Illegal deregulation in New York City is the unlawful practice by landlords or property management firms in New York City to remove rent-regulated or rent-controlled status from apartments, converting them into market rate units. [1] [2] [3] [4] [5] [6]
Rent regulation in New York City consists of two main systems: rent control and rent stabilization. Rent control applies to apartments in buildings built before 1947 and occupied by the same family since at least July 1971. Rent stabilization generally applies to buildings with six or more units built between 1947 and 1974, as well as certain newer buildings that receive tax benefits for affordable housing. [7]
Illegal deregulation involves fraudulent practices such as inflating renovation costs to exceed the deregulation rent threshold. These practices allow landlords to convert rent-regulated apartments to market-rate units unlawfully.
Illegal high rent vacancy deregulation via fraudulent capital increases involves landlords or property management firms inflating the costs of renovations or improvements to justify raising the rent of a rent-regulated apartment to a level that exceeds the deregulation threshold. This practice is intended to convert rent-regulated units into market-rate apartments, thereby removing them from rent control or rent stabilization protections. [4] [8] Under rent regulation laws, landlords are allowed to increase the rent of a rent-regulated apartment if they make significant improvements or renovations to the unit (1/40th of renovation costs can be added to the rent price). The cost of these improvements can be passed on to tenants in the form of higher rent. When the rent exceeds a certain threshold, the apartment can be deregulated, meaning it no longer falls under rent control or rent stabilization laws and can be rented at market rates. [9] [8] In fraudulent capital increase schemes, landlords or their property management firms:
- Falsely Inflate Renovation Costs: They claim higher-than-actual costs for renovations, sometimes through fake invoices or exaggerated contractor estimates.
- Use Kickbacks: They might collude with contractors to receive kickbacks, which are then included in the reported renovation costs.
- Misallocate Costs: They may distribute renovation costs unevenly among multiple apartments to ensure that some units reach the deregulation threshold.
The Housing Stability and Tenant Protection Act of 2019 strengthened tenants' rights and made it easier for tenants to challenge illegal deregulation. Under the HSTPA, tenants can recover up to six years of overcharges if their apartments were illegally deregulated. [10]
- ^ Joyce Cohen (September 21, 2023). "Tenants of Harper Lee's dirt-cheap NYC apartment sue over 'illegal' deregulation". Retrieved August 1, 2024.
- ^ "A.G. Uncovers Illegal Scheme to Deregulate Apartments". September 7, 2022. Retrieved August 1, 2024.
- ^ Suzannah Cavanaugh (August 25, 2022). "NYC Landlord to Pay $4M for Scheming to Deregulate Apartments". Retrieved August 1, 2024.
- ^ a b Sharon Otterman, Matthew Haag (June 12, 2019). "Rent Regulations in New York: How They'll Affect Tenants and Landlords". Retrieved August 1, 2024.
- ^ "Ask Sam: If my apartment was illegally deregulated, how much money can I collect in overcharges?". April 7, 2021. Retrieved August 1, 2024.
- ^ Emily Davenport (August 24, 2022). "Attorney General's office reaches settlement with 29 NYC landlords in scheme to deregulate rent-stabilized apartments". Retrieved August 1, 2024.
- ^ Sharon Otterman, Matthew Haag (June 12, 2019). "Rent Regulations in New York: How They'll Affect Tenants and Landlords". Retrieved August 1, 2024.
- ^ a b Itkowitz, Michelle. "Illegally Deregulated Rent Stabilized Apartments" (PDF).
- ^ "High-Rent Vacancy Deregulation and High-Rent High-Income Deregulation" (PDF) (PDF). 2024-08-01. Retrieved 2024-08-01.
- ^ "Ask Sam: If my apartment was illegally deregulated, how much money can I collect in overcharges?". April 7, 2021. Retrieved August 1, 2024.
Illegal deregulation in New York City is the unlawful practice by landlords or property management firms in New York City to remove rent-regulated or rent-controlled status from apartments, converting them into market rate units. [1] [2] [3] [4] [5] [6]
Rent regulation in New York City consists of two main systems: rent control and rent stabilization. Rent control applies to apartments in buildings built before 1947 and occupied by the same family since at least July 1971. Rent stabilization generally applies to buildings with six or more units built between 1947 and 1974, as well as certain newer buildings that receive tax benefits for affordable housing. [7]
Illegal deregulation involves fraudulent practices such as inflating renovation costs to exceed the deregulation rent threshold. These practices allow landlords to convert rent-regulated apartments to market-rate units unlawfully.
Illegal high rent vacancy deregulation via fraudulent capital increases involves landlords or property management firms inflating the costs of renovations or improvements to justify raising the rent of a rent-regulated apartment to a level that exceeds the deregulation threshold. This practice is intended to convert rent-regulated units into market-rate apartments, thereby removing them from rent control or rent stabilization protections. [4] [8] Under rent regulation laws, landlords are allowed to increase the rent of a rent-regulated apartment if they make significant improvements or renovations to the unit (1/40th of renovation costs can be added to the rent price). The cost of these improvements can be passed on to tenants in the form of higher rent. When the rent exceeds a certain threshold, the apartment can be deregulated, meaning it no longer falls under rent control or rent stabilization laws and can be rented at market rates. [9] [8] In fraudulent capital increase schemes, landlords or their property management firms:
- Falsely Inflate Renovation Costs: They claim higher-than-actual costs for renovations, sometimes through fake invoices or exaggerated contractor estimates.
- Use Kickbacks: They might collude with contractors to receive kickbacks, which are then included in the reported renovation costs.
- Misallocate Costs: They may distribute renovation costs unevenly among multiple apartments to ensure that some units reach the deregulation threshold.
The Housing Stability and Tenant Protection Act of 2019 strengthened tenants' rights and made it easier for tenants to challenge illegal deregulation. Under the HSTPA, tenants can recover up to six years of overcharges if their apartments were illegally deregulated. [10]
- ^ Joyce Cohen (September 21, 2023). "Tenants of Harper Lee's dirt-cheap NYC apartment sue over 'illegal' deregulation". Retrieved August 1, 2024.
- ^ "A.G. Uncovers Illegal Scheme to Deregulate Apartments". September 7, 2022. Retrieved August 1, 2024.
- ^ Suzannah Cavanaugh (August 25, 2022). "NYC Landlord to Pay $4M for Scheming to Deregulate Apartments". Retrieved August 1, 2024.
- ^ a b Sharon Otterman, Matthew Haag (June 12, 2019). "Rent Regulations in New York: How They'll Affect Tenants and Landlords". Retrieved August 1, 2024.
- ^ "Ask Sam: If my apartment was illegally deregulated, how much money can I collect in overcharges?". April 7, 2021. Retrieved August 1, 2024.
- ^ Emily Davenport (August 24, 2022). "Attorney General's office reaches settlement with 29 NYC landlords in scheme to deregulate rent-stabilized apartments". Retrieved August 1, 2024.
- ^ Sharon Otterman, Matthew Haag (June 12, 2019). "Rent Regulations in New York: How They'll Affect Tenants and Landlords". Retrieved August 1, 2024.
- ^ a b Itkowitz, Michelle. "Illegally Deregulated Rent Stabilized Apartments" (PDF).
- ^ "High-Rent Vacancy Deregulation and High-Rent High-Income Deregulation" (PDF) (PDF). 2024-08-01. Retrieved 2024-08-01.
- ^ "Ask Sam: If my apartment was illegally deregulated, how much money can I collect in overcharges?". April 7, 2021. Retrieved August 1, 2024.