Governor Signs Sweeping Rent Reforms into Law
On June 14, Governor Andrew Cuomo signed into law the Housing Stability and Tenant Protection Act of 2019. The governor has called the legislation “the most sweeping, aggressive protections in state history,” and it’s been described as the “strongest tenant protections in history” in a joint statement from Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie. With Cuomo’s signature, all provisions of the law take effect immediately.
The new legislation makes the rules permanent, repeals high-rent vacancy deregulation and vacancy and longevity bonuses, reforms rent increases for major capital improvements and individual apartment improvements, and creates protections for tenants state-wide.
The Insider will cover these changes to the rent laws in more depth in a Special Issue next month. But for now, here’s a rundown of what the new law does:
Extends and makes permanent the rent regulation laws. Current rent regulation laws are set to expire every four to eight years. Under the new act, the rent regulations laws are permanent and can be terminated or repealed only by an act of the legislature.
Limits large rent increases for rent-controlled tenants. The new law sets Maximum Collectible Rent increases to the lesser of 7.5 percent or the average of the five most recent Rent Guidelines Board annual rent increases for one-year renewals. It also prohibits fuel pass-along charges.
Repeals high-rent vacancy deregulation and high-income deregulation. The act repeals the provisions that allow deregulation of units upon vacancy if rent reaches $2,744 in New York City. It also repeals the provision that allowed owners to deregulate units if rent reached that threshold and the tenants earned more than $200,000 per year for more than two years.
Reforms “owner use” exception. The act limits the use of the “owner use” provision to a single unit. Under the existing laws, an owner can refuse to renew a rent-stabilized tenant’s lease because the owner wants the apartment for personal use and occupancy as a primary residence for the owner or a member of his or her immediate family. Now, the “owner use” provision is limited to a single unit; the law requires that the owner or a member of his or her immediate family use the unit as his or her primary residence; and the law protects long-term tenants from eviction under this exception if they’ve lived at that residence for at least 15 years.
Repeals vacancy and longevity bonuses. The statutory vacancy bonus allowed owners of rent-regulated units to collect an automatic 20 percent increase in rent upon vacancy. The vacancy longevity bonus allowed landlords who hadn’t claimed a vacancy increase for eight or more years to collect an automatic 0.6 percent increase multiplied by the number of years since the last vacancy. Both of these bonuses were eliminated by the new law. In addition, the Rent Guidelines Board is prohibited from setting its own vacancy and longevity bonuses and adjusting rent increases for reasons other than those allowed by statute.
Reforms preferential rent rules. Currently, owners of units that receive preferential rent—that is, rent below the legal regulated rent—can raise the rent to the full legal amount upon renewal of the lease. Now, owners can charge rent up to the full legal regulated rent once the tenant vacates the unit, as long as the tenant didn’t vacate as a result of the owner’s failure to maintain the unit. Owners with rent-setting regulatory agreements with federal or state agencies will still be permitted to use preferential rents based on their particular agreements.
Extends rent overcharge look-back period from four to six years. The new law extends the four-year look-back period to six or more years as reasonably necessary to determine a base rent. Currently, tenants who claim rent overcharge and bring a claim are limited to a four-year look-back period to determine the amount of overpaid rent. In addition, owners can no longer avoid treble damages by voluntarily returning the amount of rent overcharged prior to a court or the DHCR issuing a decision.
Reforms major capital improvement (MCI) increases. Previously, when owners made improvements or installations to a building subject to rent stabilization or rent control laws, they could apply to the DHCR to raise tenants’ rent by up to 6 percent. Now, the increase is capped at 2 percent. The new law also imposes stricter guidelines on what qualifies as an MCI and strict enforcement by requiring the DHCR to inspect 25 percent of MCIs. The new law also eliminates MCI increases after 30 years instead of allowing them to remain in effect permanently.
Reforms individual apartment improvement (IAI) rent increases. IAIs under the new law are limited to $15,000 over a 15-year period. Owners can make up to three individual apartment improvements over the 15 years. IAI rent increases, just as MCIs, will expire after 30 years, and the law requires owners to clear any hazardous violations in the apartment before collecting an increase.
Reforms condo and co-op conversion rules. The new law strengthens and makes permanent the system that protects tenants in buildings that owners seek to convert to co-ops or condos by eliminating existing “eviction plans” that allow owners to evict non-purchasing tenants and require a 51 percent approval from current tenants before the conversion can be effective. Previously, 15 percent of apartments had to be sold and the purchasers could be outside investors. For market-rate senior citizens and disabled tenants, evictions during conversion are permitted only for good cause, and an unconscionable rent increase doesn’t constitute good cause.
Establishes stronger housing security and tenant protections statewide. The new law includes a wide variety of protections for tenants during the eviction process, including strengthening protections against retaliatory evictions. It gives tenants more time in eviction proceedings to get a lawyer, fix violations of the lease, or pay rent owed. It also creates the crime of unlawful eviction, where a landlord illegally locks out or uses force to evict a tenant, as a Class A Misdemeanor that’s punishable by a civil penalty of between $1,000 and $10,000 per violation. And the law expands the ability of the court to stay an eviction for up to one year if the tenant can’t find a similar suitable dwelling in the same neighborhood after due and reasonable efforts or if the eviction would cause extreme hardship.
The new law also requires landlords to provide notice to tenants if they intend to increase the rent more than 5 percent or don’t intend to renew the tenants’ lease.