New Legislation Prevents Landlords From Significant Rent Hikes When Combining Apartments Into One Unit

By: Jacqueline Handel-Harbour 

Legislation has passed both the Assembly and Senate, which was recently signed by Governor Hochul on December 22, 2023, with respect to the combination of two apartments; either two regulated units or one regulated and one market unit. This legislation seeks to close several loopholes that housing advocates have pointed out since HSTPA has been passed in 2019. Most notably, it would prevent the landlord from removing the new apartment from stabilization even if one of the previous units was not stabilized. 

The primary goal of S2980C is to address the evolving housing needs of tenants while maintaining the integrity of rent stabilization regulations, however what the proposed legislation will do is have landlords rethink upgrading units and combining them since they will not even receive even a fair portion of the cost to upgrade the unit rolled back into the monthly rent. Furthermore, a landlord surely would rethink combining a regulated with a non-regulated unit, considering the new law will require the new combined unit to be regulated. It is more economical to keep the units as two, rather than combine them as one.   

While legislation aimed to provide tenants with larger living spaces and better accommodate changing household dynamics, the law fails miserably as it does not provide any financial incentive for a landlord to perform the work.  The proposed law seeks to amend Subdivision c of section 26-511 of the administrative code of the City of New York by amending it to add a new paragraph “15” to read as follows:  

(a) where an owner combines two or more vacant housing accommodations or combines a vacant housing accommodation with an occupied housing accommodation, such initial rent for such new housing accommodation shall be the combined legal rent for both previous housing accommodations, subject to any applicable guideline increases and any other increases authorized by this chapter including any individual apartment improvement increases applicable for both housing accommodations. If an owner combines a rent regulated accommodation with an apartment not subject to rent regulation, the resulting apartment shall be subject to this chapter. If an owner increases the area of an apartment not subject to rent regulation by adding space that was previously part of a rent regulated apartment, each apartment shall be subject to this chapter.  

(b) where an owner substantially increases the outer dimension of a vacant housing accommodation, such initial rent shall be the prior rent of such housing accommodation, increased by a percentage that is equal to the percentage increase in the dwelling space and such other increases authorized by this chapter including any applicable guideline increase and individual apartment improvement increase that could be authorized for the unit prior to the alteration of the outer dimensions.  

(c) notwithstanding subparagraphs (a) and (b) of this paragraph, such increases may be denied based on the occurrence of such vacancy due to harassment, fraud, or other acts of evasion which may require that such rent be set in accordance with section 26-516 of this title. 

(d) where the vacant housing accommodations are combined, modified,  divided or the dimension of such housing accommodation otherwise altered and these changes are being made pursuant to a preservation regulatory  agreement with a federal, state or local governmental agency or instrumentality, the rent stabilized rents charged thereafter shall be based on an initial rent set by such agency or instrumentality, provided such initial rent shall not be higher than if the initial rent was calculated in accordance with subparagraphs (a), (b), (e) or (f) of this paragraph. 

(e) where an owner substantially decreases the outer dimensions of a vacant housing accommodation, such initial rent shall be the prior rent of such housing accommodation, decreased by the same percentage the square footage of the original apartment was decreased by and such other increases authorized by this chapter including any applicable guideline  increase and individual apartment improvement increase that could be authorized for the apartment prior to the alteration of the outer dimensions.  

(f) when an owner combines two or more rent regulated apartments, the owner may use each of the previous apartments' remaining individual apartment improvement allowances for the purposes of a temporary individual apartment improvement rent increase. The owner shall subsequently designate a surviving apartment for the purposes of registration that has the same apartment number as one of the prior apartments…”   

Legislators are making it impossible for Landlords to conduct their business. If you have a matter that you wish to discuss you can contact us through our website @ www.sdkhlaw.com. 

A full copy of the bill is attached here:  s2980c (nysenate.gov)