NEW YORK—New York State legislators are trying to close a loophole in rent regulatory law that allows landlords to raise rents unchecked.
Horror stories about New York landlords often have a plot line like this: The landlord makes renovations to the tenants’ apartments—he paints the walls, installs a new stove and cabinets—and then increases the monthly rent. According to current State law, the increase may not exceed 1/40th of the cost of renovation. To put that in perspective, to raise rent from $1,000 a month to $2,000 a month, the paint, stove, cabinets, and labor must total $40,000.
Complicating matters, the current law does not require the landlord to prove how much he spent. Given this loophole in the law, some landlords claim that that they spent much more than they actually did and use higher rent as a way to drive low- and middle-income tenants out. Once a unit’s price reaches $2,000, it is considered deregulated and can be priced at whatever the market will bear. The new, higher price would prime the property for redevelopment into a luxury condominium.
To keep housing affordable in New York City, Assembly Speaker Sheldon Silver and some of his colleagues have introduced a bill (A5316) that will lower the maximum rent increase to 1/84th of renovation cost and require landlords to submit proof of cost to the Division of Housing and Community Renewal (DHCR). DHCR has jurisdiction over rent regulated apartments in New York City and several other counties.
Without checks in place, tenants are responsible for taking their landlords to court. But sometimes they don’t even suspect that they are being unfairly targeted.“Sometimes tenants don’t know that the landlords are faking it,” said Assemblywoman Linda Rosenthal, who supports the legislation. She hopes that tougher scrutiny from DHCR will ameliorate the problem.
Some neighborhoods where fraudulent rent increases are more prevalent are ones where there’s interest from high-end developers, according to Irene Baldwin, executive director at the Association for Neighborhoods and Housing Development. These include Central Brooklyn, the Lower East Side, and several neighborhoods in Queens.
Though the current real estate market is not taking kindly to luxury condos, Baldwin believes the legislation will be essential to preventing fraudulent rent increases when the markets heat up again. “We’re preventing it for the next cycle,” she said.
The bill was referred to the State housing committee on Thursday, Feb. 12. If passed, the law will be effective immediately.
Horror stories about New York landlords often have a plot line like this: The landlord makes renovations to the tenants’ apartments—he paints the walls, installs a new stove and cabinets—and then increases the monthly rent. According to current State law, the increase may not exceed 1/40th of the cost of renovation. To put that in perspective, to raise rent from $1,000 a month to $2,000 a month, the paint, stove, cabinets, and labor must total $40,000.
Complicating matters, the current law does not require the landlord to prove how much he spent. Given this loophole in the law, some landlords claim that that they spent much more than they actually did and use higher rent as a way to drive low- and middle-income tenants out. Once a unit’s price reaches $2,000, it is considered deregulated and can be priced at whatever the market will bear. The new, higher price would prime the property for redevelopment into a luxury condominium.
To keep housing affordable in New York City, Assembly Speaker Sheldon Silver and some of his colleagues have introduced a bill (A5316) that will lower the maximum rent increase to 1/84th of renovation cost and require landlords to submit proof of cost to the Division of Housing and Community Renewal (DHCR). DHCR has jurisdiction over rent regulated apartments in New York City and several other counties.
Without checks in place, tenants are responsible for taking their landlords to court. But sometimes they don’t even suspect that they are being unfairly targeted.“Sometimes tenants don’t know that the landlords are faking it,” said Assemblywoman Linda Rosenthal, who supports the legislation. She hopes that tougher scrutiny from DHCR will ameliorate the problem.
Some neighborhoods where fraudulent rent increases are more prevalent are ones where there’s interest from high-end developers, according to Irene Baldwin, executive director at the Association for Neighborhoods and Housing Development. These include Central Brooklyn, the Lower East Side, and several neighborhoods in Queens.
Though the current real estate market is not taking kindly to luxury condos, Baldwin believes the legislation will be essential to preventing fraudulent rent increases when the markets heat up again. “We’re preventing it for the next cycle,” she said.
The bill was referred to the State housing committee on Thursday, Feb. 12. If passed, the law will be effective immediately.
