By Adam Frisch, Managing Principal, Lee & Associates Residential NYC
In this newfound era of a heavily regulated housing market in New York City, international tenants are finding themselves in quite a predicament. Numerous highly talented individuals who work at major banks and law firms as well as fashion and technology companies, need a place to live. Unfortunately, under the new regulations, property owners are now prohibited from collecting anything in excess of one month’s rent as a security deposit. Previously, owners used to collect extra security deposit from international tenants who didn’t have a United States credit history. Now that they can no longer do this, the companies that are employing these international tenants will need to assist.
Companies can serve as corporate guarantors on leases for their international employees although this is far from ideal for owners as companies are much more difficult to sue than individuals if something goes wrong. Another problem with corporate leases is that it often means that anyone from that company can technically use the unit, thus leaving owners with no idea as to who exactly is coming into their buildings. Third-party insurance services such as Rhino or Insurent are an option but many owners don’t fully trust these new, somewhat untested companies.
It seems that owners will now either have to put their finances at risk by accepting tenants with no credit history and a deposit of only one month’s rent or lease apartments only to people who have an established credit history in the United States. If a foreign tenant were to ever file a lawsuit after being denied an apartment due to a lack of credit history, a state judge is likely to require that owners rent to them with a deposit of only one month’s rent. Over the next few months, it will be most interesting to see how this plays out and by exactly how much the government is willing to infringe on private property rights in this manner.