs, but owners have stopped investing due to 2019 laws capping rent hikes after improvements at 2% and banning landlords from raising rents by up to 20% upon vacancy – changes that cut property values.
Rising interest rates over the past three years also slowed renovations to a crawl.Tenant advocacy groups and Democratic state legislators lobbied hard for these changes, considered the biggest overhaul of New York’s rent laws in a generation – arguing they were necessary to protect tenants against rent hikes and evictions.And they succeeded.But NYC tenants could end up paying the price.“A lot of us might end up displaced — a new owner can come in and kick us all out,” said Coco Portofe, 34, whose East Village rent-stabilized building is the subject of ongoing court proceedings.If a landlord defaults, a new owner has to keep rent-stabilized units stabilized and keep rent the same.
But the issue is when no one wants to buy the f...