Charging a 'First Rent' with Outdoor Garden Space Alterations
Q Does adding an outdoor exclusive garden or recreational space to a vacant rent-stabilized apartment permit me to increase the rent of that stabilized unit? How would I know if this addition would make the resulting apartment a new apartment sufficient to justify a first rent? Is adding outdoor space, a “significant” increase in size so as to qualify for a first rent?
A No. The DHCR has held that if an owner significantly alters the outer dimensions of a vacant apartment, the owner can charge a “first rent” to the first tenant to occupy the apartment after the alteration. According to attorney Erez Glambosky, a partner at Rivkin Radler LLP, it would be hard to argue that increasing the size of an outdoor recreational space would warrant a first rent unless it somehow changes the parameter and dimensions of the apartment. For an exclusive garden space to warrant a first rent, he recommends that it be altered to include a glass enclosure and to equip it with heating, lighting, electrical outlets, and any further alterations that reflect a permanent alteration such that it would be considered an additional room to the apartment.
The first rent is typically achieved as a negotiated amount, which is then subject to increases pursuant to and in accordance with the Rent Stabilization Law and Code. The owner doesn't need to apply to the DHCR for permission to charge a first rent, says Glambosky. However, if a tenant files an overcharge complaint challenging the first rent, the owner would be required to defend against the complaint by establishing, through documentary evidence, that it's entitled to charge such a first rent. Additionally, an initial registration for the first rent of the new apartment should be filed within 90 days of rental.