Communicating the Mid-Year Hike for a One-Year Vacancy Lease in the NYC Lease Rider
Q Can you show how to implement the rent guidelines for vacancy leases starting Oct. 1, 2021? The New York City Lease Rider for Rent-Stabilized Tenants (DHCR form RA-LR1) hasn’t been updated since September 2019 and doesn’t show how the rents change after six months with the recent rent guidelines order.
A The New York City Lease Rider for Rent-Stabilized Tenants must be attached to all vacancy and renewal leases for rent-stabilized apartments. The lease rider can be found at https://hcr.ny.gov/system/files/documents/2021/07/ra-lr1-09-2019.pdf. The Housing Stability and Tenant Protection Act (HSTPA) of 2019 eliminated the statutory vacancy rate and doesn’t permit the Rent Guidelines Boards to establish a separate vacancy rate.
However, if authorized by the Rent Guidelines Board, the owner is allowed to add a one- or two-year guideline to all leases. This year, for one-year leases, the Rent Guidelines Board voted to freeze existing rents for six months before increasing rates by 1.5 percent for the remaining half of the year. An owner can’t add more than one guideline adjustment within the same guideline year. In addition, lawful temporary increases for major capital improvements (MCIs) and individual apartment improvements (IAIs) may also be added to the rent. The rider that’s attached to the lease should contain information on how the rent was calculated.
Section 1 of the lease rider asks the owner to fill out information for a vacancy lease rent calculation. For an owner seeking to apply the one-year guideline to a vacancy lease, we’ve confirmed with the DHCR that filling out Section 1 in the manner below will satisfy the owner requirements. The example below is from page 1, Section 1, of the New York City Lease Rider for Rent-Stabilized Tenants. It assumes a previous legal rent of $2,000 with a 0 percent increase for the first six months and a 1.5 percent increase for the last six months of a one-year vacancy lease. Here’s how you would fill out the form:
- Circle “1-year” and in put “0/1.5” for the guideline increase percentages [Section 1, (A)(2)];
- Enter “$2,000/2,030” for the rent amount with the corresponding percentage increase. Assuming $2,000 is the previous legal rent, $2,030 is the rent with the 1.5 percent increase for months 7 to 12 [Section1, (A)(2)];
- Add “*$2,000 for the first six months, $2,030 for months 7 to 12, as per RGB Order #53” alongside the note in (A)(2);
- On page 3 of the lease rider, for new legal regulated rent, assuming there are no IAIs, you would insert “$2,000/2,030” [Section 1, (A)(4)].