For many buying MHP’s in New York on speculation, the party is over. The State is slated to pass new legislation tomorrow allowing municipalities across the state to opt into rent control, and governing the operation of manufactured housing communities. See below overview of the new legislation as it pertains to MHPs:
Mobile & Manufactured Home Tenant Protections
- Limits rent increases to three percent unless the increase is justifiable, in which case the park owner may increase rent up to six percent. Should the park owner need an increase higher than six percent the owner must apply for a hardship allowance from HCR.
- Establishes new Rent-To-Own protections that would protect MHC tenants attempting to purchase a home from a park owner or operator.
- Add’s a Homeowner’s Bill of Rights rider for all leases.
- Strengthens protections against evictions from parks, including for seasonal residents.
- Creates new protections for home owners if a park owner or operator decides to change the use of the park by prohibiting a park owner from starting an eviction case against a home owner for two years and providing them with a stipend of $15,000 when they are evicted due to the change of use.
While at face value the new regulations seem harsh and over-reaching I believe that if properly implemented and enforced, the new regulations will help the MHP industry in New York move forward. In recent years a handful of operators have cast a shadow on the industry by unjustly raising rents while failing to implement the capital improvements. These regulations will create a standard for park owners across the state to abide by, in turn creating a level playing field for operators and tenants alike.
The days of purchasing parks in NY on pro-forma numbers are over. Hopefully this will bring cap rates back up to a reasonable level.
Thoughts?