On February 17, Adele Andaloro checked on her childhood home in Queens, which she intended to sell. To her shock, she found that her front door and locks had been changed. After observing her house for two days, she confronted the six-foot-plus male stranger who had taken it over. The squatter, who had a record of repeat offenses, including burglary and narcotics convictions, had not only damaged the property but also rented out part of it to other tenants. For ten days, Andaloro tried unsuccessfully to get the authorities to restore the house to her. Then, on February 29, the 4’8” Andaloro changed the locks—and the squatter called the police, who arrested her. Local TV news footage of the diminutive landlord leaving her house in handcuffs made national news, sparking a debate about property-owner rights across the United States.
Though squatting cases such as Andaloro’s captivate the public, small property owners face an even more common and frustrating challenge: New York’s pro-tenant laws give cover to renters who have no intention of paying rent. These laws allow “professional tenants” to remain in a leased dwelling, sometimes for years, without paying. It took four and a half years, for instance, to evict a celebrity chef from a Brooklyn apartment. The tenant allegedly owed $145,000 in rent arrears, dating back to 2020. Small property owners, many of them first-generation immigrants, call this the real squatting problem.
Before immigrants can become homeowners, they need to be housed. Often, they find housing through their community network, from small landlords who arrived a little before them from the same country of origin. Just barely above their tenants on the economic ladder, these landlords struggle to cover short-term expenses.
Immigrants and other small property owners typically acquire buildings in overlooked, affordable neighborhoods. Entire ethnic neighborhoods have emerged in this way. When Manhattan’s Chinatown (once an undesirable downtown area) became too costly, New York’s Chinese community created new, bustling, family-friendly Chinatowns in Flushing (Queens) and Sunset Park (Brooklyn). Similarly lively Indian and Bangladeshi communities have grown in Queens’s Jackson Heights, Ozone Park, and Richmond Hill. Thanks to growth in the colorful neighborhoods of Washington Heights and Inwood, New York now is home to more Dominicans than anywhere outside the Dominican Republic.
Small property owners help sustain these enclaves. Typically, as in other cities, they serve many immigrants and nonwhites. They are also less prone to evict than are larger investor-owned corporations, because of a lack of resources and the more personal nature of the landlord-tenant relationship. Small landlords also provide lower-cost housing, enabling recent immigrants to accumulate savings for eventual homeownership.
Despite record high housing prices in many U.S. cities, 94 percent of Americans still consider homeownership central to the American Dream. Immigrants in New York, where 41 percent of residents are foreign-born or the children of immigrants, have the same aspiration to property ownership, whether it’s a small co-op, condo, or house in the outer boroughs and beyond.
Many immigrants believe that real estate, being tangible and easier to understand, is a more reliable asset than financial assets such as stocks and bonds. They pour their life savings into rentals, seeing the resulting income as their main chance to keep pace with inflation throughout their retirement years. Aside from its financial utility, property ownership also represents a legacy they wish to leave for their children, and a commitment to their new homeland. Many immigrants come from countries, especially Communist ones, where, in the name of social equity, governments make property hard to acquire. These newcomers appreciate America’s reputation for protecting private property and the rule of law. All too often, however, reality fails to live up to these expectations.
Progressives often portray landlords as wealthy, callous individuals or corporations owning vast property portfolios. Often motivated by anti-capitalist ideologies, these depictions are gross distortions. According to 2018 census data, fewer than one-fifth of rental units in the U.S. are owned by for-profit corporations. Small property owners, often owning only one or two properties, account for 70 percent of rental units.
Nationwide, 36 percent of households are renters. In New York City, the percentage is reversed, with about two-thirds being renters. Over 40 percent of the city’s rental units are rent-stabilized or -controlled, which reduces the city’s housing stock and its quality. Whether first-generation or multigenerational, New York’s property-owning families commonly live in two- to five-unit buildings alongside their tenants. Mom-and-pop landlords frequently perform their own property management, taking care of tasks ranging from garbage disposal to boiler and roofing repairs. With their personal presence, they become fixtures of their communities.
