RGB Approves First Rent Increase on One-Year Leases Since 2014
On Tuesday, June 27th, the City Rent Guidelines Board (RGB) voted in favor of the first rent increase in three years with 7 votes in favor and 2 against coming from the Owner Members.
Despite a rent increase, the small increase does not come close to covering the large increase in operating expenses that property owners have incurred over the last year.
Below is a summary of Rent Guidelines Order No. 49 for leases commencing between October 1, 2017 through September 30, 2018:
1.25% 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 19.25% for one-year leases*
A vacancy allowance of 20% for two-year leases*
*With regard to vacancy allowance increases, as a result of amendments to the rent stabilization laws which took effect June 15, 2015, where the tenant who vacated the apartment was paying a preferential rent, the vacancy allowance is as follows: 5% if the last vacancy casino 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.
Vacancy Decontrol Threshold: Pursuant to the Rent Act of 2015 the deregulation threshold for luxury decontrol increases by the amount of the one-year guideline. As a result, the threshold increases to $2,733.75 effective January 1, 2018.
We will have additional information on this year's RGB process in the upcoming July/August edition of the RSA Reporter.