Rent Law Changes

Here are the actual changes to state and city rent laws in Chapter 20, Laws of 2015.

Four-year extender: State rent control and the Emergency Tenant Protection Act of 1974 were renewed until June 15, 2019, as were the laws regulating the conversion of rental buildings to cooperative or condominium status in New York City and Westchester, Nassau, and Rockland counties. The 2013 “cleanup” changes to the New York City Loft Law were extended to June 30, 2019.

Threshold for Vacancy Deregulation & High-Income Deregulation: City and state rent laws were amended to increase the monthly legal rent threshold for both vacancy deregulation and high-income deregulation from $2,500 to $2,700. These thresholds will be adjusted on January 1 of each year according to the guidelines for a one-year lease renewal adopted by the city and suburban Rent Guidelines Boards. For 2016, that means they will be frozen at $2,700 in New York City, and rise to $2,733.75 in Nassau and Rockland, and $2,747.25 in Westchester. 

Tom Waters of the Community Service Society released an analysis in June predicting that with a $2,700 threshold, 87,500 rent-regulated apartments in New York City will be converted to market-rate status in the next four years.

Major Capital Improvements: The monthly rent increases allowed for building-wide improvements have been reduced from the current formula of 1/84 of the cost of the improvement. For buildings of 35 or fewer units, MCI increases can be up to 1/96 of the cost; for larger buildings, 1/108 of it. However, the MCI will still be a permanent rent increase, and it will still be compounded with the base rent. In addition, New York City landlords will get their real property taxes reduced to cover any loss of revenue from this. The city has no say in whether landlords should get this tax abatement.

Harassment: Civil penalties for landlords found guilty of harassing tenants by the state Homes and Community Renewal agency were increased by approximately $1,000 per fine. This is fairly meaningless, as it is virtually impossible to prove harassment. 

Limit on vacancy bonus where prior tenant paid a preferential rent: If the prior tenant was paying a preferential rent (anything less than the legal maximum rent) and had been living in the apartment for less than four years, landlords will not be allowed to charge the new tenant the full 20 percent vacancy bonus. The vacancy bonus will be 5 percent if the previous tenant had occupied the apartment for less than two years, 10 percent for between two and three years, and 15 percent for between three and four years. 

The law does not prevent landlords from raising the rent from the preferential rate to the legal maximum when the tenant’s lease comes up for renewal, so the benefit (if any) from this Rube Goldberg formula will be to the new tenant. The old tenant will likely be faced with a rent increase of several hundred dollars and be forced to move. It will be interesting to see if HCR can enforce this complicated formula. This pathetic example of Albany sausage-making allows tenants to be evicted, then restricts how much the rent can go up for the next tenant—but as the new tenant will also be paying a preferential rent, they too can be hit with a large increase when their lease comes up for renewal.

Loft Law changes: The changes extended to 2019 include a reduction in the minimum size of an eligible loft to 400 square feet, and reductions in the “milestone” rent increases tenants pay while the loft is being legalized. Most important, the deadline for tenants to apply for coverage under the 2010 Loft Law was reopened for two years, so they can file applications until June 25, 2017.

421-a/J-51: These two tax-subsidy programs were extended. J-51 was extended for four years. The 421-a program will also be extended to 2019, if the real-estate industry and the building-trades unions can reach an agreement on prevailing union-scale wages in the next six months. 421-a was extensively revised, mostly along the lines proposed by Mayor Bill de Blasio. The requirement to create “affordable” housing in buildings receiving the tax break was increased from 20 to 25 or 30 percent, and will apply throughout the five boroughs, not just in parts of Manhattan, Brooklyn, and Queens. “Poor doors,” separate entrances for the below-market tenants, are prohibited, and luxury Manhattan condos no longer qualify for the subsidy. New coops and condos can qualify, but only outside Manhattan and only smaller buildings.