The New York herald. [volume] (New York, N.Y.) 1920-1924, 1921-09-01
10 PER CENT. RETURN
IS REASONABLE RENT
Valuation Set ON Market
Worth, Plus Operating
Costs, in Decision.
LAWSUITS ARE LIKELY
Mayors Committee on RENT
ing Puzzled and viii Hold
a Meeting To-day.
LAWSUITS ARE LIKELY
REALTY MEN SURPRISED
Say Doors Are Opened Wide to
sShoestring' Landlords, With
Sure Profits in View.

Unreasonable rent" according to .
decision yesterday BY the Appellate
Term of the Brooklyn branch OF the
Supreme Court, is return of 10 per
cent. on the market value of housing
property plus the operating costs.
The opinion, which is radical in its
bearing upon numberless controversies
between landlord and tenant, becomes
necessarily, unless and until modified
by the Appellate Division. the rule for
the guidance of all lower courts in de-
termining what constitutes fair ana
reasonable rent--a problem incidental
to the housing laws which has elected
a considerable variety of solutions IN
+ha landlord and tenant courts OF this
city.
The decision voices the unanimous
view of Justices c-opsey, Lazansky ana
Kelby. They held that the mere amount
which a man put into a property. COM
rnonly known as his equity. is not the
determining factor in computing MS
reasonable income therefr5m, but that
his Investment" constitutes the fair
market value of his property. the de-
c,sion further defines his investment
as the amount for which he can sen
the property 1t holds furthermore that
when apartment vacancies are proved
allowance should be made in favor OF
the landlord for failure of rent by rea-
son thereof.
Realty Men Astonished.
Real estate men expressed astonish-
ment at the opinion. Under its provi-
sions, they said. a "shoestrlng land
lord will reap large benefit. Though his
property may be mortgagcd up TO the
hilt he can pay per cent interest,"
on his mortgages and yet collect clear
4 per cent. profit from his tenants.
A meeting probably will be called to-
day of the Mayors Committee on Rent
Prohteering to determine what steps,
Il any, shall be taken in the premises.
Junius p Wilson. counsel to the COM
r11ittee, said yesterday he would take the
matter UP this morning with Otto y.
Schuloff, chairman of the Mayors COM
nrittee. Three days week Mr.. Wilson
has been holding hearings of landlord
and tenant cases in the committee
headquarters In the Municipal Build
dications have been brought about thus
without resort to litigation.
The opinion has just now been
shown to me-" said Mr.. Wilson. "and
I have not had a reasonable opportunity
TO study It. but IL the radical changes
you mention are contemplated. it will,
Of course. mean that the practice OF the
Mayors Committee on Rent Profteer-
ing will have to conform 10 the law.
az may say. however, that ia thou
sands OF cases heard by this committee
we have arrived at the market value
by taking the purchase price. II pur-
chase has been recent. otherwise yy
taking the assessed valuation. Then,
after deducting the amount Of the mort
cages, we have allowed 10 per cent.
upon the difference. which we have fig
ured to be the real equity. Then We
have computed the various operating
costs-taxes, fuel. light, water rates,
insurance, janitors services, repairs.
depreciation, &c.
Il grestely fear that 20 allow II per