Foreclosure Prevention

Rent Increases and Rent Overcharge

Rent Increases and Rent Overcharge
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Overview

Owners of rent stabilized apartments may legally increase the rent in several ways, including lease guideline increases, Major Capital Improvement (MCI), and Individual Apartment Improvement (IAI) increases. Owners of rent controlled apartments may legally increase the rent through increases to Maximum Collectible Rent, MCI, and IAI increases.  

 

Owners may also lawfully charge tenants fees or surcharges that are separate and apart from the rent.

 

Tenants who think they are being overcharged can file an overcharge complaint with the Office of Rent Administration (ORA). The Division of Housing and Community Renewal (DHCR) may order owners of rent stabilized apartments to lower the legal rent and refund excess rent collected based on a finding of rent overcharge. A finding by DHCR of a willful rent overcharge by the owner may result in the assessment of treble damages.

 

For a detailed explanation of rent increases for rent stabilized apartments, preferential rent, fees, or collecting overcharges, see the Fact Sheet section. For information on the application of the treble damages penalty, see the Policy Statement section. For the overcharge complaint form for rent stabilized apartments or rent controlled apartments, as well as additional information, see the Forms section.

Rent Increases

At the signing of a lease, owners of rent stabilized apartments may charge a rent increase based on guidelines that are annually established by the applicable Rent Guidelines Board. Owners may also collect a rent increase if they received an order from DHCR granting said increase for a Major Capital Improvement (MCI), or if the tenant and owner agreed to the increase for an Individual Apartment Improvement (IAI). If the apartment is vacant at the time that the IAI was made, the owner does not need tenant consent to increase the rent.

 

Owners of rent controlled apartments may increase the rent through the Maximum Base Rent program, as well as through MCI and IAIs. For more information on the Maximum Base Rent program, visit our Rent Control Page.

 

Rent Control

 

For more information on rent increases for rent stabilized apartments, see Fact Sheet #26. For more information on MCIs and IAIs, visit our Apartment Improvements page.

 

Apartment Improvements

Collecting Overcharges

For Rent Controlled Apartments

DHCR overcharge orders that are issued to rent control tenants are limited to a calculation of maximum rent. Collection of an overcharge award remains in the domain of the courts.

 

For Rent Stabilized Apartments

Rent stabilized tenants who receive an overcharge order from DHCR that establishes the legal rent and the amount to be refunded may collect the overcharge penalties in one of the following two methods: the offset method or the judgement method.

For more information on these methods, see Fact Sheet #16.

Frequently Asked Questions

1) What are the legally permissible methods for increasing the rent of a rent regulated apartment?

There are several ways to increase the rent for apartments under both Rent Control and Rent Stabilization. For specific information, see Fact Sheets:

#5 - Vacancy Leases in Rent Stabilized Apartments
#22 - Maximum Base Rent Program (MBR) Questions and Answers for Owners
#24 - Major Capital Improvements (MCI)
#26 - Guide to Rent Increases for Rent Stabilized Apartments
#40 - Preferential Rents
Operational Bulletin 2016-1 - Individual Apartment Improvements

 

2) Is a building owner required to provide a tenant with an itemized bill?

Owners are required to provide an itemized bill or rent receipt at the time of each rental payment to rent controlled tenants. Owners are not required to provide rent stabilized tenants with an itemized bill or rent receipt.

 

3) May an owner collect a lease or maximum collectible rent increase from a tenant when a DHCR rent reduction order for decrease in services is still in effect?

If the rent reduction order was issued to a rent stabilized tenant, the owner cannot collect a guideline rent increase upon renewal or vacancy but can calculate the increase in the new lease. The rent that is collected will remain frozen until DHCR issues a rent restoration order.

If the rent reduction order was issued to a rent controlled tenant, only rent reductions for essential services bar the maximum collectible rent from being increased until DHCR issues a rent restoration order. If the rent-controlled tenant vacates the apartment, a fair market rent set for the incoming rent stabilized tenant can be charged, but no other rent increases can be collected until DHCR issues a rent restoration order. For more information, see Policy Statement 90-1.

 

4) Are tenants required to pay NYC Sales Tax to the owner on a garage/parking space that is subject to Rent Stabilization?

The NYC Sales Tax can be collected if the tax was imposed on the owner for the garage/parking space, and the garage/parking space was provided to the tenant in a charge separate from the apartment rent. It can never be calculated in the apartment rent. 

 

5) Can a tenant in a rent regulated apartment take in a roommate and is there a limit on the rent that the roommate can be charged?

When only one tenant is named on a lease, the tenant has the right to take in a roommate and the roommate's dependent children. When two or more tenants are named on the lease, the number of tenants and roommates cannot exceed the number of tenants named in the lease. In all situations, occupancy may be restricted in order to comply with municipal regulations concerning overcrowding.

In a rent stabilized apartment, the rent collected from the roommate cannot exceed their proportionate share of the apartment. For example, one tenant named on a lease can take in one roommate and the roommate can be charged no more than half of the rent charged to the prime tenant. The roommate can be advised to file a complaint of rent overcharge with DHCR if they were charged in excess of that proportionate share.

In a rent controlled apartment, a roommate may not be charged an amount of rent that is in excess of the legal rent for the apartment. Any determination of a rent overcharge is under the jurisdiction of the civil court.

 

Fact Sheets

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    Fact Sheet #44: Fees That Owners May Charge Tenants

    This Fact Sheet contains information on certain fees that owners may charge tenants that are separate and apart from the rent for the apartment. Fees of any kind cannot become a part of the legal or preferential rent and cannot be added to the rent for the purpose of calculating lease renewal increases.

     

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Forms

Policy Statement