Owners: Beware of Possible Change in Law

Please be aware that on June 7th, a new bill was presented in the NYS Senate that proposes an amendment to the Administrative Code of the City of New York with respect to establishing the legal regulated rent when 2 or more vacant apartments are combined. Proposed legislation can be found here:  https://www.nysenate.gov/legislation/bills/2021/s7213

If passed,  the Code would have a new paragraph with the following language:

Where an owner combines 2 or more vacant apartments, the legal regulated rent for the new apartment may not exceed the sum of the rents of the formerly separated units.

Where an owner reduces the dimensions of a rent stabilized unit or combines part of that unit with a neighboring unit, the legal regulated rent for the reduced unit shall be the prior rent reduced in proportion to the reduction in floor area; the rent for any expanding neighboring unit may not exceed the former rent for that unit.

If this becomes law, then if 2 or more apartments are combined to form a new, larger apartment, the owner may not charge more than the combined rents of the former units.

In addition, if the dimensions of one apartment are reduced because part of it is combined with a neighboring unit to make one new larger apartment and one new smaller apartment,  the rent for the now smaller apartment will be reduced in proportion to the reduction in size.  (i.e., 15% reduction in size would mean a 15% reduction in rent) and the rent for the new larger or expanded apartment may not exceed the rent for the former unit.

We do not know if this proposal will pass but it is something to watch. Even if this proposed legislation does not pass, we just may see DHCR adopt reasoning along these lines in calculating rents for a combined apartments in the future. Certainly, this something to watch closely.

Eric Kahan