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Fact Sheet #26: Guide to Rent Increases for Rent Stabilized Apartments in New York City

A tenant residing in a rent stabilized apartment or in a * free market/deregulated apartment that was previously rent stabilized, may make a request to the Division of Housing and Community Renewal (DHCR) for a printout of the rent registration history of the apartment. The rent registration printout will show the apartment status and rents registered by the building owner with DHCR.

The tenant can examine the printout along with this fact sheet to try to determine if previous rent increases were lawful and/or if the previously rent stabilized apartment was lawfully deregulated. If the tenant believes that the rent charged or the deregulation of the apartment was unlawful, they should discuss it with the building owner. If the tenant is unable to resolve the matter with the owner, he or she may file a complaint of rent overcharge with DHCR.

The rent registration history printout of the apartment and the overcharge complaint form may be requested online at www.nyshcr.org, by phone at 718-739-6400 or in person at a Borough Rent Office.

In general, existing regulations limit DHCR examination of rental histories to the four years that precede the date of the complaint.

* Deregulation of a high-rent apartment may occur as follows:

High-Rent Vacancy Deregulation
If an apartment is vacated with a legal regulated rent (Rent Stabilization) or maximum rent (Rent Control) of $2,500 or more per month, such apartment qualifies for permanent deregulation, and therefore for removal from all rent regulation Prior to June 24, 2011, the rent threshold had been $2,000.00.

High-Rent High-Income Deregulation
Upon application to and the issuance of an order by the DHCR, apartments which have a legal regulated or maximum rent of $2,500 or more per month and which are occupied by persons whose total annual federal adjusted gross incomes, as reported on their New York State Income Tax returns, have been in excess of $200,000 for each of the two preceeding calendar years, may be permanently deregulated (see Fact Sheet #36.) Prior to July 1, 2011 the thresholds had been $2,000 in rent and $175,000 in annual income.

Four (4) common ways owners may adjust rents are the following:

1. Vacancy Lease Rent Increases

When a person rents a rent stabilized apartment for the first time, the owner and the tenant sign a vacancy lease.

For Vacancy Leases
Starting Between
-- Term of Lease --
 1 Year2 Year
10/1/08 - 9/30/0916.00%20%
10/1/09 - 9/30/10 117.00%20%
10/1/09 - 9/30/10 217.50%20%
10/1/10 - 9/30/11 17.75%20%
10/1/11 - 9/30/1216.50%20%
10/1/12- 9/30/1318.00%20%

1 Heat is provided by owner at no charge to the tenant.

2 Tenant pays for their own heat.

Other Lawful Vacancy Increases

Example

The following example illustrates the application of some of the above rules. Tenant A paid a vacancy increase upon moving in, lived in the apartment for ten years and most recently paid a legal rent of $510.00 per month. Tenant B moves into the apartment pursuant to a two-year vacancy lease that starts on November 1, 2010. The owner is allowed to collect a vacancy rent from Tenant B of $642.60 per month, calculated as follows:

$510 (previous legal regulated rent) + $102.00 ($510 x 20%) + $30.60 ($510 x .6% x 10 years) = $642.60

2a. Recent Renewal Lease Rates set by the New York City Rent Guidelines Board.

When a tenant signs a renewal lease, the rent adjustment for the renewal lease will only be the adjusment for a one or two-year lease.

For Renewal Leases
Starting Between
-- Term of Lease --
1 Year 2 Year
Heat provided by Owner Heat paid for by Tenant Heat provided by Owner Heat paid for by Tenant
10/1/08 - 9/30/09
VACANCY LEASE
LESS THAN 6 YEARS OLD
4.5%4.0%8.5%8.0%
10/1/08 - 9/30/09
VACANCY LEASE
6 YEARS OR OLDER
GREATER OF 4.5% or $45GREATER OF 4.0% or $40GREATER OF 8.5% or $85GREATER OF 8.0% or $80
10/1/09 - 9/30/10
VACANCY LEASE
LESS THAN 6 YEARS OLD
3.0%2.5%6.0%5.0%
10/1/09 - 9/30/10
VACANCY LEASE
6 YEARS OR OLDER
GREATER OF 3.0% or $30GREATER OF 2.5% or $25GREATER OF 6.0% or $60GREATER OF 5.0% or $50
10/1/10 - 9/30/112.25%2.25%4.5%4.5%
10/1/11 - 9/30/123.75%3.75%7.25%7.25%
10/1/12 - 9/30/13GREATER OF 2.0% or $20GREATER OF 2.0% or $20GREATER OF 4.0% or $40GREATER OF 4.0% or $40

