How much can a lanlord increase the rent on vacant newly

[WU-LI]

Hi, I was wondering If someone can help us? Here is the scenario. My wife and I been waiting for a 2 bedroom vacant apartment in a rent controlled building in the N.E Bronx to complete renovations. We were told by the management that would couldnt apply for the apartment until the renovations were completed because they didnt know what the new rent would be. In our initial conversation with mangement we were told that the rent could go as high as 1500 a month based on the contracters esimated cost of the renovation. We received a call from management when the apartment was ready telling us that the contractor had etimated incorrectly and that the apartment would probably be less than 1400 a month. Then they urged us to come in as quickly as we could to get the paperwork rolling, the next day if possible. So I took a day off from work to go to their office on Canal St to fillout the paperwork because we needed to pay for a credit check and bring in the requested documents ( W-2 form, paystubs etc..). We paid a 30.00 credit check fee and they made copies of the paperwork. They told us they still hadnt received the final cost of the renovations so they couldnt tell us how much the apartment would rent for yet. The next day we received a call from them telling us the rent would be 1650.00! a month. We asked how much the previous tenants were paying and were told it was 835.00. We asked them how they could they raise the rent so much and we were told that the renovations had cost 20,000.00.
They did a nice job in the apartment, new parkay floors, new kitchen cabinets, the bathrooms were almost totally done with the exception of the bathtubs and sinks and the walls were smoothed out and new lighting fixtures installed.
We understand that lanlords are entitled to cost of operating increases and cost for capital improvement, but how did they arrive at 1650.00? If the previous tenants were paying 835.00? We also doubt that the renovation cost 20,000.00. What we would like to know is can they raise the rent over a 100%? What are they entitled to? thanks, Wil

[mjr203]

I'd be suspicious any time it comes up to such a round #. If you move in you should get a rent history for the apartment from the DHCR immediately.

Assuming they are honest about the previous rent:

First they are entitled to an 18% vacancy increase.

835 x 1.18 = $985.3

If they spent 20,000 on the apartment they are entitled to 20,000/40 per month raise in rent.

20,000/40 = $500

So the new rent should be $985.3 + $500 = $1485.00.

Of course there may other variables that might increase the rent but if your givens are correct then $1650 might be too much, seeing as they would need to spend over $26k to justify said increase with no other variables.

If you really like the apartment and consider around $1550 a good rent deal for the neighborhood you might move in and then investigate the rent history and demand an accounting of their "individual apartment improvement". They should be providing you with a rent stabilization rider that explains how the present rent was computed.

good luck. I hope you are able to take the apartment.

feedback on my calculations & assumptions would be cool.

POINTER

<small>[ February 27, 2003, 09:09 AM: Message edited by: pointerout ]</small>

[jot0n0]

There is also a vacancy allowance bonus if the last vacancy allowance increase was collected 8 yrs. or more from inception of last lease. That is calculated at 0.6% per year on top of the regular vacancy allowance. Also WIL mentioned that it was a "rent controlled building", which leads me to assume that the apt was rented controlled which when it become vacant follows a different set of rules below:

DECONTROLLED UNITS

The permissible increase for decontrolled units as referenced in Order 3a which become decontrolled after September 30, 2002, shall be the greater of:

50% above the maximum base rent as it existed or would have existed, or

The Fair Market Rent for existing housing as established by the United States Department of Housing and Urban Development (HUD) for the New York City Primary Metropolitan Statistical Area pursuant to Section 8(c) (1) of the United States Housing Act of 1937 (42 U.S.C. section 1437f [c] [1] ) and 24 C.F.R. Part 888, with such Fair Market Rents to be adjusted based upon whether the tenant pays his or her own gas and/or electric charges as part of his or her rent as such gas and/or electric charges are accounted for by the New York City Housing Authority.
Such HUD-determined Fair Market Rents will be published in the Federal Register, to take effect on October 1, 2002.

The increase takes effect prior to adding on the 1/40 renovation cost to arrive at the final rent.

<small>[ February 27, 2003, 01:38 PM: Message edited by: John ]</small>

[Cranky Tenant]

Never let a Management Company do a credit check before they tell you how much the rent is. There's just too much temptation to raise the rent to whatever they think you can afford.

If they have a relationship with the contractors it probably isn't too hard to come up with a bill for any amount regardless of the real cost of improvements.