New York Anti Fix & Flip Legislation
”The New York state small home anti-speculation act” aims to impose a 15-20% additional conveyance tax on 1-5 separate residential units located in certain parts of New York City, if transferred within two years of the prior transfer of such property.
On behalf of the National Private Lender’s Association (NPLA), Private Lender Law (PLL) has completed our preliminary review of the pending anti-fix & flip legislation and political landscape in New York State in order to evaluate the likelihood of its passage.
Bill Description and Impact
As a reminder, New York Senate Bill S3060E (identical to A.5375-A), or ”The New York state small home anti-speculation act” aims to impose a 15-20% additional conveyance tax on 1-5 separate residential units located in certain parts of New York City, if transferred within two years of the prior transfer of such property. If transferred in less than one year, the tax shall be 20%, and if transferred between 1-2 years, the tax shall be 15%.
The Effect of Such Legislation
1. Decrease lending activity in the affected areas resulting in a loss of business for private lenders and the reduction of real estate transactions;
2. Decrease jobs for those in the building trades;
3. Decimate recovery of blighted/vacant housing;
4. Raise taxes on NY resident’s when they sell their homes; and
5. Become a catalyst bill for other state’s around the country.
The bill is currently tabled until January 2020. Conversations with Julia Salazar (D) 18th, Senate District, indicate that she will continue to sponsor the passage of the bill. The New York Association of Realtors, which opposes the bill, believes the bill has a chance of passing.
Current NY Political Landscape
Leading up to the 2020 Legislative Session, there are a number of important considerations in determining whether this legislation has a chance of being passed.
1. Governor Cuomo announced in late 2019 that NY State faces a $6.1B budget deficit;
2. Assembly Speaker Carl Heastie has indicated that the Assembly sees the need to raise taxes (generally) to help fund the budget gap;
3. Governor Cuomo and Senate Majority Leader Stewart-Cousins indicated that they will not seek to raise taxes to plug the budget gap; and
4. This is an election year in NY with all 213 legislators in New York State being up for re-election (which will impact the legislative agenda this year).
Based on the current political landscape in New York State, PLL believes that while a petition signed by Non-NY Residents may be optically pleasing, ultimately, it will have no or limited value on defeating the pending legislation.
NPLA Action Plan
As general counsel to the NPLA, PLL has determined the following action plan is recommended for the NPLA to deal with the pending Anti Fix n Flip legislation:
1. Engage a well connected registered NY state lobbying firm to directly reach out to NY State lawmakers and staff to represent the NPLA and its members (and the entire private lending industry) position against the passage of this bill.
2. Contact Building trade leadership in NY and other affected parties to begin to build a coalition against this bill.
3. Engage a well-positioned Public Affairs firm to help build public support against this bill (which will increase taxes).
We are pleased to report that the NPLA has agreed to PPL’s recommended action plan and will be moving forward with the necessary engagements. We will provide progress updates to NPLA members as new information becomes available.