The High Cost of Bad Landlords

Every year in New York City there are:

• Over 200,000 eviction cases and over 20,000 evictions ;
• Approximately 500,000 housing code violations issued; and
• Approximately 12,000 housing litigations filed by HPD or by tenants in housing court.

From 2013 to mid-2015 data, 48% of eviction cases filed were for housing units in buildings with repeated patterns of both evictions and violations. This means harassment and neglect by bad landlords likely contributed to about 100,000 eviction cases and 10,000 evictions each year.

Buildings which show these patterns of tenant abuse are a small fraction of the buildings in New York City. Of the 763,276 buildings with residential units in NYC, only 1.4% are managed by bad landlords. However, the buildings owned by bad landlords are, on average, far larger than other residential buildings, with an average of 36 units per building as opposed to 4.2 units per building for residential buildings overall. Because these buildings are so much larger, it leads to a relatively small number of owners having an oversize impact on the NYC housing market, with nearly one-in- five rental units managed by a bad landlord.

The hypothetical situations below contrast typical challenges and outcomes that families experience in buildings owned by responsible and irresponsible landlords.

Both families are headed by a single working parent who has a full time job, but which pays a modest $20/ hour without any benefits . Both have similar rent-stabilized apartments in older buildings in the same neighborhood with similar rents, but the two families’ experiences are completely different. These differences add up to considerable time, money, and health impacts.

Bad landlords do not impact all New Yorkers equally. The one million people impacted by them live in specific parts of the city. 43% people affected by bad landlords live in the Bronx, and amount to nearly a third of the borough’s population. 26% live in Brooklyn, 16% live in Manhattan, 13% live in Queens and 1% live in Staten Island.

Bad landlords do disproportionately impact people who are economically vulnerable: 29% of people who live in homes managed by bad landlords live below the poverty line, compared to 19% for New Yorkers overall. The median income of these households is $40,000 per year, which is 30% lower than New Yorkers overall. 60% are Medicaid or Medicare recipients compared to 29% of New Yorkers overall.

Bad landlords are also more likely to impact children, people of color and people with disabilities: 88% are people of color compared to 67.7% living in New York overall; and 24.4% are children compared to 21.2% for New York overall. 12.4% are people with disabilities compared to 10.5% of New Yorkers overall.

Who lives in homes impacted by bad landlords?

Using conservative costs, the minimum cost to taxpayers from bad landlords is $307.1 million annually, or nearly $100 per New York City household annually.

People living in homes managed by bad landlords face more problems. One-fifth of families living in a building managed by a bad landlord face at least one eviction case a year, that’s three times higher than amongst families with similar poverty rates but whose landlords are more responsible. They were also five times more likely to have documented lead and mold problems, four times more likely to have documented problems with pests and two and a half times more likely to have documented heat and hot water problems than families with similar poverty levels but better landlords.

Living under such housing conditions can have many impacts on people’s health, something that can be particularly harmful for people already dealing with the stresses of poverty or to vulnerable populations such as children, seniors and people with disabilities. Pest infestations, for example, can trigger allergies ; and lack of heat can lead to hypothermia . The stress from deal- ing with these challenges alone can lead to health problems . Building on comprehensive studies estimating the health and economic impacts of lead and mold exposure, we very conservatively estimate that:

• 339 children under 5 were exposed to lead due to bad landlords, leading to health problems such as brain damage and costing $680,000 dollars in medical and special education costs.
• 413 people with Allergic Rhinitis, 284 people with Asthma due to mold exposure, leading to $2.6 million dollars in total economic costs.

The approximately 70,000 families that face an eviction case every year due to a bad landlord find themselves also facing the various costs related to the legal system. They face losing wages due to time spent in court or having to provide for childcare; they may also need to pay for transportation to and from the court. In fact, many families are forced to bring their children to housing court . Another risk is being added to the tenant blacklist, which can make it very difficult to rent another apartment in New York City . We calculated that a family that faces an eviction will lose at a minimum of half a week worth of one earner’s wages just in time spent in court.

This report analyzes several fine-grained datasets in order to identify and quantify the impacts bad landlord behavior has on New York City and its residents. Throughout the report, we take a conservative approach, and the impacts we quantify should be seen as the floor for such costs -- actual costs are likely to be significantly higher but we lack the data to actually estimate them.

