Introduction to the NYC Rent Guidelines Board
OF THE BOARD AND THE RENT REGULATION SYSTEM
(Part I) (Part
II) (Part III)
1969 rapidly falling vacancy rates and an increases in complaints of
rising rents in non-controlled units led Mayor Lindsay to call upon a
group representing the owners of unregulated apartments to propose a
self-regulation program. At the same time the Mayor appointed the first
Rent Guidelines Board "to make an independent evaluation of the plan
for self-regulation" to be submitted by the owner's group.
the owner's report and review by the Rent Guidelines Board, the City
enacted the Rent Stabilization Law of 1969 ("RSL"). This law applied
to some 325,000 apartments that had been completed after February 1,
1947. It also applied to some 75,000 formerly controlled apartments which
had been decontrolled through subdivision, conversion or luxury decontrol
laws. Unlike rent control which applied to buildings with 3 or more units
(and one or two unit buildings if continuously occupied since April 1,
1953), rent stabilization applied to buildings with 6 or more units.
Consequently, decontrolled units in buildings with 3, 4 or 5 units remained
decontrolled. Also, the law did not apply to new buildings that received
a certificate of occupancy after March 10, 1969.48
the 1969 law, the Rent Guidelines Board continued in operation and was
charged with the establishment of guidelines for rent increases within
certain prescribed limitations. Any lease or rental agreement adopted
after May 31, 1968 would be subject to the first guideline which governed
lease renewals and new leases occurring between June 1, 1968 and June
leases coming due under the first guideline the law prescribed no more
than a 10% increase for 2-year leases, and a 15% increase for 3 year
leases. Also, an additional 5% vacancy allowance was granted for two-year
leases, and a 10% allowance was given for 3-year leases. The Board was
thereafter charged with establishing annual guidelines following a review
of (1) the economic condition of the residential real estate industry
in New York City including such factors as the prevailing and projected
(i) real estate taxes and sewer and water rates, (ii) gross operating
maintenance costs (including insurance rates, governmental fees [added
in 1983], cost of fuel and labor costs), (iii) costs and availability
of financing (including effective rates of interest), (iv) over-all supply
of housing accommodations and over-all vacancy rates, (2) relevant data
from the current and projected cost of living indices for the affected
area, and (3) such other data as may be made available to it.
the time no special Board positions for tenant or owner representation
were designated. The designation of two owner and two tenant representatives
was added in 1974.
new law also placed the development of a code to regulate owner/tenant
relations (with regard to appropriate supplemental charges, lease renewals,
evictions etc.) in the hands of the Rent Stabilization Association ("RSA")--a
private industry group--subject to approval by the City's housing agency.
Also established was a "Conciliation and Appeals Board" consisting initially
of owner and public members to review rent code violations. Tenant representation
was added to this board in 1974. Under the Omnibus Housing Act of 1983,
the Conciliation and Appeals Board was abolished. Two years later the
State legislature also removed the RSA from its role in developing the
rent code, along with its counterpart in the hotel sector--the Metropolitan
Hotel Industry Stabilization Association. The powers of these bodies,
along with the City's administration of rent regulation were transferred
to the State Division of Housing and Community Renewal ("DHCR") where
they remain today.49
the mid-1980's this agency came under increasing attack from many sectors
prompting a State legislative investigation of the agency's performance.
The 1987 report following this review was entitled "Bleak House" and
was highly critical of DHCR. It is worth noting that owner groups, while
critical of DHCR, have often asserted that rent regulation in New York
City is bureaucratically unmanageable. Tenant groups, on the other hand,
have charged that a lack of government commitment to the proper functioning
of the system is to blame for its failures. In more recent years the
DHCR has implemented a number of administrative improvements addressing
many of its earlier difficulties.
1971, under pressure from owners, the State legislature adopted vacancy
decontrol (as previously mentioned) and vacancy destabilization. This
allowed owners to set market rents upon vacancy and would have led to
the phasing out of both rent control and rent stabilization had the measure
remained in force. However, rapidly rising rents during the 1971-74 period
led to the passage of the Emergency Tenant Protection Act (ETPA) of 1974.