The numbers of such property owners are dwarfed, however, by the ranks of tenants in New York City. Unsurprisingly, the city has some of the nation’s most extensive tenant-protection laws. Politicians may express outrage over squatting incidents, but they mostly act to strengthen tenants’ legal protections. This April, following the national embarrassment of Andaloro’s arrest, the New York State legislature approved legal language clarifying that squatters are not tenants—but the measure may wind up being more symbolic than substantial.
Meantime, protections for tenants include caps on penalties and fees on late rent payments, and on increases in rent for rent-stabilized or -controlled units, and on security deposits; limits on charges for background checks, and restrictions on landlords’ ability to consider a potential tenant’s past record, including even their criminal activities and convictions.
Once the rental contract is signed, tenants also enjoy substantial protections against eviction—some from legislation, some from the notoriously slow-moving housing courts. In April, the state legislature enacted Good Cause Eviction as part of this year’s state budget compromise. In March, Mayor Eric Adams created a Tenant Protection Cabinet. Neither of these measures will improve the situation for landlords. And every year, the city and state add to owners’ regulatory compliance costs. Moreover, low-income tenants have access to free legal representation for eviction proceedings; landlords almost always pay out of pocket. This glaring imbalance allows tenants to withhold rent and drag out the eviction process at little to no cost to themselves, while landlords often must forgive rent arrears just to keep from drowning in legal fees.
Contrary to complaints from progressive politicians and housing advocates, eviction rates fell during the pandemic. Government moratoria on evictions led to an 85 percent reduction in the first six months of 2022, compared with the first six months of 2019. Post-Covid evictions remain low, down 52 percent in the first four months of 2023 compared with the same period in 2019.
Fewer evictions, however, don’t translate to fewer problems. Average rent arrears soared to $37,517 in June 2022, triple the average pre-Covid. In 2022, the average time to evict tenants in New York City Housing Court was nearly two years. The average time may be closer to a year and half now, but the many options available to tenants, from filing frivolous complaints to multiple lawyer changes—each change of these mostly taxpayer-funded lawyers permits adjournments—still needlessly delay evictions. Local community organizations, often sponsored by and aligned with politicians, offer workshops to help tenants game the system.
Legal fees alone are a significant burden for all landlords, but particularly for small ones, many of whom own buildings with just one rental unit (16 percent of rental units) or two-to-nine units (29 percent of units). In addition, as disputes languish in Housing Court, landlords must continue to maintain the property—making mortgage payments, covering utilities, taxes, insurance, and other fees or assessments, and curing or disputing any violations charged, spurious or not. For landlords who own few units, covering the cost of lost income on one by increasing rent on the others is not always possible; even when it is, doing so shifts the burden to tenants in good standing.
Many of these landlords, facing a drawn-out process and substantial legal costs, choose to negotiate outside Housing Court, forgo rent arrears, or even make substantial payments to entice tenants to vacate. The actual number of rent defaults, including these private negotiations and settlements, is thus far higher than the number of cases in Housing Court. Organizations representing smaller landlords, such as the Small Property Owners of New York, support members by sharing information and speaking to legislators, but little organized data are available on the effects of lengthy eviction processes on landlords.
Still, we can draw some conclusions. Some small property owners are driven to take their units off the market entirely. Following the state’s strengthening of the rent-stabilization law in 2019, rent-regulated landlords cannot raise rents high enough to justify the costs of renovations. Instead, thousands of units remain vacant, or “warehoused,” even as the city faces a dire housing shortage. These and other pressures nudge small landlords to sell and reinvest elsewhere, such as New Jersey or even Florida. New owners, often larger real estate corporations, typically raise rents, cut costs, and reduce services.
If these anti-landlord pressures continue unchecked, New York City can expect to lose even more housing stock—worsening the housing shortage, pushing up rent on the remaining properties, driving the tax base away, and hitting immigrant communities hardest. This would also demonstrate that New York is closed to enterprising housing providers willing to sacrifice and save their way to financial well-being.
New York must reevaluate its housing laws and policies. It needs to speed the evictions process in the courts, reduce burdensome fees, let landlords make reasonable background checks, and restore ownership rights. Good-faith, law-abiding landlords shouldn’t have to suffer at the hands of those abusing the law for personal gain. When mom-and-pop landlords achieve the American Dream, they bring others along for the journey.
Photo: Pulse / The Image Bank via Getty Images