Calculation for Rent Stabilized Apartments
We all know that the rent in New York City is astronimical but how is it actually calculated for rent stabilized apartments under the Rent Stabilization Law? This was the question addressed in a recent Court of Appeals case, Altman v. 285 West Fourth LLC, that is now being touted as a landmark case for rent regulation in New York City. Despite the name, the Rent Stabilization Law allows for statutory rent increases based upon several factors and any housing accommodation whose value exceeds $2,000.00 will be deregulated. One of the possible factors that can raise rent over the statutory threshold is the option to raise the rent by 20% upon the tenant’s vacancy of the housing accommodation.
Courts struggled with interpreting the Rent Stabilization Law and whether a vacancy increase should be considered a part of the rent when analyzing whether deregulation will apply. The recent decision by the Court of Appeals resolved the question once and for all, determining that, based on legislative history and purpose, the vacancy increase of 20% should be considered in determining the legally regulated rent amount at the time a tenant vacates housing accommodations regulated by the Rent Stabilization Law.
Though the recent decision is a controversial one for tenants, it offers solace for landlords and tenants alike left unsure of vague legislation. As rent is sure to continue to increase due to market pressures, landlords have a better sense of how to calculate rent and when it will remain regulated under the statute. Investors in and owners of real estate in New York City can better asses when properties are fully compliant and therefore gauge the free-market status of their properties.