Sunday, August 13, 2017

Frequently Asked Questions: “Vacancy Bonus”

Frequently Asked Questions: “Vacancy Bonus”
Q: What is the “vacancy bonus”?
A: When a tenant leaves, the landlord is generally granted a vacancy bonus that allows the landlord to increase the rent by an extra 18% for a one-year lease or  20% for a two-year lease on a vacancy lease. If the last tenant was paying a preferential rent, the vacancy bonus may be lower. If the last vacancy lease was less than two years ago, then the increase is 5%; if less than three years ago, 10%; if less than four years ago, 15%; and then if more than 4 years ago it goes up to the full 18% or 20%.  If it’s been eight years or more since the last vacancy lease, Landlords can also add a .06% increase for each year since the collection of the last increase.
It is important to know that the landlord does not need to do anything to apartment to get this increase. They simply need to get the previous tenant out to get this increase.

Q: Does an apartment become deregulated if a tenant moves out?
A: A rent stabilized apartment does not become automatically deregulated just because a tenant leaves. The legal rent must be raised to over $2700, and then the current tenant must move out, in order to deregulate a rent-stabilized apartment. They can do this through the vacancy bonus, longevity bonus, and individual apartment increases.  Often, landlords will claim these increases illegally, taking larger increases than they should be under applicable regulations. When there is a lot of turnover in an apartment, it makes it easier for a landlord to claim these increases and, ultimately, deregulate an apartment.  However, illegal rent increases -- or illegal deregulation of rent-stabilized apartments -- can be challenged with HCR or in court. If you think your apartment might be rent-stabilized or if you are a rent-stabilized tenant who thinks your rent is too high, you should get a copy of your rent history from HCR.

When a rent-controlled apartment becomes vacant, it should enter the rent-stabilization system, but many rent-controlled apartments are converted to unregulated apartments, often illegally.

Q: How does an apartment become deregulated?
A:  There are two types of deregulation:

  • High-Rent Vacancy Deregulation: The apartment can become deregulated when the rent reaches $2,700 and the current tenant moves out.
  • High-Rent High-Income Deregulation: Once the rent has reached $2,700, if the current tenant's income exceeds $200,000 for the two consecutive years before (or any two consecutive years after), the apartment can become deregulated even if you do not move out. Your landlord can only ask for your income if your rent is higher than $2,700.