Rent reform is good for co-op, condo community.

As you know, the State Legislature is considering changes to the existing rent control/rent stabilization laws. Co-op shareholders and condominium unit owners may not be aware of how important this decision is to them, but the fact is, any action within the housing industry inevitably impacts other sectors of the community. What's more, reform of these arguably archaic laws will likely have a positive impact on cooperatives and condominiums throughout the city.

Most obvious, of course, is the fact that if sponsors are finally allowed to charge market rents for their unsold units, their financial burdens will be significantly eased, creating a decrease in the shortfall between their own carrying costs and the revenues they generate. This in turn will lessen the likelihood of sponsor default and the possibility of financial jeopardy for the property.

Additionally, because tenants living under rent control/rent stabilization have traditionally had the right to renew their leases indefinitely, and also to transfer their leases to family members and other designated individuals, substantial numbers of prospective purchasers who previously had no reason to consider their purchasing options will begin to do so as the laws change. Pursuant to the law of supply and demand, this will result in a new crop of purchasers who will contribute to the already recovering sales market.

The scenario is further enhanced both by current lower mortgage and loan interest rates, and also by the lending community's recent relaxation of the stringent purchasing requirements they had imposed during the last real estate downturn. And as the percentage of owner-occupied units goes up, co-ops and condos will become more of what they were meant to be: homes rather than speculative investments.

Moreover, reform of rent control/rent stabilization laws and increased purchasing activity will augment the city's tax base owing to increased transfer taxes. More important, it will increase the amount of tax collected by the city from landlords of rental properties, further contributing to the city's coffers. And finally, this will encourage the city to take positive action to reclassify coops and condos with regard to real estate tax status and calculations.

Although there has been a loud anti-reform outcry from the advocates of existing rent control/rent stabilization laws, the reality of the situation is that every reform proposal has included protection of both senior citizens and those who legitimately cannot afford increases in their monthly living expenses. So while it is true that the city is often perceived as an inhumane bureaucracy, this is not the case in the issue of proposed rent reforms.

Co-op shareholders and condo unit owners need not feel any guilt supporting the most likely reforms to rent control/rent stabilization that may come down the pike. And, in fact, if the situation plays out as expected, it is highly probable that these reforms will be of great benefit to the city as a whole, and also to both shareholders and unit owners within their own properties and as members of the larger co-op and condo community, as well.

(Cooper Square Realty, Inc. is a Manhattan-based professional residential management organization. David Kuperberg, president, is a Certified Property Manager, Advanced Registered Apartment Manager, Treasurer of the National Board of Governors of Registered Apartment Managers, a member of the Residential Management Council of the Real Estate Board of New York, and recipient of the 1997 Leadership in Management Award.)