In June of 2019 New York State Legislature passed some of the most historic rent regulations within the Housing Stability and Tenant Protection Act of 2019. Since that time landlords and real estate developers have been weighing out the different effects that could be seen in terms of them making a profit from their properties. With the set regulations clearly favoring potential tenants, this could mean serious implications for the overall real estate industry. In due time, it will be seen as to whether or not the regulations will actually help or hurt the tenants it was set out to protect.
One of the first major changes that this bill impacts is the decontrol and value bonus. Not only does the bill do away with the decontrol and value bonus, but the vacancy bonus which used to allow tenants to raise the rent by 20 percent whenever the tenants change is going to come to an abrupt end as well. Incentives such as this being done away with could certainly hinder the market for purchasing rent-regulated units.
Landlords may also start to feel the hurt as both preferential rent and high-income deregulation come to an end. This previously allowed the landlords to deregulate a rent-stabilized housing unit anytime a tenant made over $200,000 income for two consecutive years. The passing of this bill will now keep the rent at the lower preferential value in both instances.
Two of the major changes came in the way of Major Capital Improvements (MCIs) and Individual Apartment Improvements (IAIs). Previously the landlord was able to pass by with 6 percent of the cost that was associated with the MCI on to their tenants renting. This new bill has now restricted that to only 2 percent which is now the cap. They now also require 25 percent of these MCI increases to be inspected and audited. The plan is to eliminate all MCI costs within the next 30 years.
While these are major changes that are impacting the real estate industry, this is only a portion of them to be passed in 2019. Many property owners and landlords feel that these regulations make it impossible to renovate and update their properties for new tenants.