State proposes regs to rein in Frankensteining

Landlords have been warehousing vacant rent stabilized units and then merging them with other space (sometimes unregulated apartments) to create "Frankensteined" apartments with brand new rents - often sky-high. 

The State's housing agency has just proposed regulations to implement the 2019 Housing Stabilization and Tenant Protection Act.  Rent Stabilization Code Amendments - HSTPA Revisions, pages 23-25.   These amendments include a new section, §2521.1(m) to regulate the rents and status of Frankensteind (combined) apartments.  The section says:

1. Rents for combined apartments will be the combined last rent of each rent stabilized apartment, plus any individual apartment improvement increases.  If a rent stabilized apartment is increased in size by adding a market apartment, the new rent stabilized unit will combine the two legal rents.  If a rent stabilized apartment is reduced or increased in size (for example by adding hallway space), the rent is changed by same percent as the square footage is changed. 

2. Rent stabilization will cover the whole new combined apartment if even one of the original apartments was rent stabilized. 

3. Landlord fraud, harassment, or evasion can bar any rent increase.

The hearing on these and other regulations will be on November 15, 2022 from 10 AM to 4 PM at 1 Bowling Green in lower Manhattan. 

Click on "read more" for the proposed section. 

Credit for photo: CreativeCommons, 5-24-2015.

Below is the proposed section on Frankensteining with  ADDED HEADINGS and boldfacing. 

Section 2521.1  NEW SECTION ADDED: (m) 20  FRANKENSTEINING

COMBINE APARTMENTS = COMBINE RENTS.

IF ANY UNIT RENT STABILIZED, WHOLE NEW UNIT IS STABILIZED.

(1) Where an owner combines two or more vacant housing accommodations or combines a vacant housing accommodation with an occupied rent regulated accommodation, such initial rent for such new housing accommodation shall be the combined legal rent for both previous housing accommodations, subject to any applicable guidelines increase and any other increases authorized by this Title including any individual apartment improvement increases applicable for both housing accommodations. If an owner combines a rent regulated accommodation with an apartment not  subject to rent regulation, the resulting apartment shall be subject to the rent stabilization law. If an owner increases the area of an apartment not subject to the rent stabilization law by adding space that was previously part of a rent regulated apartment, each apartment shall be subject to the rent stabilization law.

 

INCREASE RENT BY SAME % AS UNIT INCREASED IN SIZE

(2) Where an owner substantially increases the outer dimension of a vacant housing accommodation, such initial rent shall be the prior rent of such housing accommodation, increased by a percentage that is equal to the percentage increase in the dwelling space and such other increases authorized by this Title including any applicable guideline increase and individual apartment improvement increase that could be authorized for the unit prior to the alteration of the outer dimensions. 

 

NO INCREASE FOR FRAUD, HARASSMENT, EVASION!!

(3) Notwithstanding the above, the above increases may be denied based on the occurrence of such vacancy due to harassment, fraud, or other acts of evasion which may require that such rent be set in accordance with Part 2526 of this Title. 

IF UNDER A PRESERVATION AGREEMENT, THAT AGENCY SETS RENTS. 

 (4) Where the vacant housing accommodations are combined, modified, divided or the dimension of  such housing accommodation otherwise altered and these changes are being made pursuant to a preservation regulatory agreement with a federal, state or local governmental agency or  instrumentality, the legal regulated rents charged thereafter shall be based on an initial rent set by such agency or instrumentality.

DECREASE RENT BY SAME % AS UNIT DECREASED IN SIZE

 (5) Where an owner substantially decreases the outer dimensions of a vacant housing accommodation, such initial rent shall be the prior rent of such housing accommodation, decreased by the same percentage the square footage of the original apartment was decreased by and such other increases authorized by this Title including any applicable guideline increase and individual apartment improvement increases that could be authorized for the apartment prior to the alteration of the outer dimensions. 

 

CAN ADD IAIs FOR COMBINED UNITS

(6) Apartment combinations and individual apartment improvements: 

 

(i) When an owner combines two or more rent regulated apartments, the owner may use each of the previous apartments’ remaining individual apartment improvement allowances for the  purposes of a temporary individual apartment improvement rent increase. The owner shall  subsequently designate a surviving apartment for the purposes of registration that has the same  apartment number as one of the prior apartments. If that prior apartment has any reimbursable individual apartment improvement money remaining after the combination, that money may be reimbursed for future individual apartment improvements undertaken within the subsequent fifteen years following the combination. 

 

(ii) In order for an owner to qualify for a temporary individual apartment improvement rent  increase when apartments are combined, the requirements for an individual apartment  improvement, including all notification requirements under Section 2522.4(a) of this Title must be  met. 

 

RECORD KEEPING REQUIRED

(7) Owners shall maintain the records and rent histories of all combined apartments, both prior to and post combination, for the purposes of rent setting, overcharge and all other proceedings to which the records are applicable.