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The DRT, or Deregulation Threshold, is a term used in the context of rent-stabilized apartments. High Rent Vacancy Deregulation occurs when an apartment's legal regulated rent meets or exceeds the prescribed DRT. Prior to 2019, landlords aimed to reach the DRT to qualify for permanent deregulation and remove rent stabilization. However, with the passage of the Housing Stability and Tenant Protection Act of 2019 (HSTPA), High Rent Vacancy Deregulation was abolished. Now, landlords can no longer terminate preferential rents during a lease term or upon renewal, even if the rent exceeds the DRT.
| Characteristics | Values |
|---|---|
| DRT | High Rent Vacancy Deregulation threshold |
| Deregulation Threshold | $2,000 (from 1993), $2,500 (from 2011), $2,700 (from 2015) |
| High Rent Vacancy Deregulation | Abolished on June 14, 2019 |
| Past deregulations | Still valid |
| High Rent Vacancy Deregulation availability | In 421-a "Affordable Housing NY Program" buildings |
| Preferential Rent | Landlord charges less than legally allowed |
| Lease | Must include language stating preferential rent |
| Legal Rent | Higher amount written in the lease |
| New laws | Govern allowable rent increases to preferential rents |
| Termination of preferential rent | Cannot be terminated during a lease term |
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What You'll Learn
Deregulation Threshold (DRT) and Rent Stabilization Law (RSL)
The Deregulation Threshold (DRT) is a term used in the context of rent-regulated apartments, specifically those under Rent Stabilization Law (RSL). When an apartment's legal regulated rent reaches the prescribed DRT, it qualifies for High Rent Vacancy Deregulation. This means that the apartment can be permanently removed from rent regulation, allowing landlords to set rents at market rates.
Prior to the Housing Stability and Tenant Protection Act of 2019 (HSTPA), landlords could achieve High Rent Vacancy Deregulation by implementing Individual Apartment Improvements (IAIs) or Major Capital Improvements (MCIs). IAIs involve substantial modifications to dwelling space or the provision of additional services, improvements, or furnishings to a Rent Stabilized unit. MCIs refer to building-wide systems upgrades that benefit all tenants.
However, with the passage of the HSTPA in 2019, High Rent Vacancy Deregulation was abolished. As a result, landlords can no longer utilize IAIs or MCIs to deregulate apartments. It's important to note that past deregulations that occurred before the HSTPA are still considered valid.
The DRT is adjusted annually and has increased over time. For example, the High Rent Vacancy Deregulation threshold was $2,000 in 1993, increased to $2,500 in 2011, and then to $2,700 in 2015.
It's worth mentioning that tenants in rent-stabilized units have certain rights and protections. They must be offered renewal leases in a form approved by the relevant housing authority, and landlords must provide written notice of renewal within a specified time frame. Tenants can also seek legal counsel to determine if rent increases are legal and challenge them if necessary.
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High Rent Vacancy Deregulation
The concept of High Rent Vacancy Deregulation is closely tied to rent stabilization laws. Rent stabilization aims to regulate rent increases and provide tenants with the right to renew their leases. However, under High Rent Vacancy Deregulation, if an apartment's legal regulated rent reached the DRT, it could qualify for permanent deregulation, removing it from rent stabilization.
The application of High Rent Vacancy Deregulation has been a subject of debate and legislative changes. Prior to 2019, landlords could utilize Individual Apartment Improvements (IAIs) to hasten the process of reaching the DRT. This involved making substantial modifications or providing additional services to a Rent Stabilized unit, allowing landlords to secure rent increases without tenant consent during vacancies.
However, with the passage of the Housing Stability and Tenant Protection Act of 2019, High Rent Vacancy Deregulation was abolished. As of June 14, 2019, high-rent and high-income deregulation are no longer permitted. While past deregulations are still considered valid, new rent stabilization protections have been put in place.
It is worth noting that High Rent Vacancy Deregulation still applies in specific circumstances, such as in 421-a "Affordable Housing NY Program" buildings. Additionally, the legislation allows courts and the DHCR (Division of Housing and Community Renewal) to scrutinize Preferential Rents in deregulation cases, ensuring that tenants' rights are protected.
