The New York State Legislature passed new rent regulation laws on Friday, prompting apprehension and questions within the industry. We want to keep you informed about these changes, given that they will have a significant impact on the multi-family townhouse market.
The graphic above shows the comparison of rents in the average rent stabilized unit before and after the laws were passed. While lawyers are still analyzing the new laws, here's what we've gathered so far about the implications of these changes, with the help of Belkin Burden Wenig & Goldman, LLP.
- Rent regulations extended permanently
- High rent vacancy deregulation repealed
- High rent / high income deregulation repealed
- Preferential rents continue through the tenancy (may not be discontinued on renewal of lease)
- Vacancy bonus repealed
- Longevity bonus repealed
- Restriction on Rent Guidelines Board promulgating a vacancy or longevity bonus
- Owner occupancy restricted to one apartment, higher burden of proof, additional restrictions may apply
- Overcharge statute of limitation expanded from 4 to 6 years; return of overcharge will not avoid treble damages; treble damages extended from 2 to 6 years
- MCI cap reduced from 6 to 2 per cent, with longer amortization, increases come off after 30 years, more restrictive definition
- IAI limited to 3 IAI’s over 15 year for an aggregate total of $15,000 in IAI, increases come off after 30 years
- Conversion to coop/condo now requires 51% of tenants in residence (rather than 15%)
- Housing court procedure and timing is substantially altered, from rent demands to stays of eviction
- Owners must mitigate damages when tenant terminates lease early.
- New procedures and restrictions on security deposits
- Rent deposit law effectively nullified
- Free market apartments subjected to rules regarding renewals and rents
- A tenant cannot be denied a lease predicated solely upon a prior or pending proceeding
One of the key elements that lawyers will be focusing on is combining units. From what we understand, splitting, combining, or drastically altering the exterior walls of a rent stabilized apartment could allow the owner to then charge a fair market rent over the rent stabilization threshold, though it would still maintain its rent stabilized status. From what we gather at the moment, rent controlled units that become vacant will also be allowed to charge fair market rent. We will continue to update and inform as we gain clarity in the coming weeks and months.
Graphic Source: The Real Deal