Division of Housing and Community Renewal (DHCR)

The substantial rehabilitation program is designed to allow building owners to have an exemption on their whole building when they substantially renovate their building. The agency has specific requirements on the systems you need to replace or repair, such as plumbing, ceilings, floors, etc. Buildings meeting these criteria can charge a free market rent for all the units in the building. We encourage you to file an owner’s exemption application based on substantial rehabilitation so you can be protected from future regulation changes with an official determination from the agency.

The amount of a security deposit for rent regulated apartments can be no more than one month’s rent. The security deposit must be kept by the owner in an interest bearing account in a NYS bank.

New York City has a system of rent regulations known as “rent stabilization.” The system was enacted in 1969 when rents were rising sharply in many post-war buildings. The system has been extended and amended frequently, and now about one million apartments in the City are covered by rent stabilization. Rent stabilized tenants are protected from sharp increases in rent and have the right to renew their leases.

The filing for the annual rent registration is considered timely is filed between April 1st and July 31 of each year, unless specifically adjusted by the agency.

Benefits of Administrative Determination Based on Substantial Rehabilitation

An Administrative Determination by DHCR in favor of Substantial Rehabilitation provides many benefits such as:

• Increased property value:
  • Free market units provide more revenue
  • Higher return of investment for developers
• Protection from DHCR Complaints (Overcharge, Decrease of Services, Failure to Renew)
• Expedited Housing Court Proceedings
• Immunity from future DHCR policy changes

This is important because the Agency makes policy decisions that can prospectively affect a property or be applied retroactively

Whenever the Agency makes the change, you have to comply with policy whatever it is at the time of the review (that you file)

Since the Application is based on the project, it’s easier to do it right after construction because you have documents, contractors available etc, it also makes it harder for tenants to fight because everything is in the building is in new condition

In conclusion, an Administrative Determination based on substantial rehabilitation is the only way to get a whole building exemption since Rent Act 2019. It is better to file for substantial rehabilitation around the same time the project is completed in order to obtain all necessary proof when it is available and to avoid long drawn-out housing court proceedings. Once a building is out of stabilization and DHCR issues an Order based on substantial rehabilitation, it can generally not be challenged. This is different from other forms of deregulation such as deregulation based on high rent vacancy, where a tenant can easily challenge the status.

Yes, but the building will be treated as rent-stabilized until the J-51 benefits expire regardless of the amount of rent charged. However, the benefits of filing for Substantial Rehabilitation as soon as possible are that the building will immediately become destabilized after the J-51 benefits expire and you do not risk losing the documentation necessary to file for Substantial Rehabilitation.

We recommend thorough due diligence to understand building and unit history and status, as well as past DHCR cases that may be relevant before purchasingany properties.

Order #53 – Apartment and loft guidelines for leases commencing between October 1, 2021and September 30, 2022:

For a one-year lease commencing on or after October 1, 2021 and on or before September 30, 2022:

0% for the first 6 months of the lease and 1.5% for the remaining 6 months of the lease.

For a two-year lease commencing on or after October 1, 2021 and on or before September 30, 2022: 2.5%

For additional information on rent increases, please contact our office.