Question: What are your thoughts on the pied-a-terre tax now that City Council members Mark Levine and Margaret Chin announced that they would introduce a resolution with the goal of getting their colleagues to formally endorse a state-imposed surcharge on high-end second homes in the city?
Here are my thoughts...
A Pied-A-Tier tax would be a complete disaster for New York. Foreign buyers are at an all-time low with an “anti-foreign anything” administration in the White House.
A Pied-A-Tier tax could be a final nail in the coffin. Foreign buyers generated excellent paying UNION jobs in construction and building services (doorman, janitor, porters, garage attendants, resident managers, etc.). Not to mention all the jobs they support when they come to the city to spend money in shops and restaurants.
Local politicians cost this city 25,000 by kicking Amazon out. How many more do they want to lose by being anti-foreign?
- Are clients still actually calling it pied-a-terre when looking for such an apartment?
Martin: While many buyers say "they're looking for a place in the city", most adopt the term pied-a-terre. It is a New York colloquialism and people who plan to live here want to be "in the know" with terms. i.e. Houston street is pronounced "How-stun" not "Hu-stin" (like the city.)
- In wich neighborhoods do you see interest in pied-a-terres?
Martin: By far, midtown is still the most common as it is closest to Manhattan attractions. Having said that, many pied-a-terre buyers will buy in buildings that their friends already live in for familiarity. Other neighborhoods are: Upper East Side and Soho. In the 2010s, Williamsburg in Brooklyn as also emerged.
- Are there any trends you're noticing among clients - what size apartments are they looking for (1 BR? Studios? Larger?), does building height matter, do the amenities matter, etc.
Martin: The trends now are smaller apartments and price points (2M or less). 2-bedroom condos seem to be the most common. The second bedroom can be used as a home office or a lot of beds for families...i.e. two sets of bunk beds.
Are your clients are worried about a possible pied-a-terre tax in wake of Ken Griffin's big buy in 220 Central Park South?
Martin: Ken signed the contract on this property years ago when the market was very hot. Honestly, he overpaid by 30-50 million. Most of my clients are thinking 220 Central Park South is a modern take of "The Emperors New Clothes" They are worried about the proposed pied-a-terre tax and an overall shift of the city's position on business. First kicking out Amazon, now this? There are murmurs of "Bring back Bloomberg".
(a.) What are clients saying about the proposed tax?
(b.) What are you telling your clients about the proposed tax? I’m sure people are asking you about it.
This is why I think a pied-a-terre tax would be bad for New York City:
- The super rich like to prevent paying taxes, many will stop buying in an already extremely depressed market, since they are basing this revenue on closed sales that went into contract years ago when the market was much better.
- The lost tax revenue on jobs lost from construction, building workers, tourism, restaurants shopping, etc. will far exceed any revenue raised by the pied-a-terre tax.
- More importantly, this new tax would send an anti-business/anti-wealth message to the world. New York would most likely lose its “Capital of the World Status”. If they want to see what would happen, look no further than London. But this is worse than Brexit.
Why it may not matter: If New York limits it to pied-a-terres at $5,000,000 and above, they are really only targeting the super rich. If they want to play in New York City, they have to pay.
