NEW YORK – In New York City, debates over affordability often centre on the proliferation of opulent high-rise developments. But in the boroughs, deep-pocketed investors are buying up hundreds of smaller buildings, prompting a new set of concerns in the city’s deepening housing crisis.
In New York, the smaller buildings they zero in on, typically owned by families or local investors, have become attractive to bigger buyers because they have unique features: Rents are typically not regulated, and property taxes are often capped, limiting an owner’s costs. On a recent Thursday, the fire alarm was blaring at Ms Godoy’s apartment, two days after the Fire Department had cited the building’s owners over problems with the alarm system.
The number of units controlled by Carlyle and other firms remains a minuscule slice of the overall housing stock. But the firms often use limited liability companies to shroud their connection to properties, making a complete accounting of private equity-backed ownership of real estate in New York City impossible.
The expansion of private equity into this market comes as city and state officials struggle to pass legislation to deal with the housing crisis. But residents’ willingness to pay ever higher rents continues to make New York City housing a lucrative investment – particularly the smaller buildings that are largely not covered by rent stabilization.
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