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The
Rent Regulation Reform Act of 1997:
Its
Provisions and How it Affects the Authority of the New York City Rent Guidelines
Board
[Also
see Rent Law of 2003]
What
is the Rent Regulation Reform Act of 1997?
The Rent Regulation
Reform Act of 1997 was enacted in June 1997. It changed many provisions of
New York Housing Law. Specifically, it -
- Extends the
Rent Stabilization Laws until June 15, 2003.
- Provides a
new formula for computing the rent increases for stabilized apartments
which become vacant.
- Changes the
definition of "succession" rights so that an apartment can be "passed
down" for only a single generation without a vacancy increase.
- Broadens "luxury
decontrol" to households earning more than $175,000 in two consecutive
years with rents of $2,000 or more. Previously, only households with incomes
of $250,000 or more were subject to vacancy decontrol.
- Requires tenants
to pay rent into escrow in certain Housing Court disputes.
Click
here for the text of the Act in its entirety.
When
do the provisions of the Rent Regulation Reform Act take effect?
Most of the Act's
most important provisions (e.g. the formula for calculating the vacancy allowance)
were retroactive to June 15, 1997.
How
does the Rent Regulation Reform Act affect the powers of the Rent Guidelines
Board?
The Board will
continue to set percentage increases for renewal leases of stabilized apartments.
The Board has in the past also enacted a "low rent supplement"
(For example, see the guidelines
effective October 1, 1999 to September 30, 2000). The Rent Guidelines
Board could also pass a vacancy allowance IN ADDITION TO that provided for
in the Rent Regulation Reform Act of 1997. However, the Board has not done
so in recent years.
I
own a rent stabilized building. How do I calculate a Vacancy Allowance
based on the provisions of Rent Regulation Reform Act?
|
Vacancy
in last
Eight
Years?
YES
Rent
OVER $500?
YES
|
Vacancy
in last
Eight
Years?
YES
Rent
OVER $500
NO
|
Vacancy
in last
Eight
Years?
NO
Rent
OVER $500
NO
|
Vacancy
in last
Eight
Years?
NO
Rent
OVER $500
YES
|
|
(1) If
the vacancy lease is for a term of two years, the legal rent
can be raised 20%.
(2) If
the vacancy lease is for a term of one year, the legal rent can be
raised 20% less the difference between the RGB's one- and two-year
lease renewals (e.g. If the vacancy lease commences October 1, 1997
for a one year lease, the maximum vacancy increase is 18% [20% - (4%-2%)]. |
If the legal
regulated rent is less than $300, the total increase is calculated
as above in "(1)" or "(2)" to the left plus $100
per month.
If the legal
regulated rent is at least $300 and no more than $500, the total increase
is as outlined in "(1)" or "(2)" OR $100, whichever
is greater |
Multiply
the number of years since the last vacancy (or since the unit was first
stabilized) times 0.6%. Add this figure to "(1)" or "(2)" in
the far left column to determine the percentage increase.
THEN for
units under $300 ADD $100.
THEN for
units between $300 and $500 determine if this increase is at least
$100. If NOT, the increase is $100. |
Multiply
the number of years since the last vacancy (or since the unit was first
stabilized) times 0.6%. Add this figure to "(1)" or "(2)" in
the far left column to determine the percentage increase. |
How
about some examples?
Example 1 (Column
1 above): The existing legal rent is $600. The last vacancy occurred four
years ago. The new tenant wants a one year lease effective July 15, 1997.
The applicable
column in the table above is COLUMN 1, 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 (7%) and the one year lease
renewal guideline (5%), or 20% - 2% = 18%. Thus the maximum rent which can
be charged is 1.18 X $600, or $708.
If the tenant
had chosen a two year lease the maximum would have been a 20% increase or
1.2 X $600 = $720.
Example 2 (Column
2 above): The existing legal rent is $600. The last vacancy was ten years
ago. The new tenant wants a one year lease.
The first part
of the calculation is the same as in Example 1. However, since it has been
ten years since the last vacancy, you can add 10 X 0.6%, or 6% to the increase.
The increase is thus the 18% calculated above PLUS 6%, or 24%. The maximum
legal rent would be 1.24 X $600 or $744.
Example 3 (Column
3 above): The existing legal rent is $250. The last vacancy was 15 years
ago. The tenant wants a two year lease.
First compute
the percentage increase. Since the tenant wants a two year lease, start with
20%. Then add the vacancy portion (15 X 0.6%, or 9%) for a total of 29% (20
+ 9). Multiply 1.29 X $250, which equals $322.50. Note that in this case,
since the rent before the vacancy was less than $300, you can add an additional
$100 to the percentage increase, so the maximum new rent is $322.50 + $100
or $422.50.
You
can also use our VACANCY
LEASE CALCULATOR, either online or you can download an Excel spreadsheet
version of the calculator.
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