Do You Have Tenants? The New Rent Laws Affect You

On June 14th, 2019 many of the new rent laws became effective.  Many of the changes are aimed at regulated apartments, or rent-controlled or rent-stabilized apartments.  But quite a few changes apply to all landlords in New York.  The below items are only a small subset of the full version.  We mention them for their relevance to our client base which includes many condo investor owners.

• Landlords cannot charge more than $20 for credit and background checks

• Security deposit cannot be more than 1 month of rent

• Security deposit must be returned within 14 days

• Late fees cannot be charged if rent is paid within in 5 days of due date

• Rent demand must be in writing once when tenant is more than 5 days late in paying rent and once again when tenant is 14 days late in paying rent

• Landlords must provide written notice for any rent increase larger than 5% or any notice not to renew

o   30 days if the tenant has stayed for less than 1 year

o   60 days if the tenant has stayed between 1-2 years

o   90 days if the tenant has stayed more than 2 years

One unwelcome outcome of the new laws for the renters is that many rent-stabilized rental buildings are no longer accepting the one-year upfront payment.  Many of the luxury rental buildings that are popular with international students are actually rent-stabilized.  Without the option of paying one-year upfront, the students’ only two options are: 1) through a US-based guarantor or 2) through an insurance company which means higher cost.  The international students are a vital renter group to many of the new luxury rental buildings.  Some of the buildings are subsidizing the insurance cost as a result.

The new rent laws strengthened the tenants’ rights overall.  But the impact on small private landlords should be manageable.  One market that is seeing significant impact is the multifamily sales market.  Since many multi-families contain regulated apartments, the new laws cast a long shadow on the value of multi-families.  We expect this market to be very muted in the near future. 

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