New York
State Division of Housing and Community Renewal, Office of Rent Administration
Fact
Sheet #5 - Vacancy Leases in Rent Stabilized Apartments
When
a person rents a rent stabilized apartment for the first time, the owner
and the tenant sign a VACANCY LEASE. This written lease is a contract between
the owner and the tenant which states the terms and conditions of the lease,
including the length of the lease, and the rights and responsibilities
of the tenant and the owner.
The Rent Stabilization Law gives the new tenant (also called the vacancy
tenant) the choice of a one- or two-year lease term. The rent the owner may
charge for a vacancy lease starting on or after June 15, 1997 cannot exceed
the last legal regulated rent and the applicable vacancy increases authorized
by the Rent Regulation Reform Act of 1997 and the Rent Guidelines Board,
plus all other increases authorized by the Rent Stabilization Code. With
the lease, a tenant should receive a Rent Stabilization Lease Rider that
states how the rent was computed and asserts that any increases comply with
the Rent Stabilization Law and Code.
The Rent Regulation Reform Act of 1997 provides
for new vacancy increases for all vacancy leases commencing on or after June
15, 1997. The following vacancy increases are added to one another, and are
computed above the prior legal rent, to establish the legal regulated rent
for the vacancy lease:
1. A 20 percent
vacancy increase for a two-year vacancy lease; or a vacancy increase
for a one-year vacancy lease equal to 20 percent minus the difference
between the guidelines percentages
applicable to two- and one-year renewal leases, which means 18 percent
for one-year vacancy leases commencing between June 15, 1997 and September
30, 1997; between October 1, 1997 and September 30, 1998; and between
October 1, 1998 and September 30, 1999.
[RGB
Update:For
vacancy leases commencing between Oct. 1, 2008 and Sept. 30, 2009,
the vacancy allowance for a one-year lease is 16% and for a two-year
lease is 20%.
For vacancy leases commencing between Oct. 1, 2009 and
Sept. 30, 2010, the vacancy allowance for a one-year lease is 17%
(if the owner provides heat to the tenant at no add'l charge) or
17.5% (if the tenant pays for their heat) and 20% (in either situation)
for a two-year lease.]
2. If the
owner did not collect a permanent vacancy increase within eight years
of the new vacancy lease, in addition to the vacancy increase described
in item 1, the owner is entitled to collect a vacancy increase equal
to 0.6 percent multiplied by the number of years since the collection
of the last permanent increase.
3. If the
previous legal rent was less than $300.00 per month, in addition to the
vacancy increases described in items 1 and 2, the owner is entitled to
collect $100.00 per month.
4. If the
previous legal rent was between $300.00 per month and $500.00 per month,
the owner is entitled to collect a vacancy increase equal to the greater
of: a) the combined vacancy increases described in items 1 and 2; or
b) $100.00 per month.
5.
The owner is entitled to add to the vacancy increases described in items
1, 2, 3 and 4 the vacancy increase authorized by the Rent Guidelines Board
("RGB"). In New York City, the RGB vacancy increase is nine percent
for leases commencing between June 15, 1997 and September 30, 1997; and
zero percent for vacancy leases commencing between October 1, 1997 and
September 30, 1999. [RGB Update: In New York City, the RGB has not
authorized any additional vacancy increases for leases effective between
October 1, 1999 and September 30, 2010.]
If
the owner makes improvements to the apartment while the apartment is vacant,
the owner is also entitled to collect a rent increase equal to 1/40th of
the cost of the improvement.
The following example illustrates the application of some of the above rules.
Tenant A paid a vacancy increase upon moving in, lived in the apartment for
ten years and most recently paid a legal rent of $510.00 per month. Tenant
B moves into the apartment pursuant to a two-year vacancy lease that starts
on November 1, 1997. While the apartment was vacant, the owner installed
a new refrigerator at a cost of $400.00. The owner is allowed to collect
from tenant B a vacancy rent of $652.60 per month, calculated as follows:
$510. (previous legal rent) + $102. (20%) + $30.60 (6% = .6% x 10 years)
+ $10. ($400. x 1/40).
A tenant who does not receive a copy of the vacancy lease and/or Rider should
first contact the owner. If the owner fails to provide the vacancy lease
or the Rider, the tenant may file a Tenant’s
Complaint of Owner’s Failure to Renew Lease and/or Failure to Furnish
a Copy of a Signed Lease (DHCR Form RA-90). DHCR will issue an order
directing the owner to provide the tenant with the vacancy lease or the Rider.
If the owner does not comply with the order within 20 days, the new rent
increases will be postponed until the vacancy lease or the Rider is provided.
The owner may also be fined.
If an apartment is vacant or becomes vacant while an application to DHCR
for a Major Capital Improvement (MCI) rent increase is pending, the owner
must notify any incoming tenant of the basis for the previously filed application,
and that the rent will be increased if the MCI application is approved. Failure
to include this notice of anticipated rent increase in vacancy leases will
result in no MCI increase being approved for this apartment during the term
of the vacancy lease. An owner who charges such increases without this notification
will be subject to overcharge penalties.
A satisfactory MCI notification clause in a vacancy
lease is one which provides, “An
application for a major capital improvement rent increase has been filed
under Docket No.________________ with DHCR based upon the following work:
___________________________. Should DHCR issue an order granting the rent
increase, the rent provided for in this lease will be increased accordingly.”
For
more information or assistance, call the DHCR Rent InfoLine (718-739-6400)
or visit your Borough or County Rent Office.
