In mid-June, New York’s rent laws got a facelift so taut you could play it like a snare. It’s sure to have an enormous impact on the whole of the real estate market - potentially softening the interests of investors while assisting the pocketbooks of rent-regulated tenants and weakening those of small time investment property owners. It’s drastically reshaping the housing court landscape as well, significantly altering litigation strategy for landlords and tenants alike. Here, I’ll attempt to highlight some of the most practically significant changes to the law and explain how they may affect you.
Limits on Regulated Rent Increases!
Anyone with a rent-stabilized tenancy got a bit of a gift this summer at the expense of their landlords. In rent-stabilized tenancy, there has long been a choice of rents to be assessed against tenants: the maximum legal rent and the preferred rent. The legal maximum rent was - and this may shock you - the maximum rent a landlord could legally charge a tenant. The preferred rent was an option that landlords had at their discretion to offer less than the maximum rent. At the end of a lease term, the landlord then could raise the rent up to the maximum rent.
That is no longer the case.
The new rent law states that anyone who was entitled to a renewal of their lease shall not be charged more than the rent charged proper to that renewal - subject to certain adjustments relevant to all properties, not at the whim of the landlord. This means that, if you were the beneficiary of a preferred rent below the legal maximum rent, your rent can’t be increased back to the legal limit if you renew.
Limits on Background Check Costs!
I don’t know about you, but each time I’ve applied for an apartment I’ve been expected to pay an application fee of upwards of $200 to run a background check.
That is not longer allowed!
New York’s Real Property Law was amended to state that, while a landlord may charge a fee to reimburse them for costs associated with a background check, those fees cannot exceed $20, and the landlord must waive the fees if the potential tenant provides a copy of a background check or credit check conducted within the last 30 days. The landlord also may not collect these fees unless they provide the potential tenant with a copy of the background check or credit check, along with a receipt or invoice from the entity conducting the checks.
Limits on Late Fees and Collection of these Fees
The new rent law adds additional protections for tenants in the form of limits on late fees. A landlord can no longer charge more than $50 or 5% of the monthly rent, whichever is less, if a tenant is more than 5 days late with the rent.
To compound the frustration to landlords, the Real Property Actions and Proceedings Law was amended to significantly change the nature of housing court. Housing court is a “summary proceeding”, meaning it operates differently from more traditional courts insofar as it limits discovery and process such more quickly than Supreme Court. A landlord seeking to recover unpaid rent used to be able to also seek recovery of “additional rent”, which could include late fees, unpaid energy expenses, fines, or other financial penalties accrued over time by the tenant.
That is no longer the case!
Now, a landlord may only recover rent - which has been specifically defined to mean what you’d think it means - and can no longer recover any of these additional fees or penalties through the housing court’s summary proceedings. This is a tremendous blow to landlords and a boon to tenants.
Tenancy Denial Based on Prior Disputes
Tenants with a dicey legal history with landlords are in for a treat. The Real Property Law was amended to prohibit the denial of a potential tenancy to an applicant because they were involved in a past or pending landlord-tenant legal action. This is enforced by creating an assumption that the applicant was rejected on this basis if it’s shown that the landlord requested this sort of background information and then subsequently refused to offer a lease. The penalty for violating this new provision is a sum of between $500 and $1000.
If you have questions about how the changes to New York’s rent laws affect you, please don’t hesitate to email us.