The Housing Stability and Tenant Protection Act (HSTPA) of 2019 makes significant changes to the various statutes governing rent regulated and free-market housing in New York, including coops, condos and townhouses. The provisions of the HSTPA became effective on June 14, 2019 with a 30 day implementation grace period.
Rent Regulated Housing:
Vacancy Decontrol is ELIMINATED for rent stabilized apartments. Previously, when a rent stabilized apartment reached a rent of $2,774 and was vacated, the landlord was able to make it a free market apartment but this is no longer the case.
Vacancy Lease Increases (Vacancy Bonuses) are REPEALED. Previously, when a rent stabilized apartment became vacant, the landlord could increase the rent by as much as 20%, but this is no longer the case.
Rent Increases for Individual Apartment Improvements (IAIs) are REDUCED. Previously, if a landlord made upgrades to an apartment, they were able to raise the rent 1/40 th of the cost of the improvement, which is 2.5%, there was no cap on improvements. This has been greatly reduced. Now, the cap is $15,000 of improvements over a period of 15 years. The amount of the rent increase is limited to 1/168 the of the cost of the AIA for buildings with 35 or fewer units and 1/180 th of the cost for buildings with more than 35 units.
Rent Increases Based on Major Capital Improvements to the building are REDUCED. Rent increases for improvements that directly or indirectly benefit all the tenants used to be capped at 6% now the rent increases have been reduced to a cap of 2%.
Preferential Rent Adjustments are RESTRICTED. Previously, when a landlord was renting a rent stabilized apartment, they could rent it for less than the maximum (legal) rent, referred to as the preferential rent. However, under the old legislation when the lease came up for renewal, the landlord could increase the rent to the legal rent. Under the new legislation, preferential rents can only be increased by the amount allowed by the Rent Guidelines Board. Once the landlord issues a preferential rent that effectively becomes the rent going forward and can only be increased by the amounts specified by the Rent Guidelines Board until the current tenant vacates. Once the apartment becomes vacant, the landlord may increase to the legal rent.
Luxury Deregulation is REPEALED. Previously, when all the tenants on a lease earn a combined $200,000 for two consecutive years, the landlord could deregulate the apartment, this has now been eliminated.
Owner Recapture is RESTRICTED. Previously, landlords of rent stabilized apartments could reclaim an apartment when they claimed they needed it for their own use. Now landlords are only allowed one apartment, it has to be their primary residence and they have to show an immediate and compelling need to take back that apartment.
New Regulations Applicable to All Residential Housing including Co-ops and Condos:
8. Prohibition on Collecting Future Rent & Security Deposits:
• A landlord can no longer collect more than one month’s rent and one month’s security at lease signing. Landlords are limited to a total of one month’s rent for security.
• They can no longer collect multiple months of rent in advance, which was a common practice for landlords seeking to rent to students or to prospective tenants with bad or questionable credit.
• Riders used as workarounds are not permitted. The law specifically states that riders or separate agreements that do not comply with the new laws are not enforceable.
• For tenants who previously would have been required to pay rent in advance or increased security there are third party lease guarantors such as Insurent or The Guarantors.
• If a landlord has collected more security than one month prior to the law going into effect the landlord must return the additional security at lease renewal.
9. Limit and Return of Security Deposit: Currently, standard REBNY and Blumberg Leases state that the security deposit will be returned after the tenant moves out and/or when the lease expires. Generally, landlords would return the security deposits within 30 days, and in some cases, the rider would be amended to increase or decrease the number of days. Under the new legislation, a landlord must return the security deposit within 14 days after the expiration date of the lease.
10. Tenant’s Right to Conduct an Inspection before Occupancy. The new law states that a landlord must offer the tenant the opportunity to do a walkthrough in order to examine the apartment prior to taking possession. The tenant should document any damage or defect prior to lease start date and provide the landlord with documentation. At the termination of the lease, the landlord cannot make a claim for repairs to those items.
11. Cap on Late Fees. Current Standard REBNY and Blumberg Leases do not mention anything about late fees, but most attorneys or landlords who draft the leases include a late charge. The new laws put a cap on late fees, after 5 days, late fees are limited to $50 or 5% of the rent, whichever is less.
12. Landlord’s Duty to Mitigate Loss. Previously, when a tenant broke their lease, a landlord had no obligation to re-rent the apartment, they could leave it vacant and hold the tenant responsible for rent for the term of the lease. Under the new legislation, a landlord is obligated to make a good faith effort to re-rent the apartment. If they find a new tenant, the old tenant will only be responsible for rent while the apartment was vacant.
13. $20 Limit on Credit Check Fees and Background Check Fees. Under the new legislation, landlords are not permitted to charge a prospective tenant more than the actual cost of the credit and background check, or $20, whichever is less. The law is very clear, no matter who is charging, a tenant cannot be charged more than $20 for a credit report. The tenant must be provided with a receipt showing the cost of the report and a copy of the report.
14. Rental Application Fees.
• Landlords may not charge application fees in buildings that are self-managed.
• Managing agents may collect application fees. Credit check and background fees are limited to a maximum of $20. There is no language in the law stating that a managing agent cannot collect additional application fees beyond credit and background checks.
15. Tenant Renewal/Non-Renewal Notifications. For all apartments, rent stabilized or fair market, the new law requires written notice of rent increase of more than 5% or a notice of non-renewal of the lease. This notice may be sent by certified mail.
• Lease term of 1 year or less must be notified 30 days prior to lease expiration.
• Lease term of up to 2 years must be notified 60 days prior to lease expiration.
• Lease term of more than 2 years must be notified 90 days prior to lease expiration.