Rent Stabilization

In New York City Rent control favors the tenant. Regulations limit the amount that landlords can invest into a particular property, and it restricts the owners right to evict tenants. As well, the owner is obligated to provide necessary services and appliances.
Rent control in New York City is under the Maximum Base Rent (MBR) system. Maximum base rent is set for each apartment, but it is adjusted every two years. The adjustment is determined by changes in operating expenses. Owners may raise rents up to 7.5% annually (up to the MBR limit), but they must prove that they are providing essential services to renters. They must also prove that the property is free of violations. Below you will find a helpful guide to understanding more about rent control guidelines.

Rent Can Increase If

  • The owner makes substantial improvements (extensive rehabilitation or installs major capital improvements) or increases services.
  • The owner can prove increased labor costs.
  • The owner can prove hardship.
  • The owner has increased fuel costs.

 

Rent Can Decrease If

  • Significant code violations that go uncorrected
  • Reductions in services ( facilities, space, equipment)
  • Lack of services
  • Rent can be decreased in certain circumstances by DHCR.

 

What Is Rent Stabilization?

Rent stabilization protects renters. It provides extra protection that goes beyond rent limitations. Tenants must receive required services. Also, renters must have their leases renewed – unless there is a legal reason for eviction. Leases must be entered into (and renewed) for one to two-year periods. The particular term is a tenant’s choice.
If an owner acts in violation of a tenant’s rights, DHCR can reduce rent (and even impose civil penalties). Owners must provide services, and they cannot overcharge renters. If tenants get overcharged, DHCR will assign penalties including payment of interest and even payments more than the original amount (if willful overcharges). The Omnibus Housing Act required owners to initially register with DHCR including the rent and services for all rent stabilized apartments occupied between April 1, 1984, and June 30, 1984. Owners were required to give a copy of the registration to tenants. They had 90 days to challenge the information provided by the owner.
For apartments eligible for rent stabilization after 1984, owners must submit an initial registration of all residences within 90 days after becoming subject to rent stabilization. In NYC, tenants may file a challenge (Fair Market Rent Appeal) to the initial registration (concerning rent-controlled apartments becoming subject to rent stabilization for the first time). Owners are also required to register on an annual basis. If they fail to register, they may be denied rent increases. Of course, owners must provide tenants with a copy of the yearly registration.

Rent Stabilization Regulations

  • Rent stabilization includes apartments in buildings (with six or more units) built February 1, 1947 – January 1, 1974.
  • Rent stabilization also covers tenants in building built before February 1, 1047, who moved in after June 30, 1971.
  • Rent stabilization also covers buildings with three or more apartments* constructed since 1974 with tax benefits.
  • Each year, local Rent Guideline Boards set maximum rates for annual rent increases (effective for leases beginning October 1).
  • The Rent Regulation Reform Act allows deregulations – rent over $2000 July 7, 1993 – October 1, 1993, if vacant on/after July 7, 1993.
  • In NYC, Local Law No. 4 of 1994 provides for deregulation – rents of $2,000 at any point – vacant on or after April 1, 1994.
  • In NYC, Local Law No. 4 allows deregulation – rent above $2000 – tenants’ income $250,000 plus – 2 years before application.
  • Effective January 1, 1998, the RRRA of 1997 reduced the income threshold to $175,000 for NYC and New York State.
  • These apartments are stabilized as long as tax benefits are in effect.

 

Market-Rate Housing includes

  • Apartments that have never been regulated
  • Apartments that have undergone deregulation
  • A vacant apartment in buildings with 1-5 units
  • Vacant buildings with rent of more than $2000 per month (although deregulation can be challenged by new tenant)
  • Apartments in buildings built or rehabilitated after January 1974 (unless owner took advantage of J-51 & 421-a programs)
  • There can be exceptions.

 

Rent-Regulated Housing includes: Rent-controlled and Rent-stabilized apartments

  • Rent-stabilized apartments
  • Almost 50% of NYC apartments fall under this category.
  • More than 100,000 rent-stabilized apartments become vacant on an annual basis.
  • With rent below $2000, the empty apartment will still be classified as rent-stabilized (under certain conditions).
  • Also, to rent below $2000, the building must be built before 1974 and have six or more apartments.
  • Rehabilitated and new buildings may fall under rent stabilization – if the owner received a tax abatement.

 

Rent Control Regulations

  • To fall under rent control, the tenant must have lived there continuously before July 1, 1971.
  • When a rent-controlled apartment becomes vacant, it may fall under rent stabilization.
  • If the building has fewer then six units, the building will probably be removed from regulation.
  • An apartment in a 1-2 family house must have been a continuous tenant since March 31, 1953, to be eligible for rent control.
  • If that 1-2 family house became vacated after March 31, 1953, it is removed from stabilization.
  • Previously-controlled apartments may have been removed from stabilization for other reasons.

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