On Monday, June 29th, the City Rent Guidelines Board (RGB) approved a rent freeze on one-year leases for the first time in the 47-year history of the Board.
This unprecedented outcome was approved by a vote of 7 to 2 with the two votes against coming from the Owner Representatives on the Board. The RGB fulfilled a campaign promise of a rent freeze made by Mayor Bill de Blasio, who has appointed or reappointed all nine members of the Board.Below is a summary of Rent Guidelines Order No. 47 for leases commencing between October 1, 2015 through September 30, 2016:
- 0% for one-year leases
- 2% for two-year leases
- A sublet allowance of 10%
- Special Guideline Maximum Base Rent (MBR) + 33% or HUD's Fair Market Rent, whichever is greater
- A vacancy allowance of 18% for one-year leases*
- A vacancy allowance of 20% for two-year leases*
*Please note that, as a result of the changes in the State Rent Stabilization Laws effective June 15, 2015 through June 15, 2019, if a tenant was paying a preferential rent, the vacancy allowance is modified as follows: 5% if the last vacancy lease commenced less than two years ago, 10% if the last vacancy lease commenced less than three years ago, 15% if the last vacancy lease commenced less than four years ago, and 20% if the last vacancy lease commenced four or more years ago. The vacancy allowances are applied to legal regulated rent, not the preferential rent.
For more information on this year's rent increases, you can download the summary of the Rent Guidelines Board 2015 Apartment Order #47 by clicking here. We will have additional information on this year's RGB process, as well as the changes to the State rent laws, in the upcoming July/August edition of the RSA Reporter.
NEW YORK STATE RENT LAWS EXTENDED FOR FOUR YEARS WITH CHANGES
Just before midnight on Thursday, June 25th, the New York State Legislature passed a bill that extended the rent laws for four years through 2019. Here is a brief summary of the important changes to the rent laws that you must know:
- The rent laws have been extended for four years, until June, 2019.
- Tenants sought a two-year extension.
- The rent threshold for both high-rent vacancy deregulation and high-income, high-rent deregulation has been raised to $2,700 from $2,500. That threshold will be adjusted January 1, 2016 and each January 1st thereafter by the one-year guideline issued the prior year by the City Rent Guidelines Board. Significantly, for high-rent vacancy deregulations based upon the new threshold, deregulation will be based upon whether the legal regulated rent for the prior tenant was more than $2,700. Please note that this change does NOT affect prior deregulations which were based upon the legal regulated rent of the new tenant.
- Tenants sought a total repeal of vacancy deregulation or an increase to a $3,000 threshold.
- The amortization period for major capital improvements has been increased from seven years (which it has been since 1990) to eight years for buildings with 35 or fewer units and nine years for buildings with more than 35 units. MCI rent increases continue to be a permanent part of the rent. These new amortization periods apply to pending MCI applications. Significantly, owners are provided with a new one-time tax abatement for the MCI (details will be included in the RSA Reporter).
- Tenants sought MCI increases that would be temporary surcharges.
- The vacancy allowance has been revised to address vacancies which arise after a prior lease where the tenant paid a preferential rent. In these cases, a vacancy allowance of 5% is permitted if the last vacancy lease commenced less than two years prior to the new lease, 10% if less than three years prior to the new lease, 15% if less than four years prior to the new lease, and 20% if four years or more prior to the new lease. These vacancy allowances, as with “regular” vacancy allowances, are applied to the legal regulated rent.
- Tenants sought to prohibit preferential rents from increasing to the legal regulated rent and to either repeal or reduce the vacancy allowance to 7.5%.
- Monetary penalties for harassment have been increased by various amounts.
- The new rent laws are retroactive to June 15, 2015.
Despite extraordinary efforts by Governor Andrew Cuomo, Mayor Bill de Blasio and tenant advocates to strengthen the rent laws, RSA, along with the Senate Republicans, advocated for the best possible outcome for the entire rental housing industry.
We will provide a full summary of the new State rent laws in the July/August edition of the RSA Reporter.