The New York state legislature recently passed rent regulations and tenant protections that drastically affect New York landlords and property managers. The Housing Stability and Tenant Protection Act of 2019 and the Statewide Housing Security and Tenant Protection Act of 2019 consist of nine bills. Changes are substantial and in the favor of tenants from rent hardly rising, protection from eviction, and limitations on items such as requiring no more than one month’s security deposit. Keep in mind that while these recent changes in laws are specific to New York, as a leader in the country for real estate, this could be the catalyst for other states to consider tenant favorable laws as well. Here are some of the major changes to New York rent laws:
Expansion of the Emergency Tenant Protection Act
The Act amended New York’s current emergency tenant protection laws to allow any city or town in New York to regulate rents and evictions when there is a housing emergency, defined by a vacancy rate of 5 percent or less. Previously, only a few counties and NYC could regulate rents and evictions during a housing emergency. The expansion also includes making rent regulation laws permanent now, whereas they had expired every four to eight years and then were temporarily extended.
Elimination of Vacancy Bonuses
Landlords can no longer raise rent of a rent-stabilized unit by 20 percent when a tenant moves out.
Elimination of Permanent Rent Increase for Major Capital Improvements (MCIs)
Landlords can no longer permanently raise rents on apartments due to building-wide upgrades such as plumbing, heating and cooling systems, roofing, etc. For MCIs, owners can now only pass on two percent of the construction cost to tenants, down from six percent under the old law.
Elimination of Permanent Rent Increase for Individual Apartment Improvements (IAIs)
Similar to the MCI changes mentioned above, the Act permanently ends raising rent due to individual apartment improvements. Now, landlords can only pass on $15,000 worth of renovations or repairs over 15 years which equates to a monthly rent increase of $89 and makes this increase temporary.
Preferential Rent is Permanent Until Vacancy
Preferential rent is when a tenant pays a price agreed to at an initial lease signing that is lower than an apartment’s legal rent registered with the state. Building owners are now prohibited from revoking a rent-stabilized tenant's preferential rent at lease renewals. Only when a tenant moves out of the apartment can the landlord raise the rent to the maximum legal price.
Elimination of High-Rent Decontrol Threshold
Landlords may no longer permanently deregulate rent-stabilized apartments when the rent reaches more than $2,770 and a tenant moves out. This makes rent stabilized apartments permanently rent stabilized.
Limits Security Deposits for Tenants
Landlords are limited to only taking one-month security deposits and they are required to return a deposit two weeks after a tenant moves out.
Evictions are Severely Restricted
Two new prerequisites for starting a non-payment dispossess are: A 5 day notice must be sent to the tenant by certified mail, and a 14 day notice must be served by a licensed process server. Prior law required only one 5 day notice to be served by a licensed process server. In addition, judges are now authorized to delay evictions for 1 full year; previously, only for a maximum of 6 months.
Equal Rent Increase for Rent-Stabilization and Rent-Controlled Apartments
The maximum rent increase on rent-controlled apartments is capped at a rate on par with the increases for rent-stabilized apartments. Prior to this, rent increases for rent-controlled apartments were 7.5% per year up to the maximum base rent.
With these substantial rent changes in New York legislation, it is more important than ever to manage your New York properties as efficiently as possible. In order to be successful as a property manager or landlord, especially with the recently passed bills, properties must be well run. RISSOFT property management software can improve your property management success by helping you:
Get Organized - Important documents and deadlines are controlled in one place whether it be letters, tracking renewal leases, subsidy tenant billing, vendor invoices, floor plans, photos and more. Even a complete general ledger program is available to keep track of tenant charges and payments, to print rent bills onsite or export to offsite vendors.
NY Forms – You need to have the new 5 day notice form as well as Rent Stabilized Renewals. RIS has all these forms built in to the software as well as simple procedures to calculate and complete the forms with ease.
Improve Communication - Email communication is included so that you can easily email tenant rent bills, letters and reports to your tenants. Further, emails can similarly be sent to your vendors.
Simplification - Simplifying your daily management functions is key in saving time and money. The RIS program can collect the data from all properties into one easily managed screen. In one place you can manage: legal cases to work orders, vacancies to expiring leases, calendar tasks, tenant applications and much more.
Use Data to Make Informed Decisions - Produce critical numeric and graphical reports detailing your energy consumption and costs, or generate all financial reports required by any owner, manager or accountant. Then use this data to make informed decisions that will benefit your property management business.
As the New York housing market and real estate industry prepare for the legislative changes brought on by the Housing Stability and Tenant Protection Act of 2019, you can prepare and improve your management systems to combat the changes. Feel free to reach out to us at RISSOFT with questions and to learn more about our robust yet user-friendly software.