I am opposed to the proposed rule change that the Federal Housing Finance Agency is considering for private transfer fees, commonly known as “flip taxes.” The rule change would prevent institutions such as Fannie Mae and Freddie Mac from investing in mortgages on properties where flip taxes are in place.
This rule would have a detrimental effect on middle-class residents in New York City who live in cooperative housing associations, more commonly known as “co-ops.” As soon as I learned of the proposal, I wrote to Edward DeMarco, the FHFA acting director, to request an exception for cooperative housing associations in New York City.
Co-ops are a popular form of home ownership in New York City. Many residents living in co-ops are middle-class families and senior citizens on a fixed income. Unlike other private transfer fees that only benefit third-party developers, flip taxes imposed by most co-ops in New York are added to the capital reserves of these organizations in order to lower the cost of living for residents and to make capital improvements to housing.
Without the ability to charge a flip tax upon the sale of an apartment, some co-ops would be forced to assess their shareholders and residents hundreds of dollars more each month. Co-ops in New York City keep costs in check and enhance both quality of life and property values through capital improvements financed by flip taxes. Due to New York City’s unique concentration of co-ops, we need an exemption to the proposed rule.
As the founder of the City Council Caucus on Cooperative and Condominium Housing, I will continue to be a leading voice against the rule change and an outspoken advocate for co-op residents.
Mark Weprin
City Councilman
Oakland Gardens
