NYC Small Property Owners Slammed By High, Onerous Tax Assessments
Operating Costs Far Outpace Rent Caps In Proposed ‘Good Cause’ Eviction
The New York City Department of Finance released initial property tax assessments this week, showing massive increases of the assessed value of multifamily buildings despite significant revenue loss experienced by housing providers since 2020. Even when tax rates remain steady, increasing the assessed value of a building raises the overall property tax burden for the building. This is why housing providers in New York City have seen tax payments increase year-over-year, despite the tax rate remaining fairly steady.
Assessment increases are particularly hard to absorb in rent-stabilized buildings, where rents cannot be proportionally increased to offset the added cost. Pre-pandemic data suggested that the average rent-stabilized building was spending roughly 30% of rent collection on property taxes. Surveys of CHIP members in 2020 found that that number grew to closer to 40% with many small building owners reporting that more than half of their rent income was going to property taxes.
If the State Legislature passes “Good Cause” Eviction, a form of court-controlled rent control, no property owner would be able to absorb these massive property tax increases, since the proposed legislation does not account for rising property taxes when setting a standard of “reasonable” rent increases.