Owning rental property in New York City is a big job. If your building has rent-stabilized apartments, the rules are even stricter. You cannot raise the rent whenever you want or by any amount you choose. A New York City landlord lawyer can help landlords understand these rules and avoid costly rent overcharge problems. Here is a simple guide to legally raising rent on a rent-stabilized unit in NYC.
Follow the Rent Guidelines Board Rates
Each year, the New York City Rent Guidelines Board decides how much rent may go up for rent-stabilized apartments. The board sets different rates for one-year and two-year leases.
Landlords must use the correct rate for the lease period. The increase depends on when the new lease begins. If a landlord charges more than the allowed amount, the tenant may be able to file a rent overcharge claim. That can lead to penalties, refunds, and other legal trouble.
Send the Renewal Lease on Time
Landlords must give rent-stabilized tenants a written lease renewal offer before the current lease ends. In most cases, this offer must be sent between 90 and 150 days before the lease expires.
The tenant then has 60 days to choose a one-year or two-year renewal lease. Because of this, landlords should not wait until the last minute. If the renewal lease is sent late, the landlord may not be able to collect the higher rent right away. The rent increase may be delayed, even if the amount itself is legal.
Use the Correct Rent Amount
Some rent-stabilized tenants pay a preferential rent, meaning they pay less than the legal regulated rent for the apartment. Landlords usually cannot raise a tenant’s rent to the higher legally regulated rent at renewal.
Instead, the renewal increase must be based on the lower preferential rent the tenant is actually paying. The higher legally regulated rent usually cannot be collected until the tenant moves out and a new tenant rents the apartment.
Attach the Required Lease Rider
A rent-stabilized lease should include the proper DHCR lease rider or addenda. This rider explains how the rent was calculated. It may also include information about any apartment improvements that affect the rent. This paperwork can help show that the landlord followed the proper rules if a rent dispute comes up later.
Know When Improvement Increases May Apply
Some rent increases may be allowed when a landlord makes certain improvements. These rules are detailed and must be followed carefully.
Major Capital Improvements
A Major Capital Improvement (MCI) is a large building-wide improvement. A landlord must apply to DHCR and receive approval before collecting an MCI increase. MCI increases are also subject to limits, including a yearly cap. These increases are temporary and must be removed from the rent after 30 years.
Individual Apartment Improvements
An Individual Apartment Improvement (IAI) is work done inside one apartment. IAI increases have strict cost limits and filing rules. In some cases, the landlord must also get the tenant’s written consent. Current rules also require electronic filing with DHCR and before-and-after photos.
Keep Good Records
Landlords should keep copies of renewal leases, riders, notices, rent histories, improvement records, receipts, photos, and DHCR filings. Rent-stabilized apartments are heavily regulated. By following the proper steps, using the correct rent amount, and keeping clear records, landlords can raise rent when the law allows it while lowering the risk of disputes.