Ask Sam: I read the number of Manhattan rentals being warehoused has tripled. Is this legal?
Some landords keep apartments vacant rather than rent them at a discount.
I read that since rents have dropped during the pandemic, especially in Manhattan, landlords are keeping way more empty apartments off the market than usual. Is this legal? Can renters do anything about this?
It’s not against the law for landlords to keep apartments vacant, except under a few specific circumstances, says Sam Himmelstein, a lawyer with the firm Himmelstein, McConnell, Gribben, Donoghue & Joseph who represents residential and commercial tenants and tenant associations.
The term for this is called “warehousing,” and it has seen a spike during the pandemic. Landlords shelved triple the number of unrented Manhattan apartments that they typically hold back, according to data from UrbanDigs.
The reason? Demand for rentals, particularly those in pricey new developments in Manhattan, dropped significantly during the pandemic. In response, many landlords offered concessions to new tenants, like multiple months of free rent—and lower rent—in an effort to entire new renters. Other landlords have increasingly opted to not rent their units at all, in the hopes that the market will soon shift and they will be able to charge the rents they want.
In April, Manhattan’s median rent, $2,975, was down 4 percent compared to the previous month and down 18.5 percent compared to April 2020, according to the Elliman Report. Low rents sparked record lease signing last month but Manhattan landlords are still dealing with an eye-popping vacancy level. It’s been stalled above 11 percent for three months, compared to 2.42 percent in April 2020.
Another contributing factor: The 2019 rent reforms, which overturned vacancy deregulation. The law now prevents landlords from significantly increasing the rent on stabilized apartments after they become vacant. Some landlords are warehousing apartments because they’re hoping the legislation will get overturned or modified, which is unlikely, Himmelstein says.
That said, there’s nothing illegal about warehousing in most instances. In the 1989 case "Seawall Associates vs. New York," plaintiffs challenged the warehousing of SRO units in a building, but the court ruled against them.
"The court of appeals said it was unconstitutional to force landlords to rent out apartments,” Himmelstein says. “You can’t tell them what to do with their properties other than requiring them to follow zoning laws and regulations, codes governing housing standards and services, and rent regulation laws and codes.”
There are also specific situations in which warehousing could be considered illegal. One is if it creates dangerous conditions—for example, if all but one of the units in a building is vacant, it could create a security risk for the tenant living there.
Warehousing apartments could also be deemed illegal when it occurs ahead of a rental building being converted to co-ops or condos.
“Excessive long-term vacancies are illegal in the months leading up to a co-op or condo conversion,” Himmelstein says. “If an owner has more vacancies than they did previously, the attorney general can refuse to process their conversion plan.”
Excessive long-term vacancy is defined as more than 10 percent of apartments and a percentage that is double the normal average vacancy rate for the building for two years before the January preceding the date the offering statement was first submitted.
For most renters, though, there is little recourse if they suspect a landlord of warehousing apartments. Tenant advocates argue that this practice contributes to a shortage of affordable housing, but, Himmelstein says, because of the court of appeals ruling about constitutionality, “if the legislature did pass a law against warehousing, it might have vulnerabilities.”
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Read all the Ask a Renters' Rights Lawyer columns here.
Sam Himmelstein, Esq. represents NYC tenants and tenant associations in disputes over evictions, rent increases, rental conversions, rent stabilization law, lease buyouts, and many other issues. He is a partner at Himmelstein, McConnell, Gribben, Donoghue & Joseph in Manhattan. To submit a question for this column, click here. To ask about a legal consultation, email Sam or call (212) 349-3000.
