Calculating Vacancy Bonus Percentages
Q The August 2008 issue of the Insider states that the most recent vacancy bonus for a one-year vacancy lease is 16 percent. Last year's one-year vacancy bonus was 17.25 percent. I expected this year's increase to be larger. Can you explain the difference?
A A vacancy bonus is the additional rental increase allowed for apartments that become vacant after a rent-stabilized tenant has moved out. For a one-year vacancy lease commencing between Oct. 1, 2008, and Sept. 30, 2009, the vacancy bonus is a 20 percent increase minus the difference between rates set by the Rent Guidelines Board for two-year and one-year renewal lease increases [NYC Admin. Code Sec. 26-511(c)(5-a)].
This year, according to RGBO #40, the one-year renewal increase was 4.5 percent, and the two-year increase was 8.5 percent. The difference between these two is 4 percent. Therefore, the rate for a one-year vacancy lease is 20 percent minus 4 percent, which is 16 percent.
Under the 2007-08 rent guidelines period, the difference between the two-year and one-year renewal lease increases was 2.75 percent. Therefore, the vacancy bonus for a one-year renewal lease at that time was 20 percent minus 2.75 percent, or 17.25 percent.
The following are additional increases that are permitted when a new tenant signs a vacancy lease for a rent-stabilized apartment:
An additional 0.6 percent per year if the previous tenant was in the apartment eight or more years;
Higher rates for units previously renting for $500 or less; and
1/40th of the cost of apartment improvements may be added to the monthly rent.
For more information, see “Rent Increases: Collect Increase of 16% or 20% for Vacancy Leases,” Insider, August 2008, p. 9.