Together with the RSL and the Local Emergency Rent Control Act of 1962,
this is the fundamental law now governing the rent stabilization system.
A detailed review of the ETPA, excerpted from the 1980 report, is provided
Certain summarized sections of the ETPA contained in the 1980 report
have been edited out of this excerpt.]
decontrol and destabilization soon became a political issue in much
the same manner as the change by the State in the Fair Net Annual Return
provision had been ten years earlier. The City of New York brought
a court action to postpone the operation of the law but its application
was denied. In 1973 Mayor-elect Beame charged that as a result of the
State's mandated vacancy decontrol law many of the City's poor, moderate
and middle income families had been placed in an intolerable position
by not only being forced to pay exorbitant rents but in also losing
the assurance they previously had against the possibility of unconscionable
future rent increases, and he further asserted that many City residents
were being driven out of the City as a result of vacancy decontrol.
Governor Rockefeller appointed a Committee under the Chairmanship of
Assemblyman Andrew Stein to conduct hearings and make recommendations
on the subject. The "Stein Committee" recommended abrogation of vacancy
the Legislature enacted the Emergency Tenant Protection Act of 1974
(ETPA) (Chapter 576, Laws of 1974) the objective of which was to prevent
excessive rent increases in the decontrolled sector of the rental housing
market due to low vacancy rates, the inadequate supply of standard
rental housing and the increase in new household formations in New
York City and the surrounding suburban counties of Nassau, Rockland
and Westchester. Chapter 576 in substance provided for a State stabilization
program (ETPA) and also amended the New York City Rent Stabilization
law. The provisions of ETPA are declared by the statute to be applicable
only to New York City, and any City Town or Village (at their respective
option) in Nassau, Rockland and Westchester counties.
576 is a complex statute. It substantially affected the State rent
control program outside New York City, and all New York City rent control
and rent stabilization regulation. However, it did not affect State
and City pre-1947 rent controlled housing (which in New York City and
the three counties remained controlled by the State and City rent control
agencies) which remained under existing law and regulation so long
as the same tenant in occupancy on June 30, 1971 remained in possession.
Essentially ETPA amended the vacancy decontrol provision of Chapter
371 as applicable to the areas indicated above. Section 4 of Chapter
571 is the Emergency Tenant Protection Act of 1974 and significant
provisions thereof are summarized by section.
3(a) provides for the local determination of an emergency for all or
any class or classes of housing where the vacancy rate is 5% or less
(except State or City rent controlled housing accommodations) and describes
the local determination of emergency as extending to housing accommodations:
in the future;
exempt from State rent control;
exempt from City rent control;
exempt from the New York City rent stabilization law.
3(b) and (c) requires a declaration that the emergency is at an end
when the vacancy rate exceeds 5%, and permits an earlier termination
in whole or in part where the local governing body finds the emergency
to be wholly or partially abated. Any existence or termination of an
emergency must be preceded by a public hearing. Section 4(c) provides
that in New York City the Rent Guidelines Board shall be the Board
established by the New York City rent stabilization law as amended.
Section 5 provides that a local emergency may be declared for all or
any class of housing except:
declares void as contrary to public policy any lease provision or rental
agreement which purports to waive a tenant's rights under ETPA. Section
13 directs all state and local government agencies to cooperate with the
State Division of Housing and Community Renewal, and any rent guidelines
board in effectuating the purposes of ETPA. [emphasis added]
York State or City rent controlled accommodations;
whose rents are fixed or subject to the supervision of the State
Division of Housing and Community Renewal, the New York City Housing
and Development Administration, or the New York State Urban Development
Corporation or, to the extent regulation under ETPA is inconsistent
therewith accommodations aided by insurance under any provision of
the National Housing Act;
in buildings containing less than six dwelling units unless part
of a garden type maisonette dwelling complex containing six or more
dwelling units notwithstanding the existence of "one or two family
certificates of occupancy" for portions thereof;
completed or rehabilitated after January 1, 1974;
owned by an eleemosynary institution and operated on a non-profit
accommodations outside New York City;
homes, trailer homes and tourist courts;
furnished accommodations where there are two or less boarders and
the remaining portion of the housing accommodation is occupied by
the owner or his immediate family;
in buildings operated exclusively for charitable purposes on a non-profit
which are not occupied by the tenant in possession as his primary
sections of Chapter 576 also enacted significant changes as to the
State's rent control and New York City's rent control and rent stabilization
2 amends Chapter 371 Laws of 1971 by repealing vacancy decontrol for
New York City rent stabilized accommodations and by providing that
all previously destabilized apartments and all decontrolled apartments
- past and future - are to be subject to ETPA.
