I live in an affordable apartment in an 80/20 building. By how much can the landlord raise my rent when I renew my lease?
The answer depends on which kind of tax benefit program your building is participating in, says Sam Himmelstein, a lawyer who represents residential and commercial tenants and tenant associations.
Under the city’s 80/20 housing program, developers are given tax breaks in exchange for reserving 20 percent of the apartments in their buildings for low-income renters. Most of these buildings are part of the federal Low Income Housing Tax Credit (LIHTC) program, while others participate in the city’s 421-a tax abatement program. Many buildings receive benefits from both of these programs.
“There’s no one rule that applies across the board to every building,” says Ronald Languedoc, a partner with HMGDJ Law. “There are different rules in place depending on which tax incentives the owners are receiving, and whether or not stabilization is in place.”
Landlords who receive 421-a benefits are required to put apartments in their buildings under rent stabilization, which means strict limitations on rent increases for as long as the building is receiving those benefits.
“For tenants in 421-a buildings, their rent can only go up by rent stabilization guidelines, regardless of any fluctuation in their income,” Languedoc says.
Most recently, the Rent Guidelines Board, which determines rent increases for stabilized apartments, set the permitted increases for one-year lease renewals at 1.5 percent, and for two-year renewals at 2.5 percent.
Keep in mind that 421-a programs have an expiration date, and once the landlord stops receiving those tax breaks, the building’s affordable apartments will be removed from stabilization. But in order to do this legally, your landlord has to make clear in your lease when the program will expire.
“The landlord would have to put a rider in the original and all renewal leases stating that the building is subject to rent stabilization because of 421-a,” Himmelstein says. “They would also have to give the approximate expiration date of 421-a, and let the tenant know they would lose their rent stabilization status when 421-a expires.”
If your landlord hasn’t done this, even after the tax breaks expire, you can legally keep your stabilized status.
Some new construction buildings, on the other hand, have received federal benefits but not 421-a tax breaks, which means tenants in affordable apartments there are not protected by rent stabilization. If your income goes above the amount that qualifies you for the affordable apartment, then, your rent could also go up substantially.
“Depending on what your lease says, you would be out of the affordability program, and would be removed from it once another qualifying tenant is found,” Languedoc says. “You could be offered a market-rate lease instead.”
In these buildings, tenants are required to report their income and assets annually, in order for the landlord to comply with the federal tax program.
“Tenants get in trouble sometimes because they fail to report,” Languedoc says.
If this happens, your landlord could begin proceedings to evict you—but this issue is sometimes considered “curable,” that is, you might be able to resolve it by reporting your income as required.
However, 80/20 buildings, regardless of the tax program they participate in, are generally new construction and very difficult to get into. Tenants can find out if they qualify, and apply for an affordable apartment, through the city’s housing lottery program.
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Sam Himmelstein, Esq. represents NYC tenants and tenant associations in disputes over evictions, rent increases, rental conversions, rent stabilization law, lease buyouts, and many other issues. He is a partner at Himmelstein, McConnell, Gribben, Donoghue & Joseph in Manhattan. To submit a question for this column, click here. To ask about a legal consultation, email Sam or call (212) 349-3000.