NYC Rental Apartment Building Renovations

Apartment Improvements

Overview

Under New York's Rent Stabilization laws, owners may increase rents when they make qualified Major Capital Improvements (MCI) to a building or Individual Apartment Improvements (IAI). The law requires owners to follow certain rules and guidelines when increasing rents based on MCIs or IAIs, and it provides an avenue for tenants to dispute rent increases they believe were made unlawfully.

There are several publications below that provide information on a variety of topics, such as an overview of MCIs, the definition of a room for MCI purposes, and more. For an overview of MCIs, the useful life schedule, and more, see the Fact Sheet section. For an application to increase rent based on an MCI and application instructions, see the Forms section. For additional information regarding MCIs, visit the Operational Bulletin, and Policy Statement sections. 

For an overview of IAIs, see the Operational Bulletin section. For a sample of the form RN-19C Individual Apartment Improvement: Tenant's Informed Consent, see RN-19C Information Only, found under the Difference Between MCIs and IAIs.

Difference Between MCI and IAI

 

  • MCI Owners must apply for approval from the Division of Housing and Community Renewal (DHCR) in order to collect a temporary rent increase for an MCI. Increases in rent due to MCIs must be removed from the rent 30 years after the date the increase became effective. Some examples of MCI items include boilers, windows, electrical rewiring, plumbing and roofs. For more information on MCIs, see Fact Sheet #24.

 

  • IAI - In order to collect a temporary rent increase for an IAI, owners of rent controlled and rent stabilized apartments must notify DHCR of an IAI by filing a notification form and before and after photographs on the Owner’s Rent Regulation Application (ORRA) system. If the improvement is made in an occupied apartment, owners must also file a Tenant’s Informed Consent form. After filing the proper forms, owners of rent stabilized apartments can begin to collect a temporary rent increase without a DHCR order of approval.
    • Increases in rent due to IAIs must be removed from the rent 30 years after the date the increase became effective. Some examples of IAI items include the installation of a new stove, refrigerator, security alarm, and flooring. For more information on IAIs, see Operational Bulletin 2016-1.

 

To view an English sample of the Individual Apartment Improvement: Tenant’s Informed Consent form, see RN-19C Information Only. To view the translated sample versions of RN-19C Information Only, visit our Translations page.

 

Translations Page

Frequently Asked Questions

1) What is the difference between an Individual Apartment Improvement (IAI) increase and a Major Capital Improvement (MCI) increase?

An MCI is an improvement or installation that improves the overall condition of a building that is subject to the rent stabilization or rent control laws. The verified costs of an MCI can be passed onto rent regulated tenants through a temporary increase to their monthly rent. However, in order to collect the rent increase the owner must file an application with DHCR. The summary of the application must be served on the tenants and they are given the chance to respond in writing. DHCR must issue an order either denying or granting the increase in whole or in part. For more information, see Fact Sheet #24 and form RA-79.

An IAI is an improvement, equipment installation, or increase in services that is made in an apartment subject to the rent stabilization and rent control laws. To collect a rent increase for an IAI, a DHCR order of approval is not needed. However, owners must file a notification form with DHCR for each IAI installation and it must be accompanied by before and after photos. In addition, if the apartment is occupied, the owner must also get the tenant’s written informed consent, which must be filed with DHCR. For more information, see Operational Bulletin 2016-1.

 

2) How is the legal rent adjusted when an MCI order is issued after a renewal lease had been executed?

If the effective date of the MCI order is before September 30 (the date used for calculating guideline adjustments), the renewal lease increase may be recalculated based on the higher legal rent, which now includes the entire dollar amount of the MCI rent increase. This will result in a larger renewal lease increase. The affected lease(s) do not have to be reissued, but the owner must give the tenant a statement showing the rental recalculation.

If the effective date of the MCI increase is after September 30, the increase in the legal rent will not be compounded by the guideline adjustment(s) until the next lease renewal.

The actual rent paid by the tenant is subject to an annual MCI rent increase cap of 2%. For more information, see Fact Sheet #24.

 

3) How should multiple overlapping MCI Rent Increases be applied to the rent?

When there are multiple overlapping MCI rent increases, they should be added to the rent in the order they were awarded, subject to the limitation of the annual 2% cap in collectability. The first MCI rent increase should be completely added to the rent before an owner begins to apply the second MCI rent increase and so on.

 

4) If DHCR issues an MCI rent increase order for a building and the owner does not collect it in a timely manner, at what point does the collection of the increase become waived?

Owners must add an MCI rent increase to the rent and charge the tenant, limited by the annual 2% cap amount, within 120 days of the lawful collection date or the next lease renewal, whichever is greater. If an owner does not charge the tenant within the greater of these time frames, the MCI rent increase may be considered permanently waived. There may be no waiver if the delay of collection is due to the issuance of multiple MCI rent increases, as the collection is limited by the annual 2% cap.

 

5) The owner wants to renovate the entire building and has asked me to temporarily relocate. ­Do I have to relocate?

 No. Tenants do not have to temporarily relocate to allow an owner to renovate an entire building unless ordered by DHCR, another governmental agency, or a court of competent jurisdiction. 

Fact Sheets

Forms

Operational Bulletins

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    Update Number #1 to Operational Bulletin 2021-1: Reasonable Cost Schedule

    This 2022 Update to Operational Bulletin 2021-1 contains information on the reasonable cost schedule for MCIs which sets a ceiling for what can be recovered through a temporary MCI rent increase, based on the type of improvement and its rate of depreciation. It also contains information on when and how an owner may apply for a waiver of the application of the reasonable cost schedule.

     

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    Operational Bulletin #2021-1: Reasonable Cost Schedule

    (Replaces Operational Bulletin 2020-1) This Operational Bulletin contains information on the reasonable cost schedule for MCIs which sets a ceiling for what can be recovered through a temporary MCI rent increase, based on the type of improvement and its rate of depreciation. It also contains information on when and how an owner may apply for a waiver of the application of the reasonable cost schedule.

     

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    Operational Bulletin #2020-1: Reasonable Cost Schedule

    (Historical document. Replaced by Operational Bulletin 2021-1.) This Operational Bulletin contains information on the reasonable cost schedule for MCIs which sets a ceiling for what can be recovered through a temporary MCI rent increase, based on the type of improvement and its rate of depreciation. It also contains information on when and how an owner may apply for a waiver of the application of the reasonable cost schedule.

     

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Policy Statements