DHCR Adopts Rent Stabilization Code Amendments

On Oct. 23, 2023, the DHCR certified adoption of amendments to the Rent Stabilization Code (RSC) it had proposed in August 2022. These RSC Amendments are expected to be published in the NY State Register on Nov. 8, 2023, which is the date they will become effective. 

The context: Last August, the proposed amendments had been in the works for two and a half years, and the adopted amendments will be the first update since 2014 to the RSC. The amendments codify major changes made under the Housing Stability and Tenant Protection Act of 2019 (HSTPA) and attempts to address what the DHCR deems as abuses so that more units are preserved. 

One level deeper: The DHCR has adopted the amendments with no meaningful changes to the proposed version. Among other things, the amendments include:

• Elimination of a first rent for newly created apartments. First rents for new apartments created by combining or dividing rent-stabilized apartments to create new units with rent-regulated or deregulated apartments are now limited and must be based on prior rents, square footage calculations, and applicable guideline increases.
• Substantial rehabilitation criteria modifications. To prove rent stabilization exemption by substantial rehab, owners must now replace at least 75 percent of building/apartment systems, and the presumption that a building was in substandard or seriously deteriorated condition when the building is 80 percent vacant has been eliminated.
• Changes to calculation of base date rents, overcharges, and default formula. The RSC will now bifurcate overcharge complaints and proceedings between those filed pre- and post-adoption of HSTPA. The DHCR may now look at the “most recent reliable annual registration statement” filed six or more years before an overcharge complaint or claim is filed but in no event prior to June 14, 2015. The default formula now will apply to owners who purchase at judicial sales, and the code now removes the ability of an owner to offer a full rent history to preclude imposition of the default formula.

We will discuss the amendments in greater detail in future issues of New York Apartment Law Insider.