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How Rent Control Works in New York City

How Rent Control Works in New York City

Legal Foundation

The “local emergency housing rent control act” provides authority for “the city rent and rehabilitation law”, which governs rent control in New York City. The Division of Housing and Community Renewal (DHCR) in turn has promulgated regulations pursuant to the city rent and rehabilitation law that govern rent control in New York City. Those regulations are known as the New York City Rent and Eviction Regulations (DHCR regulations).

Rent control covers units constructed before February 1st, 1947, and continuously occupied by the same tenant, or the tenant’s legal successor, since July 1, 1971.

“Statutory Lease”

The city rent and rehabilitation law and the DHCR regulations make up the “statutory lease” between the owner of a property subject to the rent control laws and a tenant who qualifies for the protection of the rent control laws, but who does not have a previously existing lease between himself or herself and the landlord before the rent control laws went into effect. In the event the tenant did have such a lease between himself or herself and the landlord, the terms of that lease would govern the relationship between the tenant and the landlord even though the tenant would still qualify for protections from rent increases and eviction provided by the rent control law and associated regulations.

(1) Termination of Tenancy

As long as the rent control tenant continues to pay the regulated rent, the tenancy cannot be terminated at will by the landlord.

(2) Termination of Rent Control Status

When a rent controlled apartment becomes vacant, it either becomes rent stabilized, or, if it is in a building with fewer than six units, it is generally removed from regulation and no longer subject to rent control.

Succession Rights

Family members of a rent-controlled tenant have succession rights to the rent-controlled apartment and cannot be evicted when the main tenant dies or otherwise permanently vacates the apartment. “Family member” includes a spouse, son, daughter, stepchild, father, mother, stepparents, brother, sister, grandparents, grandchildren, in-laws, and any other person residing with the tenant who can prove emotional and financial commitment and interdependence between the person and the tenant. Emotional and financial commitment is proven by consideration of various factors set out in DHCR Fact Sheet #30.

In order to succeed to a rent-controlled apartment, the family member must have resided with the tenant as a primary resident in the apartment for at least two years immediately prior to the death of, or other permanent departure from the apartment by, the tenant. Protection also exists for family members who reside with the tenant from the inception of the tenancy or the commencement of the relationship.

Indications of residency include: placing a name on a mailbox, advising the landlord of the tenancy, leaving personal property on the premises, leaving furniture on the premises, maintaining a telephone number on the premises, and being present on the premises on a regular basis.

A lease (including a statutory lease) for residential premises permits occupancy by the tenant, immediate family of the tenant, one additional occupant, and dependent children of the occupant provided that the tenant or the tenant’s spouse occupies the premises as his or her primary residence. Under the rent control laws, “immediate family” includes siblings. It would therefore be unlawful to try to preclude “immediate family” members from moving in with a tenant with rights to a rent-controlled apartment.

Rent Increases

When the initial rent-controlled tenant transfers occupancy to a successor, that successor takes the premises at the same rent paid by the first tenant. However, if the second tenant transfers the premises to a subsequent legal successor, that successor takes the premises subject to a 20 percent increase in rent, and possibly to an additional 24 percent increase (44 percent total) if it has been 40 years since the last vacancy increase. Subsequently, the landlord can increase the rent up to 7.5 percent each year as long as, every two years, the landlord completes a Maximum Base Rent (MBR) Application that is approved by DHCR.

Pursuant to the MBR system, a maximum base rent is established for each apartment and adjusted every two years to reflect changes in operating costs. Owners, who certify that they are providing essential services and have removed violations, are entitled to raise rents up to 7.5 percent each year until they reach the MBR. Rents can also be increased because of increases in fuel costs and to cover higher labor costs.

DHCR Fact Sheet #22 describes the MBR rent increase system as working the following way:

The rent that rent controlled tenants actually pay is called the Maximum Collectible Rent (MCR). The MCR generally is less than the MBR. By law, the MCR cannot be increased by more than 7.5% per year for each year of the two year MBR cycle unless there are Major Capital Improvements or individual apartment rent increases. For example, if a tenant’s rent (MCR) on 12/31/01 was $600, and the MBR was $700, then on 1/1/02 (effective date of MBR) the rent (MCR) would rise 7.5% to $645 and the MBR ceiling would rise by 10.5% (the 2002-03 MBR factor) to $773.50. On 1/1/03, the MBR would remain the same (since MBRs cover a two-year period), but the MCR would rise by another 7.5% to $693.38.

Tenants may challenge the proposed increase on the grounds that the building has violations or that the owner’s expenses do not warrant an increase.

Rents can also be increased: (1) with the written consent of the tenant in occupancy, if the owner increases services or equipment, or makes improvements to an apartment; (2) with DHCR approval, if the owner installs a building-wide-major capital improvement; or (3) in cases of hardship with DHCR approval.

Contact an NYC business lawyer at Hendricks Law Firm PLLC to see how we can assist you.

This blog post is not intended to consist of legal advice and you should always consult with a lawyer before acting on anything you find on the Internet.  If you have questions or comments about this post, about the topic, or if you need legal assistance, you should feel free to give us a call or send us an email.