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Legal Regulated Rent
The legal regulated rent, also known as Rent Stabilization, is the maximum amount a landlord can charge for an apartment that is legally under rent control. The rent is adjusted by the New York City Rent Guidelines Board for housing accommodations where the rent includes electrical services. These adjustments were made between 1974 and 1984.
The legal regulated rent can lead to High-Rent Vacancy Deregulation when it reaches a prescribed deregulation threshold (DRT). Before the Housing Stability and Tenant Protection Act of 2019 (HSTPA) abolished High Rent Vacancy Deregulation, landlords aimed to reach the DRT through IAIs. The DRT threshold has increased over time, starting at $2,000 in 1993, then $2,500 in 2011, and $2,700 in 2015, with slight increases thereafter.
It is important to note that tenants have certain rights and protections under rent stabilization. Tenants in rent-stabilized units must be offered renewal leases at a rate set by the Rent Guidelines Board. Additionally, tenants can contact DHCR regarding rent increases due to various factors and seek legal counsel to determine if rent increases are legal.
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Preferential Rent
A preferential rent is a rent lower than what the landlord is legally allowed to charge for that apartment. If you pay a preferential rent, your lease must include language that states you are being charged a preferential rent. A preferential rent may be described as a lower rent or a temporary rent. Look to see if a higher "legal rent" is written in the lease in addition to the preferential rent. If in doubt, always ask before signing your lease.
As of June 14, 2019, there are new laws governing allowable rent increases for preferential rents. If you pay a preferential rent, your landlord may no longer be able to terminate it upon lease renewal. However, preferential rents cannot be terminated during a lease term for any reason.
It is important to carefully read your lease and any riders before signing. If you are unsure about any terms in the lease, be sure to ask for clarification before signing. Tenants should also be aware of their rights and protections under rent stabilization laws, which may apply to their building or apartment.
In summary, a preferential rent is when a landlord charges a tenant a rent that is lower than the legal rent for an apartment. This is often done as a temporary incentive and should be clearly stated in the lease. As of 2019, there are new laws governing rent increases for preferential rents, and landlords may not be able to terminate a preferential rent upon lease renewal. Tenants should always review their lease carefully and seek clarification on any unclear terms before signing.
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Individual Apartment Improvements (IAIs)
To collect an IAI rent increase, landlords must notify the DHCR (Division of Housing and Community Renewal) by filing a notification form and providing before-and-after photographs. If the improvement is made in an occupied apartment, landlords must also obtain the tenant's informed consent and amend the Tenant's Informed Consent form. Landlords should be aware that there are strict standards of proof for work done on individual apartments to substantiate a rent increase. This includes providing cancelled checks, invoice receipts, signed contract agreements, and a contractor's affidavit.
IAIs are distinct from Major Capital Improvements (MCIs), which are building-wide systems that benefit all tenants and require DHCR consent. However, IAIs have been criticised as being open to fraud and abuse, with some landlords failing to provide proof of improvements used to justify rent increases. The HCR's Tenant Protection Unit (TPU) has found that in up to 40% of cases, landlords did not have the necessary proof of improvements.
Prior to the abolition of High Rent Vacancy Deregulation in 2019, landlords could use IAIs to reach the Deregulation Threshold (DRT) and permanently deregulate apartments from rent regulation. By making substantial modifications to dwelling spaces or providing additional services, improvements, or equipment to Rent Stabilized units, landlords could increase rents and potentially deregulate the apartment.
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Frequently asked questions
DRT stands for Deregulation Threshold, which is the rent level at which an apartment qualifies for permanent deregulation and removal from all rent regulation.
Legal rent is the maximum rent that a landlord is legally allowed to charge for an apartment. A preferential rent is a rent amount that is lower than the legal rent and is charged by the landlord.
Yes, a landlord can charge more than the legal rent if the apartment is deregulated. Deregulation occurs when an apartment's legal regulated rent reaches the DRT.
No, as of June 14, 2019, landlords may no longer terminate a preferential rent during a lease term for any reason.