Example of how to compute the renewal rent for a lease set to expire on or after September 30, 2010:

Rent as of September 30, 2010 = $700

Tenant A has resided in the subject apartment for seven years, and chooses a two-year renewal lease term that commences 10/1/10. The owner is allowed to charge up to $731.50 per month, calculated as follows:

$700 (previous legal regulated rent) + $31.50 ($700 x 4.5%) = $731.50

2b. Garage Renewal Leases

Any fixed dollar amounts cited above DO NOT apply to renewal leases for garage or parking spaces for which rent stabilized tenants are charged separately. Under those circumstances, rent increases are limited to the applicable percentages provided for that Guideline period.

3. Major Capital Improvement ("MCI") rent increases approved by the DHCR.

Where an owner makes a building-wide improvement, such as the installation of a new boiler, the owner may be entitled to charge each rent stabilized tenant in the building a rent increase based on an MCI. The MCI increase cannot be charged until a DHCR order is issued authorizing the charge and setting the amount. The MCI increase is allocated on a per room basis, and becomes a permanent part of the legal regulated rent for the purpose of applying future rent increases. The DHCR computes the rent increase based upon a seven-year period of amortization of the verifiable costs of the MCI. There is a 6 percent cap on the amount of the increase that may be collected each year. (See Fact Sheet #24, "Major Capital Improvements (MCI)", for additional information.)

If an apartment is vacant or becomes vacant while an application to the DHCR for a MCI rent increase is pending, the owner must notify any incoming tenant of the basis for the previously filed application, and that the rent will be increased if the MCI application is approved. Failure to include this notice of anticipated rent increase in vacancy leases will result in no MCI increase being approved for this apartment during the term of the vacancy lease. An owner who charges such increases without this notification will be subject to overcharge penalties.

An example of a satisfactory MCI notification clause in a vacancy lease is the following: "An application for a major capital improvement rent increase has been filed under Docket No. ________________ with DHCR based upon the following work __________________. Should DHCR issue an order granting the rent increase, the rent provided for in this lease will be increased accordingly."

4. Individual Apartment Improvement ("IAI") rent increase.

Where an owner installs a new appliance in or makes an improvement to an apartment, the owner can raise the rent by 1/40th or 1/60th of the costs. In an occupied apartment, the owner must first obtain the written consent of the tenant to the increase, in order to charge and collect it. In a vacant apartment, tenant consent is not required.

Pursuant to the Rent Act of 2011, effective September 24, 2011, in buildings that contain more than 35 apartments, the owner can collect a permanent rent increase equal to 1/60th of the cost of the Individual Apartment Improvement (IAI). In buildings that contain 35 apartments or less, the owner can collect a permanent rent increase equal to 1/40th of the cost of the IAI, as had previously been allowed.

For example, if a new dishwasher is installed in a vacant apartment, in a 100 unit building, and the cost is $900, the rent can be increased by $15 (1/60th of $900). The same installation in a 20 unit building would result in a $22.50 rent increase (1/40th of $900). The increase, if taking place on a vacancy, is added to the legal rent after the application of the statutory vacancy increase, not before. (See Fact Sheet # 12 for additional information).

Security Deposit

The amount of a security deposit that an owner may collect is generally limited to one month's rent. However, if the tenant originally paid a greater security deposit when the apartment first came under rent stabilization, and has been in continuous occupancy since that date, such deposit may continue in effect until the tenant reaches the age of 65, or receives Social Security disability retirement benefits or SSI benefits. The next rent stabilized tenant to occupy the apartment, however, cannot be required to deposit more than one month's rent as security.

When a lease is renewed at a higher rent, or the rent is lawfully increased during the term of the lease, the owner may collect additional money from the tenant to bring the security deposit up to the new monthly rent. If after the tenant vacates the apartment, he or she disagrees with the owner over the payment of interest or the return of the security deposit, and such disagreement cannot be resolved between them, the tenant may contact the Consumer Frauds and Protection Bureau of the New York State Attorney General's Office or begin a proceeding in a court of competent jurisdiction (usually, Small Claims Court).

For more information or assistance, call the DHCR Rent InfoLine, or visit your Borough or County Rent Office.

Sources:

Related Material:

Revised: 09/12

Last updated on 10/11/12