Surcharges and Fees

There are certain fees that owners may charge tenants that are separate and apart from the rent. 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.

There are certain surcharges that owners may charge tenants that are separate and apart from the rent. Surcharges 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.

For a detailed explanation of lawful and unlawful fees, see Fact Sheet #44.

For a detailed explanation of surcharges for washing machines, dryers, or dishwashers, see Operational Bulletin 2005-1 - Supplement No. 3.

For a detailed explanation of surcharges for air conditioners, see 35th Annual Update to Operational Bulletin 84-4, Supplement 1.

For a summary of surcharges for air conditioners, see the Fact Sheet section. For historical allowable surcharges for air conditioners and washing machines, dryers, or dishwashers, see the Operational Bulletin section. For an owner’s application to apply for DHCR approval to collect air conditioner surcharges for rent controlled apartments, see the Forms section.

1) Who is responsible for paying a 421-a tax benefit - 2.2% surcharge and how is it calculated?

The 2.2% surcharge is collectible primarily from tenants in market rate units in buildings that receive 421-a (subdivision 1-15) tax benefits.  It is not collectible from tenants in market rate or income restricted units in buildings that receive 421-a (subdivision 16) tax benefits (Affordable New York Housing Program Benefits).

The 2.2% surcharge is not part of the legal rent and cannot be compounded by Rent Guidelines Board increases for one and two-year leases or by any other lawful rent increases including, but not limited to Major Capital Improvement (MCI) or Individual Apartment Improvement (IAI) rent increases. The 2.2% surcharge can only be charged once a year regardless of how many leases have been executed in any given year. The collection of the 2.2% surcharge is also not affected by a DHCR order reducing rent for decreased services.

The 2.2% surcharge is only collectible if the applicable lease includes a rider that is signed by the tenant, notifying the tenant of the owner’s right to collect the 2.2% surcharge and the approximate date of expiration of the 421-a Benefits.  If the owner does not include the rider in a tenant’s vacancy (first) lease, DHCR will allow owners to add it to such tenant’s renewal lease and collect the 2.2% surcharge that could have been charged, prospectively only, plus any future lawful annual surcharges. A subsequent tenant who moves into an apartment during the phase-out of such building’s 421-a Benefits, provided that he or she receives the rider, can be prospectively charged the surcharge amount that had been or could have been charged to the prior tenant, plus any future lawful annual surcharge increases.

The 2.2% surcharge (a) can be increased annually during the phase-out period of the tax abatement up until the date upon which the 421-a Benefits expire, (b) is calculated for each year as a percentage of the actual rent paid by the tenant as of the initial date of the phase out and (c) can never exceed cumulatively 19.8% of the actual rent paid by the tenant on the date that such phase-out began.

The total surcharge assessed upon the expiration of the 421-a Benefits is a fixed final surcharge that may continue to be charged in each year thereafter.  However, no additional 2.2% increases can be added to the final surcharge after the 421-a tax benefits expire. The collection of the final surcharge terminates when the tenant who is in occupancy on the date the 421-a benefits expire vacates the apartment.