The New York herald., 1921-09-29
UNTERMYER TELLS
TENANTS TO RESIST
Big RENT INCREASES
He Charges Appellate Di-
vision Decision Permits
Gouging by Owners
HOPES FOR TEST CASE
Landlord Entitled to Gain
on Equity, Not on Total
Value, Is Theory.
EASY PROFITEERING SEEN
Court Would Allow Many to
Pay for Property in 6 Years,
Asserts Lawyer.
EASY PROFITEERING SEEN

In long opinion filed last night with
the Lockwood Legislative Committee
on Housing. Samuel Untermyer at
tacks the ruling OF the Appellate Term
of the Supreme Court Of the Second
Department that landlords are entitled
to a net return Of 10 per cent. on the
whole value of their properties. He
advises the committee to notify ten
ants whose leases expire October and
whose rents are raised to demand bills
OF particulars.
Where it appears that landlords are
attempting to exact net return of
more than 10 per cent. thereon. Mr.
Untermyer advises tenants to refuse
to pay the increase pending de-
termination of the legality of the APP
pellate decision.
To hasten this Mr.. Untermyer urges
that test case be prepared by the
Lockwood committee in cooperation
with the New York Real Estate Board
of Brokers on an agreed statement of
facts. He wants this submitted to the
Appellate Division and then to the
Court OF Appeals. where, he holds. a
final determination could be had In
three months If proper cooperation be-
tween the sides was obtained.
Mr.. Untermyer's opinion clashes vio-
tently with the decision OF the Appellate
Term in Hirsch VS.. Weiner, appealed
from the Municipal Court. on the propo-
sition that landlord was entitled to a
return OF 10 per cent. on the value Of
his property regardless OF his actual in
vcstmcnt.
Court Cancellations wrong"
Tho conclusions OF tat higher court.
Mr.. Untermyer says, are fundamentally
wrong In important particulars. and III
permitted TO go unchallenged will estab-
lish vicious and unsound precedent
which the statute did not contemplate"
Mr.. Untcrmyer's conclusions. In which
he also attacks the practice OF the land
lords in including permanent improve
ments and substitutions against one
years rental, instead Of spreading them
over period approSimating the life Of
the Improvement, may be summarized
as follows:
/. The test OF the value OF the in
vestment is not the cost OF the prop
erty. but its value at the time that
the rental in question was charged
against the tenant. which Is the sub
ject OF the test
?. An allowance to the landlord of
net return of 10 per cent. on the
total value OF the property, regard
less OF his investment, Is contrary 10
the spirit and meaning OF the rent
laws.
3. a return OF 10 per cent. on the
actual investment is not unreason-
able. because such a return Is neces-
sary to stimulate investments In resi-
Dental properties. especially in re-
cent years, when 8 per cent. return
is readily obtainable on gilt edged
investments that require no care or
risk and when tax exempt securities
are purchasable on a 5ia per cent.
basis.
4. The inclusion OF permanent iH,-
provements and substitutions arc not
properly chargeabie against the cur
rent expenses of the year in which
they are made. but should be pro-rate1
and extended over q period OF ten
years In determining the net rental
received by the landlord from the
property.
means Big Profits"