How the Pied-à-Terre Tax Is Reshaping New York’s Rental Market

By Rachel Glazer, Brown Harris Stevens

As property owners adjust to the pied-à-terre tax rollout, its effects are rippling throughout the rental market. What started as a policy aimed at owners of luxury second homes is now working its way into lease negotiations, tenant screenings, and landlord decision-making across the city.

 Many landlords are opting out of renting to pied-à-terre tenants altogether – a notable shift, given this group has historically represented a well-heeled, reliable slice of the luxury rental pool. Excluding them will cut the market substantially.

Given the tax currently applies to landlords renting to non-full-time residents, owners are now asking tenants to sign documentation proving full-time occupancy before a lease can move forward. When a tenant won’t or can’t sign, landlords are generally choosing among three paths: passing the anticipated cost on to the tenant (attorneys haven’t yet reached consensus on whether this is permissible), refusing to rent to them, or simply leaving the unit vacant. Several landlords have shared with me that they’d rather sit on an empty apartment than deal with the uncertainty at all.What makes this especially tricky is the pace of change. Guidance is shifting daily, and both landlords and brokers are scrambling to keep up with rules that are still being worked out in real time.

For now, my advice to owners and prospective renters alike is to check in early and often with your broker and get ahead of the documentation question. For tenants who split time between the city and elsewhere, raise residency status early in your search and know your budgetary thresholds for absorbing any passed along taxes. Cross your t’s and dot your i’s in advance to avoid falling in love with an apartment that you may have no choice but to back away from.

Rachel Glazer is a market authority at Brown Harris Stevens representing high-net-worth individuals across the city’s top neighborhoods.

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