How We Identified Bad Landlords

Generally speaking, our approach was to identify recurring patterns in buildings in order to quantify bad landlord behavior. We did not seek to quantify the number of bad landlords, because analyzing the multiplicity of holding companies and the complexities of corporate structures to make such a determination was beyond the scope of this analysis. For simplicity’s sake, we treated buildings and BBLs (Borough, Tax Block & Lot) as interchangeable. We used several data sources: HPD’s violations database on NYC’s Open Data portal, the 2018 v.1 version of Pluto (filtered for buildings with residential units only), and a list of all evictions cases filed at NYC’s Housing Court between January 2013 and June 2015. As we wanted to identify building-wide trends, we geocoded the evictions list to get a BBL, and achieved a success rate of 94%.

Filing frivolous eviction cases often serve as a way for landlords to harass rent-regulated tenants and force them to leave their apartments. We assumed that buildings with high eviction rates and poor housing conditions indicated this behavior, and found a pattern that pointed to a small number of landlords being responsible for a disproportionate share of evictions and violations. We identified bad landlords as those that between 2013 and mid 2015 met all the following conditions: (1) had at least two evictions filings in NYC’s housing court; and (2) the ratio of eviction cases divided by total residential units was 0.3 or greater; and (3) they were issued at least 10 housing code violations by the NYC Department of Housing Preservation and Development. We found that 48.4% of evictions during that time period happened in buildings that met the above conditions.

We looked at other permutations as well and saw the same pattern of relatively concentrated evictions: 41.6% of evictions happened in buildings that had met all of the conditions above and had one or more litigations filed by a tenant or HPD between 2013 and 2018. 57% of evictions happened in buildings where there was one or more eviction (2013-2015) and one or more litigation (2013-2018). 68% of evictions took place in buildings where there were five or more evictions (2013- 2015) and five or more violations (2013-2018) per building.

While buildings with bad landlords had on average 0.76 evictions per building unit and 63 violations per building, the average residential or mixed use building had 0.16 evictions per housing unit and 0.84 violations per building during that period. We also found a similar pattern with housing litigations brought by HPD or tenants naming HPD. Also, because New York City has increased enforcement since 2015, the average annual number of violations issued in 2013 and 2015 was 388,492 while the average annual number of violations in the years 2015-2017 was 540,311. Meanwhile, the annual number of evictions cases has remained the same. This means that had we been able to use more current evictions data than 2013-2015 we likely would have identified a larger number of buildings with bad landlords.

Once we identified the number of buildings owned by bad landlords, we multiplied them by the number of residential housing units to get the total number of housing units with bad landlords: 385,697.

How We Estimated The Impact On People

To get a demographic profile of the people most impacted by bad landlords, we divided the number of housing units impacted by bad landlords by the total number of housing units. We then used a crosswalk to census tracts provided by Pluto to calculate a demographic profile, prorating both for share of units impacted and population size.

We defined lead problems as housing units where HPD initiated a lead-related housing action in recent years. This is a conservative estimation and likely does not capture nearly the full universe of lead-related health impacts. To calculate lead exposure, we derived share of children exposed to lead by dividing total number of children under the age of six with high blood lead levels by total number of children under age six — a conservative estimate as it is unlikely that none of non-tested children were exposed to lead. We then applied this ratio to the number of children under age six in impacted housing units — another conservative assumption as lead exposure is generally higher in low income communities and communities of color. Assuming that 50% of lead exposure was due to unhealthy homes a low ratio, a total of 339 children under age six were exposed to lead due to bad landlords. Between 2013 and 2018 the Department of Housing Preservation and Development issued 673 housing court actions, a similar scale to what we identified We assumed that 20% of those required special education at excess costs of $9,369 annually , and all required medical costs at $663 annually for a total of $860,000.

