Earlier this month, Mayor Zohran Mamdani and Governor Kathy Hochul announced a new “pied-à-terre tax” on second homes in New York City valued at $5 million or more. The proposal rests on the faulty premise that wealthy nonresidents are freeloaders, treating the city as an occasional luxury indulgence, though they pay property taxes without consuming much in city services.
But the city’s historic housing crisis isn’t caused by the relatively few $5 million-plus units used as second homes. There is, in fact, a much bigger underuse problem: thousands of unlawful rent-stabilized pieds-à-terre, the tenants of which pay rock-bottom rates for their second home. New York City is thus poised to tax unsubsidized second homes more while continuing to underwrite their subsidized counterparts.
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Section 2520.11(k) of the Rent Stabilization Code requires that rent-stabilized units be used as a tenant’s primary residence. Landlords can seek to evict a tenant who violates this provision. Courts weigh multiple factors when evaluating primary residence, including whether the tenant lives in the unit for at least 183 days per year and whether the address appears on tax filings or a driver’s license.
Before 2019, landlords had reason to enforce the rule. That’s because owners could raise rents by as much as 20 percent upon vacancy, with additional increases tied to tenant longevity and capital improvements to the building or apartment. When rents rose above a certain threshold, units could exit stabilization altogether. These mechanisms created a clear incentive to bring eviction proceedings against tenants who were not using their apartments as primary residences.
The 2019 Housing Stability and Tenant Protection Act, however, incentivized bad behavior. HSTPA removed vacancy bonuses, sharply curtailed improvement increases, and effectively closed deregulation pathways. Landlord attorneys report that non-primary residence cases “dropped overnight.” Why take on the cost and burden of proving nonresidence and pursuing an eviction when the tenant pays reliably and causes fewer issues than full-time residents?
The result is a system that now protects rent-stabilized pieds-à-terre. Because these units are not means-tested, that protection extends indiscriminately—even to households with ample means to maintain a market-rate second residence. The law effectively forces landlords to subsidize occasional-use apartments for tenants who may have little connection to the city’s day-to-day economic life, while locking out would-be full-time residents from a housing stock already in short supply.
No one can say exactly how many such stabilized units exist. The state agency overseeing rent stabilization releases little data, keeping researchers in the dark about questions like non-primary residence. But given that these cases once constituted up to a quarter of landlord attorneys’ practice, the number is likely in the tens of thousands—far exceeding the roughly 13,000 units targeted by the new pied-à-terre tax.
At a minimum, stabilized tenants today can operate with far greater confidence that the primary-residence requirement will not be enforced. By contrast, owners of luxury second homes already pay property taxes, transfer taxes, and a host of other levies. And, unlike moderately priced rent-stabilized units, $5 million apartments are not the type of housing most New Yorkers need. These ultra-luxury units exist in a unique segment of the market, and their presence does not hamper supply or raise rents for middle- or working-class residents.
The proposed pied-à-terre tax therefore targets a visible and politically convenient class while ignoring the deeper distortions in the housing market. In announcing the proposal, Mayor Mamdani framed it as part of “our commitment to the working New Yorkers being priced out of our city.” That commitment rings hollow when state law permits what are likely tens of thousands of rent-regulated apartments—precisely the kind of housing meant for working New Yorkers—to function as part-time residences.
Lawmakers should restore incentives for rent-stabilized units to be returned to the market for full-time residents. Reintroducing vacancy and improvement bonuses would not only discourage the use of stabilized units as second residences but also make it financially viable to return the up to 50,000 long-term vacant, stabilized apartments to the market. Allowing bonuses would also quickly unlock housing supply and channel private capital into maintaining and upgrading the stabilized housing stock.
Until city and state lawmakers are willing to confront these perverse results, taxes on luxury second homes will remain a concession to leftist demands to “tax the rich,” rather than a serious effort to solve Gotham’s housing problems.