A little over one month after New York passed landmark new protections for renters, some tenants who pay preferential rents—those lower than the legal limits on their apartments—are already accusing their landlords of ignoring the rules by imposing illegal rent hikes.
Patricia Skelly, a tenant at Lenox Terrace, a six-building, 1,600-unit complex in Harlem, told Gothamist she received a one-year lease renewal in late June—two weeks after the new rent legislation were passed on June 14—that called for a stunning $1,100 monthly rent increase. Under the new laws, the maximum her landlord is allowed to raise her rent is roughly $35 a month.
“They knew what they were sending out,” said Skelly, who shortly after receiving the contract renewal attended a legal forum on the new rent laws run by the Legal Aid Society. “They are looking to see who is going to call them on it and who isn’t.”
More than one-quarter—266,000—of the city’s one million rent-regulated units receive preferential rent, which means they pay an amount lower than the legal maximum rent as determined by the state department of Homes and Community Renewal. (This typically happens when landlords have been able to use now-eliminated loopholes to raise the legal rent faster than the neighborhood’s market will support.) In the past, preferential tenants have been at the mercy of landlords at lease-renewal time, because landlords had the right to raise rents to the maximum allowable amounts.
But as part of the latest rent reform legislation, preferential rents are now the base rent for each tenant's entire occupancy; any rent increases are limited by the annual increases set by the Rent Guidelines Board, the agency that sets rent increases for rent-stabilized units.
Another tenant at Lenox Terrace, who asked that her name not be used, said she was also hit with an illegal rent increase. In July, she received in the mail a one-year lease renewal.
“When I got it I was afraid to open it. I had a bad feeling,” she said.
Sure enough, her lease called for a 27 percent monthly rent hike. The RGB's approved increase is 1.5 percent for one-year leases, and 2.5 percent for two-year ones.
The proposed rent hike has been a source of anxiety, she said, adding, "I can’t afford that rent, and I can’t afford to move."
Skelly, who has lived in the building since 2014, said that prior to this year, she had not experienced any issues with her rent. Last year’s increase, she said, was in accordance with those set by the Rent Guidelines Board.
She said after calling the management company about her lease, she was directed to the leasing department, where an individual told her, "I’ll have to take a look at this and send you a new lease."
Reached for a response, a spokesperson for Olnick issued the following statement to Gothamist:
“Following regulations that require lease renewals to be issued at least 90 days in advance of the lease renewal date, an automated system used by property management at Lenox Terrace generated certain notices prior to the new rent laws taking effect a few weeks ago. Unfortunately, certain lease renewals were erroneously issued before the new corrected versions were finalized. No leases were, or would have been, renewed without complying with current regulations. Management is very sorry for any inconvenience caused by this situation.”
This is not the first time complaints about illegal rent increases have surfaced at Lenox Terrace. In 2015, amid an RGB-ordered rent freeze, rent-stabilized tenants charged that their rents had been illegally raised when the landlord inaccurately sought to treat them as preferential-rent tenants. In 2010, a group of tenants sued Olnick for illegally deregulating units while the company was receiving a J-51 tax break, which is granted to landlords performing capital repairs in exchange for an agreement to keep units rent-regulated. (Lenox Terrace also drew headlines in 2008 after the New York Times reported that former Congressman Charles Rangel had four rent-stabilized units at the complex.)
From the beginning, some housing activists have cautioned that landlords may seek to take advantage of preferential rent tenants who are not up to speed with the new laws. Aaron Carr, of Housing Rights Initiative, said landlords now have an incentive to drive out preferential tenants, perhaps by scaring them away with the threat of large rent hikes. Once the unit is vacated, the landlord can charge the maximum legal regulated rent.
According to a recent story in The Real Deal, some landlords have insisted that renewal offers issued before June 14 do not have to comply with the new laws. The story cited two preferential rent tenants at LeFrak City, a Queens complex with more than 4,000 units, who received lease renewals that were higher than the legally permitted increase. In one case, a tenant received a two-year lease renewal offer in April that called for a 17 percent increase that would go into effect on July 19.
Aisha Gomez, a tenant activist at LeFrak City who has spoken with the two tenants, confirmed the accounts to Gothamist. She said in the case of the 17-percent rent increase, the tenant sent a letter to the landlord, requesting a corrected lease, but as of last week had not received a response.
Ellen Davidson, a staff attorney at the Legal Aid Society, said that the statute is very clear: All rent increases on preferential-rent leases are limited to the RGB percentages, starting with the day the law was signed, June 14. (The law specifies that it takes effect "upon renewal" of any leases in effect on or after that date.) This is the case, she said, even if the tenant signed the lease before June 14—so long as the lease was set to go into effect after that date, higher increases are illegal.
The LeFrak Organization, which is one of the largest owners of rent-stabilized apartments in New York City, did not immediately respond to an email from Gothamist.
Determining the scale of preferential-rent abuse is difficult, Gomez and others said, because tenants are often reluctant to talk about their rents.
Moreover, Gomez added, “It’s hard to mobilize tenants because people’s leases start at different times,” so rent hikes for various apartments end up scattered throughout the year.
Landlords are required to send rent-stabilized tenants lease renewals anywhere between 90 to 150 days prior to the start of the new lease.
Delsenia Glover, the executive director of Tenants & Neighbors, a tenant advocacy and organizing group that has been following the situation at Lenox Terrace, said her organization has also received calls from rent controlled tenants saying that they were still being billed in July for fuel pass-along charges, a practice that is prohibited under the new laws.
“Whatever [landlords] can get away with, they’re going to try to get away with,” she said.
Tenants with preferential rents whose leases are due for renewal after June 14 and who received leases with illegally high increases should return them to the landlord with a request for a new lease with only the RGB increase, Glover said. She added that if the landlord fails to do so, the tenant should file an overcharge complaint with Homes and Community Renewal.
Davidson said to date, she has heard of at least 10 cases involving preferential rent.
“I don’t think we anticipated that landlords would blatantly violate the law as quickly as they seem to have done,” she said, adding, “’I’m somewhat bewildered because I think this is one of the clearest parts of the law.”
UPDATE: A previous version contained a typo of the tenant advocacy group named Tenants & Neighbors.