The Mamdani administration recently fulfilled its promise to introduce a tax on New York City's wealthiest homeowners. The city's Department of Finance published an online database of over 31,000 properties and owners who could be subject to the new pied-à-terre tax. When the levy was passed in May, city and state officials initially estimated that approximately 10,000 properties would be affected by the tax.
Although the list sent out last week does not represent the final compilation of homes that will be subject to higher charges, it does include several prominent addresses and well-known owners. Among the numerous billionaires, CEOs and managing directors on the list are Ken Griffin, CEO of Citadel, Mark Cuban, 'Shark Tank' investor, Richard Gelfond, CEO of IMAX, and Stephen Schwarzman, CEO and co-founder of Blackstone. Several A-list celebrities are also on the list, including fashion icon Anna Wintour, actress Cynthia Nixon, singer Taylor Swift, filmmaker Woody Allen, and actor Alan Cumming.
Prominent luxury residential buildings and developments mentioned in Mamdani's list include the Jenga Tower at 56 Leonard Street in Tribeca, the Witkoff Group's 150 Charles Street building in West Village, MetroLofts' 443 Greenwich Street in Tribeca, Vornado Realty Trust's 220 Central Park South on Billionaires’ Row, the One57 Condo Tower in Midtown, and 15 Central Park West in Lincoln Square.
Owners' Reactions
The pied-à-terre tax triggered sharp reactions in the New York real estate industry upon its announcement, accompanied by concerns about market disruption, flawed regulations, and political calculations. However, it appears that the tax has not yet immediately affected the city's luxury market. Nevertheless, the city began informing homeowners by post last week about their potential tax liability. According to Ian Slater, real estate agent at Compass and co-founder of Trove Partners, many of these owners are already prepared to sell their second homes to avoid difficulties arising from the tax. Slater reported that his clients had reached 'the end of their tether'.
Market Impact and Client Behaviour
Ian Slater stated that the repeated reports and the publication of the list of potentially affected individuals are attracting a great deal of attention. Clients who may have previously only loosely considered the tax are now realising that they are affected and are beginning to quantify the financial implications. The timing coincides with the start of the autumn season, a traditional period for property listings in New York. Slater reports increased enquiries about selling, with some owners whose tenancy agreements are expiring preferring sales over re-letting. He adds that many buyers are observing the market and may be more inclined to rent.
Regarding the letting of luxury properties, Slater notes that owners in the very top segment rarely wish to let their properties; they prefer to leave the property vacant or sell it. Although he does not observe a significant increase in lettings in the super-luxury sector, he notes that more vacant high-end properties are now being let, as the incentives to do so have increased. Slater emphasises that the decision to sell is often based on multiple factors and is not a crisis like during the COVID-19 pandemic or in 2008, but rather an accumulation of smaller burdens that become unbearable for some.
The long-term effects of the pied-à-terre tax on the New York real estate market remain to be seen. Slater maintains that the confusion created by the new list is never beneficial for markets. Although the pied-à-terre market constitutes only a small part of the overall market, it attracts a lot of public attention due to its high value and the personalities involved. However, the majority of the market consists of New Yorkers purchasing homes as their primary residence, so the tax is likely to have less direct impact on the broader market.