which denied decontrol of rent controlled accommodations where a finding
by the City Rent Agency that the vacature of the accommodation had
been achieved via tenant harassment was retained.
7 amends section YY51-3.0 [now §26-504] of the Administrative
Code of the City of New York by adding housing accommodations made
subject to the provisions of the Rent Stabilization Law by ETPA. These
decontrolled accommodations (in buildings containing six or more accommodations)
which were formerly subject to rent control;
(b) accommodations formerly subject to New York City rent stabilization
which had been vacancy destabilized;
(c) accommodations in New York City created between 1969 and 1974 and
had been exempt from both rent control and rent stabilization.
9 amends section YY51-5.0 [now §26-510] with respect to the New
York City Rent Guidelines Board by staggering the terms of the members,
and prescribing criteria for guidelines orders.
12(b) (1) repeats the language of section 9(b) of ETPA except that
in addition to designating the Conciliation and Appeals Board as the
agency for determining fair market rent applications,50 it
also requires that decisions by the Conciliation and Appeals Board
on such applications consider, in addition to the special guidelines
to be established by the City's Rent Guidelines Board, the "...rents
generally prevailing in the same area for substantially similar housing
accommodations." [Fair Market Rent Appeals are discussed at here and here,
15 provides that all rights, remedies and obligations created pursuant
to the New York City Rent Stabilization Law, the Rent Stabilization
Code, and the orders of the Conciliation and Appeals Board inure to
the benefit of all owners and tenants made subject to the rent stabilization
law by ETPA. It also declares that nothing in Chapter 576 is intended
to diminish the powers of the Conciliation and Appeals Board, or the
New York City Rent Guidelines Board to make, amend, or modify rules,
regulations, or guidelines.
17 declares the provisions of ETPA to be effective immediately subject
to a declaration of a public emergency by the local legislative body.
of edited excerpt from the 1980 report ***51
Omnibus Housing Act of 1983
next major revision of the rent regulation laws occurred in 1983 with
the passage of the Omnibus Housing Act. This Act had only a limited impact
on the operations of the Rent Guidelines Board, however, and its main
features, including the transfer of administration of rent regulations
from the City to the State and the abolition of the Conciliation and
Appeals Board, have previously been mentioned. Three changes imposed
by the new law did affect the Board's operations. Prior to this act the
Board routinely adopted special rent adjustments or surcharges at different
times within a single guideline period. The new law ended this practice
by limiting the Board to one guideline package per year. In addition,
the law eliminated the availability of three-year leases as an option
for tenants faced with lease renewals. Finally, the law added "governmental
fees" to the list of cost considerations that the Board is required to
worth note is the fact that the 1983 law significantly overhauled certain
enforcement provisions of the rent stabilization laws. Treble damages
were imposed for willful rent overcharges [limited to two years / straight
damages for overcharges up to four years]. A four-year limitation period
was established for filing overcharge claims.52 In
addition, for the first time owners of rent stabilized apartments were
required to register rents on an annual basis.
mentioned earlier, subsequent legislation in 1985 ended the official
involvement of the Rent Stabilization Association and the Metropolitan
Hotel Industry Stabilization Association in the stabilization system.
