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Rent Regulation Reform Act

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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