On June 14, the legislature passed “The Housing Stability and Tenant Protection Act of 2019. The law amended the state’s current emergency tenant protection laws. The legislation, strengthened tenant protections for residents of the nearly one million rent-stabilized apartments in NYC and it made the rent regulation laws permanent.
Some say this has has left landlords feeling like they won’t have enough revenue to maintain their buildings and keep updating apartments as tenants move out.
Here are the major changes:
Caps major capital improvements and individual apartment improvements.
Previously, landlords could renovate apartments and pass a fraction of that expense onto tenants in the form of permanent rent increases. The state would essentially rubber stamp the upgrades, known as individual apartment improvements (IAIs). Under the new policy, landlords can only pass on $15,000 worth of renovations over 15 years. For major capital improvements (MCI’s), owners can now only pass on two percent of the construction cost to tenants, down from six percent under the old law. MCIs are building-wide upgrades like boilers, plumbing, heating and cooling systems, electrical systems, roofs and windows.
Repeals high-rent and high-income deregulation.
The most common way for landlords to remove units from rent regulation was to find ways to increase the rent on a unit until it met the deregulation threshold, which is $2,774. The new law not only eliminated this option, but it also axed a less commonly used rule that let landlords deregulate an apartment if they could prove its occupant earned more than $200K a year.
Makes condo and co-op conversions tougher.
The new law increases the number of tenants who must agree to a tenant or co-op conversion in a rent-stabilized building. Under the old law, it was 15 percent of tenants; now it’s 51 percent. Also, the old law allowed outside investors to purchase the 15 percent of converted apartments if tenants decline to purchase them. This month’s legislation requires 51 percent of tenants to not only support the conversion but also to agree to purchase their units before the state attorney general will sign off on a condo conversion plan.
Establishes preferential rent as the base rent for a new lease.
Preferential rent is when a tenant pays any amount lower than an apartment’s legal rent registered with the state. While the rent reform bill didn’t eliminate preferential rents, it created a rule that extends preferential rents for the duration of a tenancy. Under the old system, a tenant could sign a lease at a preferential rent, then see the rent jump to the legal rent upon renewal. Now, renters who pay preferential rents won’t be subjected to an increase in their rents when they renew their leases; they will only be subject to normal increases from the Rent Guidelines Board. But when a tenant moves out of the apartment, the landlord can raise the rent to the maximum legal rent.
Creates stronger tenant protections and limits upfront fees for renters.
The law bans the use of tenant blacklists, which include tenants who have been sued in housing court for not paying the rent, repeatedly paying it late or creating a nuisance. It also limits security deposits to one month’s rent and requires landlords to return a deposit two weeks after a tenant moves out. Charges for late rent payments are capped at $50. And it mandates that landlords give tenants at least a month’s notice if they plan to raise the rent more than five percent (even on free-market units) or if they plan to not renew a lease.