June 19, 2019
By Shimon Shkury, Ariel Property Advisors
Below is a summary of major changes included in the legislation that all NYC property owners should be aware of:
|REGULATION||BEFORE 2019 RENT REFORM
|Rent Regulation Laws Expiration||Rent regulation laws were scheduled to expire every four to eight years.||New rent regulations are permanent and will not sunset unless the state government repeals or terminates them.|
|Individual Apartment Improvements (IAIs)||No cap on IAI spending and rent increases never expire. Increases were 1/40 for buildings with 35 or less units or 1/60 for buildings with more than 35 units.||Caps the amount of IAI spending at $15,000 over a 15-year period limited to three IAIs during that time. Increases shall be 1/168 for buildings with 35 or less units or 1/180 for buildings with more than 35 units, for a period of 30 years.|
|Major Capital Improvements (MCIs)||Rent increase capped at six percent amortized at a 96-month (8-year) period for buildings with 35 or less units or 108-month (9-year) period for buildings with more than 35 units. Rent increases never expire.||Rent increase capped at two percent amortized at a 144-month (12-year) period for buildings with 35 or less units or 150-month (12.5-year) period for buildings with more than 35 units. Eliminates MCI increase after 30 years and mandates 25 percent of MCIs be inspected and audited.|
|Vacancy Bonus & Longevity Bonus||Property owner was able to raise rents as much as 20 percent each time a unit became vacant.||Repeals the vacancy bonus and repeals the longevity bonus.|
|High Rent Vacancy Deregulation & High-Income Deregulation||Allowed removal of units from rent stabilization when the rent crosses a statutory high-rent threshold and the unit becomes vacant or the tenant’s income is $200,000 or higher in the preceding two years.||Elimination of High Rent Vacancy Deregulation & Elimination of High-Income Deregulation .|
|Preferential Rents||Owners who offered tenants “preferential rent” below the legal regulated rent were allowed to raise rent up to the full legal rent upon renewal.||Prohibits owners who give tenants “preferential rent” below the legal regulated rent from raising the rent up to the full legal rent upon renewal. Once the tenant vacates, the owner can charge up to the full legal regulated rent.|
|Co-Op / Condo Conversions||Option of eviction plan and required 15 percent of tenants in residents to agree to purchase apartments before the conversion can be effective.||Eliminates the option of “eviction plans” and institutes reforms for non-eviction plans. Requires 51 percent of tenants in occupancy to agree to purchase apartments before the conversion can be effective.|
|Owner Use Exception to Rent Regulation||Owner may refuse renewal of a rent regulated unit. Upon expiration date of lease an owner may take possession of one or more units for personal or family use.||Limits the use of the “owner use” provision to a single unit, requires that the owner or their immediate family use the unit as their primary residence, and protects long-term tenants from eviction under this exception by reducing the current length of tenancy required to be protected from eviction to 15 years.|
|Class-Specific Renewal Increase||N/A||Prohibits Rent Guidelines Boards from setting additional increases based on the current rental cost of a unit or the amount of time since the owner was authorized to take additional rent increases, such as a vacancy bonus.|
|Large Rent Increases for Rent-Controlled Tenants||N/A||Sets Maximum Collectible Rent increases at the average of the five most recent Rent Guidelines Board annual rent increases for one-year renewals.|
|Rent Overcharge Look-Back Period||Look-back period at four years to determine a reliable base rent, and owners can avoid treble damages if they voluntarily return the amount of the rent overcharge prior to a decision being made by a court or Housing and Community Renewal (HCR).||Extends look-back period to six or more years as reasonably necessary to determine a reliable base rent, extends the period for which an owner can be liable for rent overcharge to six years, and would no longer allow owners to avoid treble damages if they voluntarily return the amount of the rent overcharge prior to a decision being made by a court or Housing and Community Renewal (HCR).|
|Option for Localities Statewide||Prior geographical restrictions on the applicability of the rent stabilization laws||Removes the geographical restrictions on the applicability of the rent stabilization laws, allowing any municipality that otherwise meets the statutory requirements to opt into rent stabilization.|
|Housing Security and Tenant Protection||N/A||Limits security deposits to one month’s rent and provides required procedures to ensure the landlord promptly returns the security deposit. Creates the crime of unlawful eviction, where a landlord illegally locks out or uses force to evict a tenant, as a Class A Misdemeanor and punishable by a civil penalty of between $1,000 and $10,000 per violation. Requires landlords to provide notice to tenants if they intend to increase the rent more than five percent or do not intend to renew the tenants’ lease.|
To download the table above please click here.
Please click here for the bill signed into law.
For more information, please contact us at 212.544.9500 or email us at email@example.com.
More information is available from Shimon Shkury at 212.544.9500 ext.11 or e-mail firstname.lastname@example.org.
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