Rent Regulation Reform Act of 1993
major change in the rent regulation system came with the adoption of
the Rent Regulation Reform Act of 1993. Following a pattern set decades
earlier, there were four last minute extensions of the rent laws, including
one in which Governor Cuomo entered the Senate chamber at 11:57 PM to
sign a three day extension before the midnight deadline. In the final
bill State legislative leaders agreed to the first decontrol initiative
in over twenty years. The key provisions of the 1993 law are briefly
renting for $2,000 or more between July 7, 1993 and October 1, 1993,
which were vacant on July 7, 1993 or thereafter, were exempted from
which 1) are occupied by persons who have a total annual income in
excess of $250,000 per year for two succeeding years, and 2) that have
legal rents in excess of $2,000 per month as of October 1, 1993, were
exempted from rent regulation. The $250,000 threshold would be modified
four years later with the adoption of the Rent Regulation Reform Act
law established a system of income certification to be administered
through the Division of Housing and Community Renewal with the cooperation
of the Department of Taxation and Finance.
law established one-fortieth the cost of individual apartment improvements
as the allowable monthly rent increase when such improvements are made.
The DHCR had considered implementing a longer "amortization" period
via administrative regulations. The establishment of one-fortieth as
the appropriate amount by statute eliminated the possibility of such
an administrative change.54
law limited the availability of damages in cases where stabilized tenants
claim a rent overcharge because the owner failed to register the apartment
with the Division of Housing and Community Renewal.55
law provided that the chairperson of the Senate Committee on Housing
and Community Development, jointly with the chairperson of the Assembly
Housing Committee would establish a study group on rental housing which
would produce a report for the Governor, the President Pro Tem of the
Senate, and the Speaker of the Assembly no later than June 30, 1995.
The study was to examine a number of issues relating to the impact
and effectiveness of rent regulations and was to include, among other
things, "recommendations regarding: (1) the methodology and criteria
employed by rent guidelines boards in establishing guidelines for rent
adjustments." This study and accompanying recommendations were apparently
law extended the ETPA until the fifteenth day of June 1997.
Rent Regulation Reform Act of 1997
Rent Regulation Reform Act of 1997 followed one of the most bitter state
legislative battles of the 20th century. Following a failed effort to
work out a compromise between the Republican led Senate and the Democratic
led Assembly, existing rent laws expired at midnight on June 15, 1997
-- the first time in over fifty years that the state was without some
kind of rent regulations. After four days of intense negotiations, the
laws were renewed for six more years, with some major changes.
law imposed a complex statutory vacancy allowance which provides as
the incoming tenant selects a two-year lease, the increase shall
be 20% over the prior legal regulated rent.
the new tenant selects a one-year lease, the increase shall be
20% over the legal regulated rent, less the difference between
(a) the RGB two-year renewal lease guideline applied to the prior
legal regulated rent, and (b) the RGB one-year renewal lease guideline
applied to the prior legal regulated rent. For example, if the
one year guideline is 4% and the two-year guideline is 7%, the
vacancy allowance is 17% (i.e. 20-(7-4)=17).
addition to the above, if an owner has not collected a vacancy
allowance for the vacant apartment for at least 8 years, the owner
is entitled to an additional six-tenths of one percent (.6%) for
each year since the last vacancy allowance for the apartment was
taken (or since the apartment fell under rent stabilization). For
example, if the prior tenant was in occupancy for eleven years,
and the new tenant takes a two-year lease, the vacancy allowance
is 20% plus (.6% x 11) or a total of 26.6%.
the prior legal rent was less than $300, an additional $100 increase
may be added. If the prior rent was above $300 but below $500,
the owner is entitled to all increases allowed by law or a minimum
increase of $100.
vacancy allowances are in lieu of RGB one or two-year renewal increases,
but in addition to other increases authorized by statute, such as major
capital improvement increases, individual apartment increases, and
any additional vacancy increase adopted by the RGB.
