NYC Rental Apartment Building Renovations

Apartment Improvements

Apartment Improvements
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OVERVIEW

Under New York's Rent Stabilization Laws, landlords may increase rents when they make qualified Major Capital Improvements (MCI) to a building or Individual Apartment Improvements (IAI). The law requires landlords 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.

Difference Between MCI and IAI

 

  • MCI - Owners can apply to HCR for approval after improvements have been made on a building. Any increase in rents is based on the actual, verified cost of improvement or installation. Some examples of MCI items include boilers, windows, electrical rewiring, plumbing and roofs. See Fact Sheet #24: Major Capital Improvements QA

 

  • IAI - An owner may increase the rent for an improvement to an individual apartment, for example installing a new stove, refrigerator, etc.

 

Note: All IAI installations require that a Notification form and before and after photographs be electronically filed with DHCR. In addition, if the improvement is made in an occupied apartment the owner must attach a Tenant Informed Consent form.

To view a sample of the Tenant’s Informed Consent form, see RN-19C Information Only

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.

Fact Sheets

  •  

    Fact Sheet #35: Collectibility of Major Capital Improvement

    Rent stabilization codes authorizes tenants to apply to the Office of Rent Administration for a reduction of the legal regulated rent to the level in effect prior to the most recent guidelines adjustment, and provides that such order reducing the rent bars the owner from applying for or collecting any further rent increases until the services are restored.

     

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Forms

Operational Bulletins

Policy Statements