Institutional investors would face new restrictions on buying homes in New York state under a proposal that Governor Kathy Hochul plans to include in the state budget on April 1.
The proposal could make New York a model for increasing homeownership by removing incentives for hedge funds, private equity groups and other institutional investors who would have to wait 75 days before bidding on one- and two-family homes in the under the Democratic governor's plan.
Hochul will detail the proposal in a proposed budget due Jan. 21, as part of her broader efforts to focus on pocketbook issues following Republican victories in the 2024 elections. Key lawmakers have expressed support for her idea, as they wait for more information on how it relates to pending legislation in the state Senate and Assembly.
“The cost of living is just too damn high,” Hochul said in a statement Thursday previewing the proposal. “Shady private equity giants are buying up the housing stock in communities across New York, leaving ordinary homebuyers with fewer and fewer affordable options.”
The plan, which Hochul will highlight in her Jan. 14 State of the State address, would target tax loopholes that allow for “interest deductions, depreciation deductions and other fees” that make such investments profitable for investors, her statement said.
Large institutional investors — those who own more than 100 single-family homes — own about 574,000 of the 15.1 million rental properties nationwide, according to a 2022 report from the Urban Institute, a Washington-based think tank.
New York City is not among the top 20 metropolitan areas for institutional investor properties, with Atlanta and Phoenix ranking first and second, respectively, according to the Urban Institute. A housing shortage has fueled rising prices in the Empire State, amid efforts by Hochul to boost construction.
State Senate Finance Committee Chairwoman Liz Krueger and Assemblywoman Michaelle Solages expressed support for Hochul's proposal on Thursday. The legislation they sponsored would close tax loopholes for such investments, while giving institutional investors a tax break if they sell 10% of their home ownership each year.
“We really need to put an end to these private equity firms amassing these massive amounts of property and limiting the ability of New Yorkers to own a home,” Solages said in an interview about Hochul's proposal. “I look forward to receiving additional details.”
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