FAQ's - Major Capital and Individual Apartment Improvements
1) What is the basis of Major Capital Improvement (MCI) rent increases?
Major Capital Improvement (MCI) increases are allowed by law and regulation and have been upheld by the courts. The legislature has directed that the increases continue to be a part of the rent to provide an incentive for owners to improve New York State's housing stock. For more information about MCIs see Fact Sheet #24.
2) What are the differences between an Individual Apartment Improvement (IAI) increase and a Major Capital Improvement (MCI) increase?
An owner may increase the rent for an improvement to an individual apartment (e.g. new stove, refrigerator, etc.) without approval from DHCR. However, the owner must have the written consent of the tenant in occupancy to collect the rent increase, and for a rent-controlled apartment, the owner must send a written notice of the rent increase to DHCR on form RN-79b, Owner's Notice Of A Rent Increase Based On Increased Services /New Furnishings /Equipment / Painting; And Tenant's Statement Of Consent. For improvements made while an apartment is vacant, the written consent of the new tenant is not required.
An owner must file an Owner's Application For Rent Increase Based On Major Capital Improvements (MCI) (form RA-79) with DHCR to increase the rent for a Major Capital Improvement which benefits the entire building. The consent of the tenants is not required. The owner, however, must first receive approval from DHCR prior to collecting this increase. The rent increase will be apportioned among the tenants on a per room per month basis. See Fact Sheet #24 & Fact Sheet #12.
3) Where a tenant must vacate a rent-regulated apartment because of a fire or vacate order issued by a government agency, is the owner entitled to a rent increase where the apartment has been restored and the subject tenant moves back in?
Not where the owner simply restores the apartment to its previous condition. This is true even where the owner has not been fully reimbursed by insurance proceeds. However, where the owner installs new equipment not previously provided in the apartment, such owner can charge an IAI rent increase, but only if the tenant moving back in provides the owner with her written consent to the rent increase. If written consent is not provided, then the rent cannot be increased.
Where the tenant decides not to move back into the apartment, and a new tenant is going to move in, then the owner would be entitled to add the IAI rent increase for any new piece of equipment not previously provided where such prior tenant did not provide written consent. However, this rent increase would only apply to new equipment not previously provided in the apartment, not the cost of restoring the apartment to its previous condition.
4) 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) does 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 (6% in NYC; 15% outside of NYC).