Mold Exposure. We estimated the number of people exposed to mold by averaging annual number of mold related violations (identified via text search) from 2013 to 2017 and multiplying by average size of household in NYC to get total number of people exposed. Again, this is a conservative estimation and likely does not capture nearly the full universe of mold-related health impacts. We then calculated the odds ratio of developing Asthma, Allergic Rhinitis, and Acute Bronchitis with or without exposure to mold from Mudarri, 2016 to estimate number of cases due to mold exposure at home which resulted in 413 people with Allergic Rhinitis and 284 people with Asthma. We used annual costs for patients also from Mudarri, 2016 to estimate total costs. For updated Asthma costs estimate, we used data from a 2018 study . Total economic costs were estimated to be $2.6 million. Note that this likely vastly underestimates actual exposure to mold in NYC, including due to bad landlords, as we use violations issued as proof of mold, which would suggest that only 0.4% of New Yorkers are exposed to mold. We identified pest and heat and hot water problems through a textual search of HPD’s violations database.

Residents facing eviction actions also have to miss out on work because of dealing with evictions cases. A typical resident facing an eviction action will often spend at least two days in court , and possibly more depending on the details of the case.

How Much Does It Cost New Yorkers?

All costs are annual, using the most current data available.

Legal aid to tenants. Total funding for legal aid to tenants in FY 2017 was $181,300,000 . We assumed that 48% of cases requiring legal aid were due to poor landlord behavior. Total costs came up to $87 million annually.

New York City Housing Court Program. The latest NYC Housing Court personnel budget request is $32 million dollars . We assumed that 90% of the housing court’s time was spent on residential evictions and that 48% of these evictions were due to poor landlord behavior . Total costs came up to $13.8 million.

Emergency Shelter for the Homeless. There were approximately 58,958 people living in homeless shelters in July 2018 . 18% of current shelter residents reported losing their homes due to evictions, and we assumed that 48% of that number was due to poor landlord behavior — 5,094 people or 8.6% in total. We then divided the Department of Homeless Services’ contract budget by the total number of homeless and multiplied it by 8.6%. Total costs came up to $125 million. The likely amount of homelessness caused by bad landlords is likely greater than 18% for two reasons: first, many people make an intermediate stop at a friend’s or relative’s house after an eviction but before entering the shelter system, and second, many people may leave an apartment due to landlord harassment or unlivable conditions but before a formal judgement of eviction is ordered

Unsheltered Homeless. There are 3,675 unsheltered homeless in NYC in 2018, but most experts consider this to be an undercount . 12% are estimated to be due to evictions, 48% were due to poor landlord behavior. The cost per person for unsheltered persons is typically $31,000. Total costs came up to $6.9 million.

Supportive Housing. There are 32,000 supportive housing units in New York City currently . Forty percent are occupied by people entering from the shelter system. We again assumed a conservative estimate of 18% of these people were homeless because of evictions, 48% of which were because of bad landlord behavior. We estimate the public cost yearly operational subsidy cost at $17,000 from an interim assessment of NY/NY III agreement. Total costs came up to $19 million.

HPD’s Emergency Repair Program. From the Department of Housing Preservation and Development preliminary 2019 budget . This program is only used as a last resort for delinquent landlords. While a tax lien is imposed, costs are not typically recovered. Total costs came up to $34 million.

Housing violations costs. We assumed that each unique address and date record in the violations file reflected an inspection. We then divided the total budget for inspectors by the number of total inspections to get cost per inspection. The total budget for inspectors and number of total inspections conducted by the Department of Housing Preservation and Development preliminary 2019 budget . Costs came up to $11.4 million.

The Preservation Anti-Abandonment program. From the Department of Housing Preservation and Development preliminary 2019 budget . Total costs came up to $4.4 million.

Certificate of No Harassment Pilot Program. From the Department of Housing Preservation and Development preliminary 2019 budget . Total costs came up to $1 million.

Tenant Protection Unit, Division of Housing and Community Renewal, New York State. From proposed 2012-2013 Housing and Community Renewal proposed budget . Total costs came up to $1.8 million.

There were various limitations to our study. First, the evictions data we had was from 2013 to mid-2015 and may not fully reflect current trends (although the total number of evictions cases in recent years is very similar). Secondly, we had a geocode success rate of 94% for evictions, which means that not all evictions were included. Since we do not have access to comprehensive information on building conditions, we had to rely on violations data which is inherently biased towards residents who file a complaint and the ability of inspectors to access any given home. One example of the gap is that although we only have about 13,000 mold violations issued a year in New York City, some estimates suggest that nearly one in three homes in the U.S. have a mold problem. Taken together, the limitations likely underestimated the cost that bad landlords impose on New Yorkers.