Changes to NYC Rent Laws for 2019

Changes to Deregulation of Rent Stabilized Units

The vast majority of the deregulation pathways for rent stabilized units have been eliminated under the Housing Stability and Tenant Protection Act of 2019. Deregulation is essentially a thing of the past, with the exception of rent stabilized units in buildings with 421a tax benefits. Stabilized units in 421a buildings can still high rent vacancy deregulate over time under the new legislation.

Mandy Y. Hauseit Seller Review for NYC

Changes to Rent Increases for Rent Stabilized Units

Pathways for rent increases on rent stabilized apartments have also been significantly curtailed under the Housing Stability and Tenant Protection Act of 2019. Previously there were four (4) ways to legally adjust rents on rent stabilized units prior to the legislation, including the ability to raise rents up to 20% upon a vacancy using the ‘statutory vacancy bonus’. Under the 2019 legislation, the only way to adjust rents going forward is based on capital improvement work done to stabilized units (IAI) and buildings (MCI).

How Much Are Buyer Closing Costs in NYC?

Changes to Rent Overcharge Laws for Stabilized Units

Rent overcharge rules have been drastically altered in tenants favor as a result of the Housing Stability and Tenant Protection Act of 2019. The 2019 legislation has expanded the statute of limitations for recovery of a rent overcharge to six (6) years from four (4). Prior to the legislation, there was a 4 year statute of limitations for a rent overcharge complaint.

Changes to the Owner Use Exception for Rent Regulated Housing

The Housing Stability and Tenant Protection Act of 2019 limits the “owner use” provision to the use of a single unit of rent regulated housing stock by the owner or their immediate family as their primary residence. Furthermore, the landlord must demonstrate an “immediate and compelling” necessity instead of the less restrictive “good faith” standard employed prior to the 2019 legislation.

Changes to the Real Property Law for All Apartments in NYC

A number of changes were made to the real property which apply to both regulated and unregulated apartments in NYC. Changes were made to the retaliatory eviction provision, notice requirements for non-renewal and rent increases above 5%, tenant screening blacklists, apartment re-letting, rent receipts, security deposits and application fees.

Retaliatory Eviction

The retaliatory eviction provision for all apartments in NYC (regulated and unregulated) was strengthened as part of the Housing Stability and Tenant Protection Act of 2019. The new legislation prohibits retaliatory eviction by a landlord against a tenant who makes a good faith complaint to them alleging a violation of the warranty of habitability.

Changes to NYC Rent Laws in 2019

Notice Requirements for Non-Renewal and Large Rent Increases

The Housing Stability and Tenant Protection Act of 2019 increases the notice requirements for a non-renewal of a lease or a rent increase greater than 5% to 30 days notice for leases under a year, 60 days for leases between one and two years and 90 days for leases of 2 years or more. Prior the legislation, landlords of unregulated units did not have to send out any notice of non-renewal.

Duty to Mitigate Damages for Re-Letting

The Housing Stability and Tenant Protection Act of 2019 requires landlords of both regulated and unrelated units to make a reasonable, good faith attempt at re-letting a unit if a tenant vacates before their lease expires. Landlords must re-rent at the lesser of previous rent or market rent, and the existing tenant is off the hook for damages once a new lease is signed.

Restrictions on Usage of Housing Court Records to Screen Tenants

Under the new legislation, a landlord may not consult housing court records as part of the screening process for a prospective tenant. Accessing court records or tenant blacklists will automatically create a rebuttable presumption that the landlord has violated this statute. While this statute is enforceable by the New York Attorney General, it remains to be seen whether it’s also enforceable by individual tenants.

Limitations on Security Deposits for All Apartments

The Housing Stability and Tenant Protection Act of 2019 mandates a maximum security deposit for both regulated and unregulated units of no more than one (1) month of rent. The maximum amount which may be collected upon the commencement of a lease is one month rent and one month security deposit. Collecting more than one month of prepaid rent would subject a landlord to treble damages by way of a rent overcharge complaint under the new legislation. Furthermore, security deposits must now be returned to the tenant within 14 days of moving out.

Limitations on Application and Late Fees

Under the new legislation, a tenant may only be charged the minimum of $20 or the actual cost of a credit report (whichever is lower). Landlords must also furnish a copy of any credit report obtained to the prospective tenant(s). The legislation as it stands is somewhat vague as it relates to multiple tenants under one lease. Currently it’s unclear whether the maximum would be $20 total under this scenario, or $20 per individual tenant under the lease.

Changes to Housing Court Procedures

The Housing Stability and Tenant Protection Act of 2019 significantly expands the procedure for handling non-payment of rent. Specifically, the landlord must first must give a 5 day notice to the tenant by certified mail that the tenant’s rent has not been received. The landlord must retain the receipt, and if no receipt is retained it may be used as a defense of non-payment in order to dismiss a non-payment case against a tenant. Furthermore, the tenant must also receive a fourteen (14) day demand for rent in addition to the aforementioned 5 day notice.

The Uncertainties of Recent Changes to NY Rent Laws

The largest unknown effect of the 2019 Amendments to the NY Rent Laws will be the impact it has on the valuations of older rental buildings which have rent stabilized apartments. Prior to the legislative changes, there were a number of ways an owner or prospective purchaser could raise rents and remove units from rent-stabilization. This ability to increase the Net Operating Income (NOI) over time was priced into the valuations of buildings being sold in NYC.

Anna L. Hauseit Seller Review for NYC

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