BY MICHAEL STOLER
Owners and tenants of residential real estate in the five boroughs of New York City are trying to understand the recent legislative and regulatory news on residential rents.
Last month the Rent Guidelines Board (RGB) approved the following increases for rent regulated units in 2016. One-year lease renewals are subject to a “rent freeze” and will not increase in 2016. Two-year lease renewals are subject to a two percent increase.
Rent regulation laws have been extended for four years to June 15, 2019 and new laws will take effect on January 1, 2016 with the following modifications.
Vacancy decontrol involves preserving rent control and tenant protection for currently occupied rental units; when a renter moves out of the unit, however, the landlord may raise rent or change policies involving tenant protection, “decontrolling” the property.
The vacancy decontrol threshold will increase from $2,500 to $2,700 and will be indexed to rise annually based on the most recent one year renewal voted on by the Rent Guidelines Board.
The city requested for eliminating the 20 percent increase in monthly rents when tenants vacate an apartment. This allowance has created strong incentives to pressure tenants out of their homes in the hopes of faster-rising rents.
For units in which the tenant upon vacancy was receiving preferential rent, the vacancy allowance increase will be limited to the following (these restrictions do NOT apply to units which are leased at the legal rent):
• 5 percent rent increase for less than two years ago vacancy lease commencement
• 10 percent rent increase for less than three years ago vacancy lease commencement
• 15 percent rent increase for less than four years ago vacancy lease commencement
• 20 percent rent increase for more than four years ago vacancy lease commencement
Changes in the Major Capital Increase:
The city requested calling for the current permanent rent increases for building-wide or individual apartments to be made temporary. Costs from increased services or improvements to individual apartments would be spread over 10 years, while building wide or system improvements could be spread over seven years. Long-term rent would be unaffected, and would reset after the fixed period.
The amount a landlord can increase rents when performing a major capital increase (MCI):
• In buildings with 35 units or more, the recapture period will increase from 84 months to 108 months.
• In buildings with less than 35 units the recapture period will increase to 96 months from 84 months.