I've heard that rent-stabilized tenants are charged a monthly rent increase of about 1/40th the cost of a major upgrade to their apartment. However, I could easily pay the entire cost of an upgrade myself. Is it possible to do that—and avoid a permanent rent increase?
It's a nice idea, but it's unlikely your landlord will let you handle the upgrade yourself, our experts say.
Individual apartment improvements (IAIs) are one of the ways that landlords can raise the rent on stabilized apartments beyond the renewal increases set each year by REBNY. When landlords make an upgrade to an apartment—like install a new dishwasher—they can increase a tenant's rent by 1/60th of the cost in a building with 35 or more apartments, or by 1/40th of the rent in a building with fewer than 35 apartments. (Minor repairs, like spackling over holes in the wall or grouting bathroom tile don't count as IAIs.)
Not only does this mean a permanent rent increase, which in the long run could be better for the landlord than a one-time payment, but it can also help to bring an apartment closer to the threshold for deregulation, which is a rent of $2,774.76 per month.
"If they agree to do the work, they will almost always condition it upon the tenant agreeing to the rent increase," says Sam Himmelstein, a lawyer who represents residential and commercial tenants, and tenant associations (and FYI, a Brick sponsor). "The higher rent puts more financial pressure on the tenant and gets the rent closer to the threshold for vacancy and high-rent, high-income deregulation."
Moreover, it's likely that your lease forbids you making any substantial upgrades to your apartment. (Minor changes like a new coat of paint are okay, but you'll have to repaint the original color before you move out.)
"Assuming you are rent stabilized, you must first seek permission from the landlord before you consider doing any upgrades yourself," says Dennis Hughes, a broker with Corcoran. "Keep in mind all vendors must be licensed and insured."
Should your landlord agree to let you pay for and oversee the upgrade, make sure to document everything.
"If the tenant and landlord do agree to this, that agreement must be in writing," Himmelstein says. "In order to qualify [as an IAI], the work must be either new equipment, such as appliances, cabinets, sink, or bathtub improvements; ordinary repairs don’t qualify."
For more Ask an Expert questions and answers, click here.
You Might Also Like