RRRA of '97 also modified succession rights. It eliminated nieces,
nephews, aunts and uncles from its definition of family members eligible
to succeed departing tenants of record. These individuals still might
qualify for succession rights if they can prove "emotional and financial
commitment, and interdependence between [themselves] and the tenant." The
new law also imposed a vacancy allowance on the second succeeding family
member. Thus, if a parent passed away leaving an apartment to a son,
the son would not have to pay a vacancy allowance. If, however, the
son were to depart, leaving the apartment to a brother (a brother who
meets the requisite two year co-occupancy requirement) the brother
would have to pay all vacancy allowances in effect.
RRRA of '97 further modified the luxury decontrol provisions first
adopted in 1993. Tenants residing in apartments renting for more than
$2,000 per month earning more than $175,000 per year for two consecutive
years (down from $250,000) are now subject to high income decontrol.
amendment to the Rent Stabilization Law adopted by the New York City
Council in 1997 provided that the high rent vacancy decontrol adopted
in 1993 only applied to apartments renting for $2,000 or more at the
time they are vacated. The DHCR had taken a different view, and concluded
that if the rent lawfully reached $2,000 (through the vacancy allowance,
improvement allowances etc.) after the prior tenant vacated, it could
be deregulated. The State adopted the DHCR's view and codified it in
the RRRA of '97. Subsequently, the City Council adopted a local law
requiring owners to disclose prior rent histories to new occupants
of deregulated apartments.
RRRA of '97 restricted consideration of evidence to establish rent
overcharge claims to events occurring within four years of the claim.
Thus, if a tenant does not file an overcharge claim within four years
of the rent registration filed with the DHCR claimed to include the
excessive amount, the rent is final and the complaint will not be considered.
eliminate any fear developers may have of subsequent rent regulations,
the RRRA of '97 allows the Commissioner of DHCR to enter into contracts
with developers to exempt new construction from any form of rent regulation
for a period of fifty years.
RRRA of '97 also provides a mechanism to remove "hold-out" rent controlled
tenants from buildings where the owner seeks to demolish and construct
new units. If such tenants occupy less than ten percent of the units
in a building (or one apartment in a building with 10 or fewer units),
the owner may remove such tenants, but must provide relocation benefits
established by the DHCR.
RRRA of '97 imposes strict requirements that tenants engaged in Housing
Court proceedings deposit rents into court on a second adjournment
or if more than 30 days have passed following the party's first appearance
(unless the owner has requested the adjournments.)
RRRA of '97 also stiffens criminal penalties for physical harm to tenants
caused by landlords engaged in harassment, making such acts a Class
E felony. The Legislature's requirement of physical injury makes this
particular enactment rather illusory. Under most circumstances, it
is already a felony to deliberately injure someone.
(Part I) (Part
II) (Part III)
Introduction to the NYC Rent Guidelines Board
Table of Contents
this date would be changed to January 1, 1974, and newly constructed
buildings may have become subject to rent stabilization if the owner/developer
took part in the City's J-51, 421a or similar tax abatement programs.
These programs are discussed here.
an overview of the administrative history of rent regulation and a critique
of the system as a failed attempt at owner self regulation, see Keating, Landlord
Self-Regulation: New York City's Rent Stabilization System 1969 - 1985,
31 J. of Urb. & Contemp. L. 77 (1987).
a DHCR function.
edited excerpt was taken from pp. 1-84 through 1-94 of the 1980 report.
this rule an overcharge was viewed as a continuing infraction. Thus,
a tenant was allowed to challenge the last four years of any overcharge
even if the unlawful increase began prior to the four-year period. Subsequent
changes in 1993 and 1997 made the limitations period absolute. Thus,
unlawful increases in rent that are more than four years old are now
completely immunized from challenge.
July 7, 1993--October 1, 1993 time period was later extended by Act of
the New York City Council so that an apartment reaching the $2,000 threshold
AFTER October 1, 1993 was subject to vacancy decontrol.
54 See here for
a discussion of individual apartment improvements.
55 See here for
a discussion of the consequences of a failure to register