Property tax defaults by New York homeowners at highest level in 10 years

Controller Scott Stringer (Getty)

Nothing is certain but death and taxes, and property taxes are no exception.

For a year and a half, New York City landlords complained that eviction bans would prevent them from paying their bills. Without rental income, owners warned, they would not have the income to pay property taxes, and without those payments, the city’s finances would suffer.

Recent figures suggest they weren’t entirely bluffing, but the impact on the city has, so far, been minimal.

Data produced by the Comptroller’s Office shows the preliminary delinquency rate across all properties in the city averaged 2.1% for fiscal year 2021, which ended in late June.

That’s a few ticks higher than the 1.93% calculated for fiscal year 2020, which ended three months into the pandemic. For the 2019 financial year, it was 1.69%.

In February, Comptroller Scott Stringer predicted missed payments were on track to exceed rates not seen since 2011, the aftermath of the Great Recession, when the city’s delinquency rate peaked at 2.17.

Although below Stringer’s dire February forecast of 3%, a crime rate of 2.1% is close to that ten-year high. But it’s still relatively small potatoes for the city.

Property taxes make up nearly a third of the city’s revenue; if that 2.1% rate holds — the comptroller’s office said it could drop once late payments are credited — the city stands to lose less than 1% of its annual consumption.

“People were expecting much larger jumps in delinquencies given the news of residential and commercial tenants not paying rent,” said George Sweeting, deputy director of the city’s independent budget office. “Part of the story is that homeowners found ways to keep up with their property tax payments.”

Among owners of single-family, two-family and three-family homes — some of whom are single family owners — data collected by the IBO found crime rates of 4.25%, above the city’s average but down from to last year. at 4.42 percent.

Delinquency rates among multi-family homeowners increased slightly to 2.78% in 2021, but remained below the city average calculated by IBO at 2.84%.

The IBO data differs slightly from that of the city; Sweeting said the numbers are “different, but not that different.”

Such city, such state

At the state level, researchers expect property tax payments for 2021 to show a relatively healthy collection rate.

Real estate data firm CoreLogic found that while New York City’s delinquency rates are currently trending upward from previous years — 10.1% in 2021 from 4.3% in 2020 — that number is expected to rise. balance after all state municipalities finalize their tax schedules. CoreLogic’s Kirk Randlett said he expects rates to settle near the national average of around 5%.

The booming housing market has helped stabilize crime rates.

What Miller Samuel President Jonathan Miller described earlier this month as an “insatiable demand” for homes has resulted in an influx of buyers who are making mortgage payments and paying taxes.

“Quite frankly, I think you see the strength in the economy,” CoreLogic’s Randy Kozlowski said, referring to the expectation that delinquencies will fall in line with previous years.

Property liens can also follow suit.

As of September, the number of municipal properties deemed at risk for lien sales exceeded 11,000. That figure includes some rollover properties from 2020, when at-risk liens totaled more than 3,000.

However, at risk does not mean that a property will be delinquent at the end of the year.

“Many landlords will be updating their waiver forms or making outstanding payments by December,” said Paula Segal, senior counsel at TakeRoot Justice, which provides legal and research services to grassroots movements.

The extra payments will likely result in a smaller list of privileges when the sale, pushed back since the start of the pandemic, finally takes place in mid-December. Liens sold in 2018 and 2019, for example, hovered around 3,000.

Taxed through the nose

Yet landlords say that while they are still paying their bills, they have had to contend with rising tax rates that outpace rent increases.

Jerry Waxenberg, a longtime city landlord whose business owns several thousand units, calculated a 40 percent increase in property taxes from 2016 to 2020. The city’s Rent Guidelines Board, said he noted, only increased rents by 4.25% for one-year leases within the same period. In 2016 and 2020, the council voted to freeze rents; in 2021, it opted for a six-month freeze, followed by a 1.5% hike.

At a virtual press event hosted by New York-based landlord group Small Property Owners in May, several landlords activated their microphones to criticize the gap between low rents, given the eviction moratorium, and rising property taxes. Justin Fong, a third-generation homeowner, said he’s seen his taxes go up 65% in the past five years.

It is possible that next year will bring a bigger blow to the collections.

The city’s property assessment for fiscal year 2022, which began July 1, provides for a 5% decrease in the assessed value of all buildings. The multifamily should experience a decline of 1.2%.

For owners of large buildings, the lower rates will bring some relief, but the compensation for this break is a 3.56% increase in the estimated tax value of single-family to three-family homes.

With the state’s eviction moratorium now extending through January and rent increases frozen until the spring of 2022, family landlords say they’re between a rock and a hard place.

“I just got an assessment from the city and the city is raising my property taxes again, but not letting me earn the money to pay the property taxes,” Fong said last spring. “I don’t know how long I can last.”

Penny D. Jackson