Leases can be divided into two main categories: Vacancy leases and renewal leases.

A tenant signs a vacancy lease when moving into a vacant apartment OR if his/her name is added to a lease signed by existing tenants.

The second lease (and subsequent leases) signed by a rent stabilized tenant are RENEWAL leases. Allowable rent increases for renewal leases are governed by the annual orders of the NYC Rent Guidelines Board. For renewal guidelines, see Apartment & Loft Guidelines.

Prior to June 15, 1997, the increase in rent for vacancy leases was governed by the NYC Rent Guidelines Board and the provisions of the Rent Stabilization Law. A landlord could raise the rent for a vacant unit by the VACANCY ALLOWANCE passed by the Rent Guidelines Board, PLUS the one or two year lease renewal amount. In addition, 1/40th of the cost of any apartment improvements could be added to the monthly rent.

Since June 15, 1997, the increase in rent for a vacancy lease has been governed by the terms of the Rent Regulation Reform Act of 1997. The formula of this act is complicated.

In general, during recent guidelines periods, the landlord can increase the rent by the following amounts:

• For vacancy leases commencing between Oct. 1, 2008 and Sept. 30, 2009: 20% if the tenant chooses a two-year lease, 16% if the tenant chooses a one-year lease; NOTE: the vacancy increase for one-year leases is determined each year by taking 20% minus the difference between one- and two-year RENEWAL leases. Under the 2008-09 rent guidelines period, the difference is 4%, so 20% - 4% = 16%. To see how much the rent can be raised for a particular apartment for vacancy leases going into effect during this period, try the 2008-09 RGB Vacancy Lease Calculator. You plug in the numbers and the calculator figures out how much the rent can be raised over the amount paid by the previous tenant.

• For vacancy leases commencing between Oct. 1, 2007 and Sept. 30, 2008: 20% if the tenant chooses a two-year lease, 17.25% if the tenant chooses a one-year lease; NOTE: the vacancy increase for one-year leases is determined each year by taking 20% minus the difference between one- and two-year RENEWAL leases. Under the 2007-08 rent guidelines period, the difference is 2.75%, so 20% - 2.75% = 17.25%. To see how much the rent can be raised for a particular apartment for vacancy leases going into effect during this period, try the 2007-08 RGB Vacancy Lease Calculator. You plug in the numbers and the calculator figures out how much the rent can be raised over the amount paid by the previous tenant.

• For vacancy leases commencing between Oct. 1, 2006 and Sept. 30, 2007: 20% if the tenant chooses a two-year lease, 17% for a one-year lease; NOTE: the vacancy increase for one-year leases is determined each year by taking 20% minus the difference between one- and two-year RENEWAL leases. Under the 2006-07 rent guidelines period, the difference is 3%, so 20% - 3% = 17%. To see how much the rent can be raised for a particular apartment for vacancy leases going into effect during this period, try the 2006-07 RGB Vacancy Lease Calculator. You plug in the numbers and the calculator figures out how much the rent can be raised over the amount paid by the previous tenant.

In addition, the following increases may also be permitted:

• An additional 0.6% per year if the previous tenant was in the apartment 8 or more years;

• Higher rates for units previously renting for $500 or less;

• 1/40th of the Cost of apartment improvements may be added.

Additional information on vacancy leases may also be found in this DHCR fact sheet.

Vacancy calculation steps (excludes any qualifying apartment improvements):

Vacancy calculation examples:

Example 1: The existing legal rent is $800. The last vacancy occurred four years ago. The new tenant chooses a one-year lease effective February 1, 2009.

The applicable column in the table above is the first column above, 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 and the one-year lease renewal guideline or 20% - 4% = 16%. Thus the maximum rent which can be charged is 1.16 X $800, or $928.

Example 2: The existing legal rent is $450. The last vacancy was 12 years ago. The tenant chooses a one-year lease effective November 1, 2008.

The applicable column in the table above is the third column above, since there hasn't been a vacancy in the last eight years and the rent is under $500. First compute the percentage increase. Since the tenant wants a one year lease, start with 16%. Then add the vacancy portion (12 X 0.6%, or 7.2%) for a total of 23.2%. Multiply 1.232 X $450, which equals $554.40. Note that in this case, since the rent before the vacancy was less than $500, but the increase was over one hundred dollars, you cannot add an additional $100 to the percentage increase, so the maximum new rent remains $554.40.

Example 3: The existing legal rent is $800. The last vacancy was ten years ago. The new tenant chooses a two-year lease effective July 1, 2009.

The applicable column in the table above is the fourth column above, since there hasn't been a vacancy in the last eight years and the rent is over $500. Since it has been ten years since the last vacancy, you can add 10 X 0.6%, or 6% to the increase. Then, calculate the vacancy allowance as in column one: A two-year guideline allowance is 20%. Add the two: 6% longevity allowance PLUS 20% vacancy allowance for a total increase of 26%. Thus, the increase is calculated by multiplying $800 x 1.26 equaling the new maximum rent of $1,008.

Updated 9/17/08