Tanvi Misra is a staff writer for CityLab covering immigrant communities, housing, economic inequality, and culture. She also authors Navigator, a weekly newsletter for urban explorers (subscribe here). Her work also appears in The Atlantic, NPR, and BBC.
“[It] speaks to the dire lack of enforcement in New York City, which is exacerbating our affordable housing crisis.”
On Tuesday, a class action lawsuit was filed against Jared Kushner’s family’s real estate company, alleging that it has been skirting local rent stabilization laws, by overcharging rent to 90 percent of the tenants at 89 Hicks Street in Brooklyn.
This is not the first time the Kushner’s real estate practices have come under scrutiny. This lawsuit adds to the mounting evidence—from New York, New Jersey, and even as far as Baltimore—that, much like his father-in-law, Donald Trump, Kushner is a rule-breaking landlord. But apart from that, it also raises important questions about the strength of New York City’s rent laws and how strictly they’re enforced.
Consider how Kushner’s alleged violations were uncovered in this case. A nonprofit organization that investigates and sues scofflaw landlords checked Kushner’s publicly available property tax filings. The investigators at Housing Rights Initiative (HRI) found a discrepancy in the documents that was right there for the government to see: He reported that only 10 percent of the units were rent stabilized in 2014, when the company acquired the building. The law required the entire 48-unit building be registered as such.
“[The government] should have been looking at this data,” says Aaron Carr, HRI’s founder and executive director. “What makes it so heinous is the sheer number of improper market rate leases that were handed out or provided to the tenants when they bought this building,” With the help of law firm Newman Ferrera, his organization sued on behalf of some of these tenants. A Kushner Companies spokesman told The New York Times that it is reviewing the lawsuit.
According to Carr, it’s not just this one building that’s the problem. Rent discrepancies appear in around 50 properties in the Kushner Companies real estate portfolio. “These things happen in a pattern,” he says. “The rent stabilization count across their portfolio has been precipitously on the decline.”
Upwards of 800,000 units in the city are subject to limited increases in rent. While some have criticized these laws, many housing advocates argue that they help protect vulnerable tenants from eviction and keep them out of poverty.
Every year, landlords are supposed to register the status and rents for each unit with the Division of Housing & Community Renewal (DHCR), the state agency that regulates rent limits. This information is protected under the state’s privacy laws, although tenants can access their landlords’ rental history upon request. When he examined the rental history for 89 Hicks Street, Carr found that Kushner Companies hadn’t registered any apartments with the DHCR since 2014:
To Carr, this missing data points to the bigger problem in the system: That the regulatory apparatus is not working well. “[It] speaks to the dire lack of enforcement in New York City, which is exacerbating our affordable housing crisis.”
DHCR maintains that its Tenant Protection Unit proactively monitors the practices of the city’s landlords, and investigates and audits them on an ongoing basis. It says it has returned 60,000 units to regulation and has recovered nearly $4 million in overcharges for tenants. And certainly—there are cases, including another one involving Kushner Companies—where the agency has detected wrongdoing. But critics like Carr argue that city and state rent regulators have not been nearly nimble enough in monitoring landlords, and place the burden of investigation on the tenants, who often don’t even know what they’re being overcharged.
Evidence backs up that claim. Propublica has conducted several investigations that reveal how landlords routinely flout rent laws, while state and city regulators stand by—sometimes, even after they’ve been alerted to the inconsistencies. Even when regulators have opened up investigations into rent gouging on the request of a tenant, it’s usually for that individual apartment—not the entire building or the portfolio of the landlord in question. Landlords have often written off these individual discrepancies as administrative errors.
This is a recurring pattern, and alludes to a culture of trivializing rent laws in New York’s real estate industry, Carr says. “Landlords will then say, ‘OK, well, if I lose $50,000 with this one tenant, I'm still making millions of dollars overcharging the other tenants,’”he says. “’So, this is just the cost of doing business and I will not be deterred from continuing my predatory business model.’”
Local lawmakers have also created conditions that make it easy to sidestep rent stabilization laws. Increasingly, landlords have exploited loopholes that allow them to hike rents or simply ignored the rules altogether.
For Carr, the immediate hope is that this lawsuit helps reimburse the tenants of 89 Hicks Street, and gets Kushner Companies to start complying with the rent stabilization laws. But the larger goal is a reexamination of the entire system in which tenants are regularly swindled out of affordable housing, in a city where there’s very little available in the first place. “In the midst of an affordable housing crisis, affordability is invaluable,” he says.