Due to the unique nature of New York City, rental laws in New York have always been more complicated than anywhere else in the country. This makes sense in a place with 65% renting population including 5.4 million people. While most states have a few landlord-tenant laws that protect the rights of both parties, New York has a complex patchwork of legacy policies, protections, and rental statuses that only exist within the state and NYC itself. Each layer of rental law in New York has been added to account for problems that have arisen over decades of rising real estate prices, neighborhood management, and landlord-tenant disputes.
The New York 2019 Housing Stability and Tenant Protection Act
However, the 2019 Housing Stability and Tenant Protection Act seeks to bring that patchwork of policies together into a more cohesive set of laws and regulations for landlords. More to the point, these laws are now far more tenant-favorable than the city's policies have ever been before. For homeowners and apartment-building owners in New York state and NYC, awareness of the new laws are vital to remaining within legal compliance. Doing things the way they've always been done won't work anymore.
Many of those who work with VerticalRent provide rental homes in NYC, so we're here to offer a comprehensive update on what you should know about the laws and how to most easily adapt.
What Do the New Rental Laws Address?
The best place to start is understanding the scope of the changes. The changes all relate to tenant rights and protection against sudden or excessive costs. Application fees and security deposits have been limited. The amount that rents can be increased in various circumstances have been limited, and it is required to give tenants greater notice
- Application Fees
- Blacklisting Ban
- Security Deposits
- Rent Increases
- Notice of Rent Increases
- Stability of Rent Control and Rent Regulation
- Lease Violation Remedy Time
- Eviction Considerations
TLDR: $20 Maximum or Recent Screening Results
One of the simplest changes relates to application fees. New York real estate is well known for extensive background checks and charging more for application fees than the cost of tenant screening alone. With the high demand for apartments and rental homes, it's an understandable practice. But the recent law has set an absolute limit on how much landlords or their agents can charge tenants to apply to be considered for a residence.
The new cap is $20 per application, regardless of the costs of tenant screening. This means that no one can charge more than $20 for an application, no matter how desirable the property or how much you pay for screening services.
In addition, applicants are allowed to completely waive the fee if they can provide recent screening documents instead. If an applicant provides results of credit check and background check that was run within 30 days, no application fee can be taken because there are no reasonable screening costs.
No More Tenant Blacklisting
TLDR: Refusing tenants based on blacklists or past disputes is illegal
One of the more profound changes involves tenant blacklisting. It is now illegal to refuse a tenant based on their name being on a tenant blacklist or based on a record of previous landlord-tenant dispute. This particular change has resulted in some resistance, as many landlords use blacklists and previous dispute records to identify potentially troublesome tenants.
However, these methods have also been used to unjustly prevent tenants from renting in new a place after an encounter with a corrupt or vindictive landlord. Therefore, blacklists and refusing tenants over previous disputes are no longer legal.
TLDR: Equal or less than one month's rent
Security deposits for New York homes have also been notoriously high, often well more than the national standards. The new law brings New York back in line with national rental standards by limiting security deposits, eliminating the exorbitant cost of moving in for most tenants. Now, security deposits must be no more than the cost of a single month's rent.
This means that move-in costs are now limited closer to three-time rent: first, last, and deposit. Combined with the limited application fee, tenants may be looking at much more affordable costs for moving to a new rental location.
Notice of Rent Increase
TLDR: 30 to 90 days notice required to raise rent above 5%
- All Tenants: 30 Days Notice
- 1-Year Tenants (duration or lease) 60 Days Notice
- 2-Year Tenants (duration or lease) 90 Days Notice
Then there are the regulations for tenants who are in continual residence, lease-on-lease. Long-term tenants are a great thing for most landlords and the new laws offer greater protection in terms of rent increases. There are several new laws relating to fair, limited, or stabilized rent increases.
The first of which is how much notice you must give when planning to increase the rent. If, in the next lease, you plan to increase the rent more than %5 then you must give tenants at least 30 days notice so they can adapt to the new rent or arrange to move instead.
The length of a tenant's stay or their current lease may give them the right to a longer notice period. Tenants who have been with you over a year or whose lease is a year long should be given 60 days notice and tenants who have been in residence for two years or have a two-year lease have a right to 90 days notice.
Rent Control and Rent Regulation
- No More Expiration
- No More Status Reversion or Disqualification
- Preferential Rents are Base Rents
Rent control and rent-stabilized homes are no longer at risk of expiring. This is part of the reason that the new set of rental laws was released this year, to prevent currently rent-controlled and rent-stabilized homes from reverting by default. In fact, reverting is now almost universally off the table. Not only will rent-controlled and stabilized apartments be protected from 'timing out', but the rent increase and the income of the residents will no longer be a factor. Even if rents rise above $2,775 or if tenants earn more than $200,000, the apartment will not revert back to normal rental rules.
If your tenants have been paying a preferential rent rate below the maximum, it is no longer legal to raise the rent to the maximum at any time. The preferential rent is now treated as the base rent, and rent increases must be conducted accordingly.
It is also no longer legal to raise the rent of a stabilized unit by 20% during tenant turnover when marketing for new tenants.
Limitation on Rent Increases for Building Improvements
- Capital improvements allow no more than 2% rent increase.
- Individual unit improvement fees limited to $89 with a 30-year expiration.
When landlords make building improvements or perform major structural repairs, it's tradition in NYC (but not everywhere) to raise rents in order to cover these expenses more quickly. Major capital improvements, for example, used to permit a 6% increase, which has been reduced to only a 2% permitted increase with additional restrictions on the types and scope of projects that can be taken on.
Also, the fees allowed for improvements to individual units has been cut way down. While landlords could once charge up to $1,000 for home improvements, they can now only charge $89 and the charge expires 30 years after the improvement.
Lease Violation Correction Time
TLDR: 30 Days to correct lease violations
Evictions due to lease violations were once rampant and old New York law supported that by giving tenants only 10 days to correct any lease violations before punitive fees or eviction could occur. This time has been extended threefold, giving tenants up to 30 days to correct lease violations once notified by their landlord. The extended time is far more reasonable for most tenants who are busy and may not have time to correct the problem within 10 days.
Eviction Considerations for Tenant Welfare
TLDR: Eviction proceedings will consider hardship for tenants and their children
Part of the goal of the recent laws is to reduce spurious or unnecessary evictions. To that end, how eviction cases are handled in court will change. Not only will the landlord's grievances be considered, but so will hardship on the tenants if forced to leave through eviction. If an eviction would put tenants in a dangerous situation for their personal safety, their ability to commute, or the welfare of their children, then the eviction is less likely to be approved. Children's proximity to their schools will also be a consideration during these new proceedings.
Unlawful Evictions are a Misdemeanor
TLDR: Evicting unlawfully is a misdemeanor with $1,000 fined.
Landlords who evict their tenants without just cause, legal grounds, or court approval can now face criminal charges. An unlawful eviction is now a legal misdemeanor that will go on your record. Landlords can also be charged up to $1,000 in fines, intending to make spurious evictions unappealing on a variety of levels.
Final Tips for New York Landlords
Landlords who act in good faith can embrace the new laws, knowing they are in place to help tenants experience a fair rental experience. Being aware of these new regulations and limitations can help you to avoid accidental blunders like raising rents based on the old way of doing things or accidentally asking for an oversized security deposit or relying on blacklists during your screening process. A few minor changes to your management style should be all you need to ensure that you are in compliance with the law and your tenants are well-taken-care-of.
If you have any questions or just want to talk about how the changes will influence your rental business in the future, contact us! The VerticalRent team is always ready to ensure that you are fully prepared with everything a landlord needs to succeed.