The 1997 Rent Law:
Its Provisions and How it Affects the Authority of the New York City Rent Guidelines Board
(supplied by the Rent Guidelines Board)
What is the Rent Regulation Reform Act
of 1997?
The Rent Regulation Reform Act of 1997 changed many provisions of New
York Housing Law. Specifically, it -
- Extends the Rent Stabilization Laws until June 15, 2003.
- Provides a new formula for computing the vacancy allowance for rent
stabilized apartments.
- Changes the definition of "succession" rights so that an
apartment can be "passed down" for only a single generation without
a vacancy increase.
- Broadens "luxury decontrol" to households earning more than
$175,000 in two consecutive years with rents of $2,000 or more. Previously,
only households with incomes of $250,000 or more were subject to vacancy
decontrol.
- Requires tenants to pay rent into escrow in certain Housing Court disputes.
Click here for the text of the Act in its entirety.
When do the provisions of the Rent Regulation
Reform Act take effect?
Most of the Act's most important provisions (e.g. the formula for calculating
the vacancy allowance) were retroactive to June 15, 1997.
How does the Rent Regulation Reform
Act affect the powers of the Rent Guidelines Board?
The Board will continue to set percentage increases for renewal leases
of stabilized apartments. The Board can also enact a "low rent supplement"
as it did this year. At the present time, it is unclear whether the
Board can pass a vacancy allowance which would be in ADDITION to that provided
by the new law.
I have a vacant unit in my building.
Can I add the current Rent Guidelines Board vacancy allowance of 9% to the
other increases allowed by the Rent Regulation Reform Act?
It is currently our understanding (check back soon for updated information)
that the Reform Act basically supplants the Board's Existing Order (which
runs through September 30, 1997). Therefore, you should calculate the vacancy
allowance based on the provisions of the act and it is questionable whether
you can add the Board's 9% to the allowance provided in the new law.
I own a rent stabilized building. How
do I calculate a Vacancy Allowance based on the provisions of Rent Regulation
Reform Act?
|
Vacancy in last
Eight Years?
YES
Rent OVER
$500?
YES
|
Vacancy in last
Eight Years?
YES
Rent OVER
$500
NO
|
Vacancy in last
Eight Years?
NO
Rent OVER
$500
NO
|
Vacancy in last
Eight Years?
NO
Rent OVER
$500
YES
|
|
(1) If the vacancy lease is for a term of two years, the
legal rent can be raised 20%.
(2) If the vacancy lease is for a term of one year, the legal
rent can be raised 20% less the difference between the RGB's one- and two-year
lease renewals (e.g. If the vacancy lease commences October 1, 1997 for
a one year lease, the maximum vacancy increase is 18% [20% - (4%-2%)]. |
If the legal regulated rent is less than $300, the total increase is
calculated as above in "(1)" or "(2)" to the left plus
$100 per month.
If the legal regulated rent is at least $300 and no more than $500, the
total increase is as outlined in "(1)" or "(2)" OR $100,
whichever is greater |
Multiply the number of years since the last vacancy (or since the unit
was first stabilized) times 0.6%. Add this figure to "(1)" or
"(2)" in the far left column to determine the percentage increase.
THEN for units under $300 ADD $100.
THEN for units between $300 and $500 determine if this increase is at
least $100. If NOT, the increase is $100. |
Multiply the number of years since the last vacancy (or since the unit was
first stabilized) times 0.6%. Add this figure to "(1)" or "(2)"
in the far left column to determine the percentage increase. |
How about some examples?
Example 1 (Column 1 above): The existing legal rent is $600. The last
vacancy occurred four years ago. The new tenant wants a one year lease effective
July 15, 1997.
The applicable column in the table above is COLUMN 1, since there has
been a vacancy in the last eight years and the rent is over $500. Since
the tenant wants a one year lease the correct percentage increase is 20%
MINUS the difference between the two year lease renewal guideline (7%) and
the one year lease renewal guideline (5%), or 20% - 2% = 18%. Thus the maximum
rent which can be charged is 1.18 X $600, or $708.
If the tenant had chosen a two year lease the maximum would have been
a 20% increase or 1.2 X $600 = $720.
Example 2 (Column 2 above): The existing legal rent is $600. The last
vacancy was ten years ago. The new tenant wants a one year lease.
The first part of the calculation is the same as in Example 1. However,
since it has been ten years since the last vacancy, you can add 10 X 0.6%,
or 6% to the increase. The increase is thus the 18% calculated above PLUS
6%, or 24%. The maximum legal rent would be 1.24 X $600 or $744.
Example 3 (Column 3 above): The existing legal rent is $250. The last
vacancy was 15 years ago. The tenant wants a two year lease.
First compute the percentage increase. Since the tenant wants a two year
lease, start with 20%. Then add the vacancy portion (15 X 0.6%, or 9%) for
a total of 29% (20 + 9). Multiply 1.29 X $250, which equals $322.50. Note
that in this case, since the rent before the vacancy was less than $300,
you can add an additional $100 to the percentage increase, so the maximum
new rent is $322.50 + $100 or $422.50.
