(Bloomberg Government) — Institutional investors would face new restrictions on buying housing units in New York state under a proposal that Gov. Kathy Hochul aims to pass in the state budget due April 1.
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The proposal could make New York a model for increasing home ownership by eliminating incentives for hedge funds, private equity groups, and other institutional investors who would have to wait 75 days before making offers on single and two-family homes under the Democratic governor’s plan.
Hochul will detail the proposal in a proposed budget due Jan. 21 as part of her wider efforts to emphasize pocketbook issues following Republican victories in the 2024 elections. Key lawmakers have expressed support for her idea while awaiting more information on how it compares to pending legislation in the state Senate and Assembly.
“The cost of living is just too damn high,” Hochul said in a Thursday statement previewing the proposal. “Shadowy private equity giants are buying up the housing supply in communities across New York, leaving everyday 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 provide “interest deductions, depreciation deductions and other expenses” that help make such investments profitable for investors, according to her statement.
Large institutional investors—those who hold more than 100 single-family homes—own about 574,000 out of 15.1 million one-unit rental properties across the country, according to a 2022 report by the Urban Institute, a Washington-based think tank.
New York City does not rank among the top 20 metropolitan areas in terms of properties owned by institutional investors, 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 promote construction.
State Senate Finance Committee Chair Liz Krueger (D) and Assemblymember Michaelle Solages (D) expressed support for Hochul’s proposal on Thursday. Legislation they’ve sponsored would close tax loopholes for such investments, while giving institutional investors a tax break if they sell 10% of their housing holdings each year.
