Switching from Gas to Electric Stoves in Rent-Stabilized Apartments
Q I own a small mixed-use building in Brooklyn with two commercial tenants, three rent-stabilized tenants, and three market-rate tenants. As a result of Local Law 152 gas piping inspection requirements, I will have to replace five of the stove gas lines used by the residential tenants to pass the inspection. Due to the high cost of changing the gas pipes, I’m considering switching from gas to electric stoves. As a result, I will need to buy new stoves for each one of the five apartments. (The sixth apartment already has an electric stove.) Is it possible to do the gas-to-electric-stove conversion without approval of the tenants? Can I charge the rent-stabilized tenants for the renovation cost or the stove replacement cost as a major capital improvement?
A Yes, you can perform the gas-to-electric-stove conversion without the approval of the tenants as long as you obtain permission from the DHCR. This is done by submitting an “Owner’s Application for Modification of Services” (RAMS-93) to the DHCR. “In most instances, the DHCR has been approving these types of applications,” says attorney James Marino. He adds that consent from one or more tenants may be helpful in support of the application, but it isn’t an absolute requirement. If an owner files for a modification of services without tenant consent, the tenants will be provided with a copy of the application and an opportunity to respond.
With regard to charging the rent-stabilized tenants for the renovation costs, attorney Elizabeth Lentini says, “No, a modification of services does not permit the costs to be distributed to the tenants.” When an owner files a modification of services application, the DHCR can reduce the rent, increase the rent, or keep the rent the same. “The DHCR will likely direct the owner to reduce the rent based on the exclusion of the cooking fuel if it had been previously included in the rent,” says Lentini.
For improvements inside an individual apartment such as the replacement of a stove, an owner may not increase the tenant's rent using the MCI formula, adds Lentini. These types of new appliance installations or improvements to an apartment may entitle an owner to an individual apartment improvement (IAI) increase. Tenant written consent for the improvement and rent increase is required only if the apartment is occupied by a tenant at the time of the improvement. Written consent isn’t required for a vacant apartment.
If the apartment is vacant, or the occupying tenant provides written consent for the new stove, an owner may increase the tenant’s rent using the formula permitted for IAIs. Since the passage of the Housing Stability and Tenant Protection Act, the owner is permitted an increase of 1/168th of the cost if the building has fewer than 35 units and is capped at a total of $15,000. “Any IAI rent increase must be documented and filed with the DHCR,” adds Lentini.