As Williamsburg residents flee the neighborhood ahead of the L train shutdown, there is one group of tenants who should consider staying put, according to Lease Buyout Advisors CEO Ben Landy.
The 15-month L train shutdown between Brooklyn and Manhattan is less than eight months away. While significant changes in the Williamsburg rental market are already being reported, Landy believes now is not the time for rent-stabilized tenants in north Brooklyn to bail on their apartments — if they can wait.
Market-rate renters have little incentive to stick around, especially if their commute is at stake, but rent-stabilized tenants have more power because of their below-market rents as well as government protections like indefinite lease renewals and succession rights.
“So, many times landlords who would want to raise rents to market rate are not able to, given the fact that these tenants are protected by the city,” Landy, 31, explained.
One way a landlord could raise rent to the market rate would be to offer a rent-stabilized tenant a buyout. “If they offer them a form of money or buyout they might move out faster.”
As market-rate rents drop in Williamsburg ahead of the shutdown, the value of a rent-stabilized lease buyout also diminishes, however, landlords are more willing to agree to a buyout as well, Landy said.
“A lot of times these landlords have overpaid for these properties and have to keep the income up with what they’ve projected it’s going to be,” he added.
By buying out rent-stabilized apartments and then raising the rent and listing them at the market rate, they’ll be able to maintain their projected income levels.
Even as market-rate rents in Williamsburg drop to 2015 levels, according to a report by real estate listing firm StreetEasy, landlords could still see a benefit to buyouts since many of the people living in rent-stabilized apartments have been there for decades and could likely be paying less than 2015 market-level rent.
But if a rent-stabilized tenant can stick it out through the L train shutdown, their buyout offer will be much higher once the rental market improves, Landy said.
“If they want to maximize their dollars they’re going to get on their buyout, I think they should wait a little bit until the market recoups and the L train is almost close to reopening and prices have gone back up,” Landy added.
Additionally, it is considered tenant harassment, and illegal, for a landlord to repeatedly offer a buyout on a rent-stabilized apartment. The city has a tenant protection hotline that residents can call if they feel they are being harassed by their landlord.
If a rent-stabilized tenant does need to move during the L train shutdown, the key is to remember that the leaseholder has the power.
The core value of any buyout is the understanding that the tenant is not going anywhere and that a landlord can’t make them leave.
“Not letting anyone know that you plan on moving is a huge tip for any buyout,” Landy added.
If a landlord knows a rent-stabilized tenant is going to leave within a year or two, they're less likely to pay a high price on a lease buyout now.