About Rent Control

What is the Maximum Base Rent (MBR) system?

Tenants pay a monthly rent called the maximum collectible rent plus a fuel pass-a-long. Rents are increased through a complicated and out-of-day formula. The process starts with landlords applying to the NYS Division of Housing & Community Renewal (DHCR) for increases for each rent-controlled apartment they own. Landlords first apply for a Maximum Base Rent Order of Eligibility. This is done once every two years, six months prior to the increase period. The MBR, or ceiling rent, is raised by the DHCR once every two years, and qualifying landlords get that raise.

The landlord is only allowed to increase the rent for the tenants in the building if he receives an Order of Eligibility and sends each rent-controlled tenant an RN-26 form. The rent will now increase will now be an average of the last 5 Rent Guidelines Board 1-year rent increases or 7.5%, whichever is less. Landlords will still need to apply for an increase. The Order of Eligibility is mailed by the DHCR to the landlord and all the rent-controlled tenants in the building — it merely gives the landlord permission to raise the MCR, and allows for the increase of the MBR. The Orders usually go out in the early part of the first year of the cycle.  (For some tenants, the Order will come much later — that means that the building had violations or that the landlord’s filing was somehow defective. Once the Order is received, the landlord must mail out the RN-26 forms to each rent-controlled tenant for the MCR within 60 days. If the RN-26 is mailed after the 60 days, the increase is prospective only. If mailed on time, the MCR increase is effective on January 1 of the first year of the cycle (or whatever effective date is written on the order). The RN-26 form will show the previous Maximum Base Rent, the increase, and the Maximum Collectible Rent with the new increase. It will also show any recent Major Capital Improvement rent increases. Once the landlord has mailed out the RN-26 forms, the new rent bills will follow.

Some landlords choose not to participate in the MBR system. And some landlords have so many violations, they are not eligible for MBR increases. For tenants in these buildings, the landlord is not permitted to collect any increase. (See below for more information.)

Rent-controlled tenants also pay a fuel pass-along. Every year that pass-along is increased or decreased according to the change in price of the fuel used in the building. In periods of high increases in oil (such as now) and gas prices rent-controlled tenants pay high fuel cost adjustments. The notices go out once the DHCR releases the fuel prices. When the price of fuel used in your building decreases, the landlord must notify you of the decrease within 60 days of the date of the fuel price release or the entire fuel pass-along is suspended for a period of 12 months. In years when the price increases, the landlord must notify rent-controlled tenants within 60 days to get the increase retroactive to the January 1 of the year. If the notice is later than 60 days, the increase is prospective only.

Is there a way to stop the constant rent increases in a rent controlled apartment?

The permanent rent increases for rent controlled apartments come in two forms: MBR increases and Major Capital Improvement rent increases (there are a few other rare ones – see the DHCR website for complete information). MBR increases are done on a 2-year cycle basis. The MBR is granted only if the owner files for it six months prior to the cycle and certifies that essential services are being maintained and that 100% of rent impairing violations and 80% of all other violations that were in place on January 1 of that year have been removed.

Rent-controlled tenants can challenge the MBR increase once they receive the RN-26, which is the notice of the increase in the Maximum Collectible Rent, if the violations were not removed. For example, if your apartment has an ongoing violation for lack of hot water or heat, the landlord’s application for the MBR increase will be denied — and if that denial survives the owner’s appeal, the owner can not get it retroactively later. (Unlike rent stabilization where the landlord can get all lost increases once the violations are cleared.) To challenge the increase, you must file an RN-94 within 33 days of receiving the RN-26.

Rent-controlled tenants have two other challenges: tenants can use the RN-94 to say that the landlord failed to provide essential services (since the landlord swore that essential services were being provided when he filed for the MBR order), and, that the owner does not need the increase in order to run the building (the owner must certify that he paid, or promise to pay, at least 90% of the expense allowance for the operation and maintenance of the building).

In addition, like all rent-regulated tenants, rent-controlled tenants can get a rent freeze and rent reduction if the landlord is not providing services or making repairs and the tenant follows the proper procedures. To get the rent freeze and roll back, the tenant must write a letter to the landlord, mailed by certified mail, describing the problem. If, after 10 days, the owner doesn’t fix the issue, the tenant can file for a decrease with the DHCR. If the problem is lack of heat and hot water, tenants should call 311 until an inspector visits and records the violation, and then get a copy of the violation (from HPD’s website or in person) and send it to the DHCR with the proper form.

For additional options, see our fact sheet: If you just can’t afford the rent, including the Senior Citizen Rent Increase Exemption (SCRIE) and Disability Rent Increase Exemption (DRIE) rent-freeze programs.

What is the history of rent control?

The rent control law is descended from the broad rent and price controls that were in place at the end of World War II (of course, rent laws were also in effect in NYC in the 1920’s). During the late 1940’s the federal rent control system, which had been nationwide, was gradually lifted and states that wanted to preserve rent control were permitted to take on administration of the system. While New York City’s housing market suffered from both the lack of construction during the war as well as a large population influx, it also had a well organized labor and tenant movement. Thanks to agitation from the huge number of tenants in the city, Albany took over the rent control system in 1950. After that, the administration of rent control for New York City went from state to city to state, and a variety of decontrol provisions were passed. Today, rent control covers only about 43,000 apartments, down from well over one million in its heyday. The system is now under vacancy decontrol – once the tenant moves out, the apartment is decontrolled (and covered by the rent stabilization system if it qualifies).

What is the profile of most rent-controlled tenants?

According to the 2005 Housing and Vacancy Survey, there are now 43,000 rent-controlled apartments in New York City. The median income of those households was $22,200. The median rent is $551 per apartment, and the median household pays over 33.5% of income for rent. The city’s rent-controlled tenants are mostly elderly – with most tenants having lived in their apartments since 1971 or before.

What are the special challenges facing rent-controled tenants?

Rent controlled tenants are elderly and living on fixed incomes. The city’s Senior Citizen Rent Increase Exemption program provides relief for some tenants. Tenants who are 62 or older, whose income is $50,000 or less, and who pay 1/3 of their income or more for rent can get their rent frozen. The program is great for those who qualify, assuming that they get the rent frozen right when they reach the qualifying marks. However, many tenants do not qualify in time to freeze the rent before it goes over the 1/3 level of income for rent. (The federal benchmark for an affordable rent is less than 1/3 of income – it is 30% of income.) Additionally, tens of thousands of New York City’s elderly tenants earn a marginal amount over $50,000 and pay higher than 1/3 of their income for rent. Recent legislative moves to change the formula (to make it retroactive, for example), raise the income limit higher, or to moderate the increases in the rent control law have failed. Additionally, many tenants who qualify for SCRIE don’t know about it or don’t apply. If you have neighbors who you think might be interested, let them know about the program. Information is available at senior centers and by calling the city at 311.