MAJOR CAPITAL IMPROVEMENTS

Three months ago my landlord installed a new boiler.  Last week I received notification from NYS DHCR (Division of Housing and Community Renewal) that the landlord has applied for a Major Capital Improvement (MCI) and my rent will increase.  Do I still have to pay this rent increase even though I did not consent to it?

A Major Capital Improvement (MCI) is the most common types of rent increase for which landlords can apply for.  When landlords substantially rehabilitate a building, or replace or add services that is building wide (for example, a new boiler, repaired a leaking roof, new intercom systems, new aluminum framed window, etc.), they are eligible to apply for a Major Capital Improvement rent increase within TWO YEARS of completing the work.

For landlords to collect a rent increase for building wide improvements, the consent of individual tenants is not required, but before a landlord can charge tenants for any MCI work, the landlord must file an application requesting DHCR approval.  All rent stabilized and rent control tenants are affected by this rent increase.

For eligible work begun or contracted on or after June 29, 1990, the allowable rent increase is equal to the landlord's cost of the improvement (finance costs excluded) spread out over seven years (or 84 months).  After dividing the total cost of the MCI by 84 months, DHCR then divides the resulting figure again by the total number of rooms in the building (bathrooms are not included unless windows were installed then the total cost divided by the number of windows). A tenant would then pay a monthly increase based on the number of rooms in their apartment.

The process for requesting an MCI rent increase is lengthy and the final DHCR approval allows landlords to collect retroactive increases.  The retroactive increase covers the time period between when the landlord submitted the application to DHCR and when it was approved.  Rent Stabilized tenants are responsible for retroactive MCI increases, Rent Controlled tenants are not.  MCI rent increases are permanent.  All MCI increases become a PART OF THE BASE RENT and affect future rent increases, even though the actual cost of the MCI is recovered by the landlord.

Tenants who want to challenge a landlord's application for a MCI rent increase must hire an independent licensed architect or engineer in order to rebut the landlord's application.  If 51 percent of the tenants challenge, a licensed architect or engineer is not required.

Any new tenant who moves into a rent stabilized apartment while an application for a Major Capital Improvement (MCI) with the NYS Division of Housing and Community Renewal (DHCR) is pending, will immediately be charged the full MCI increase upon moving into the apartment. However, in order for the landlord to legally collect the MCI increases from a new rent stabilized tenant, the landlord MUST notify any incoming tenant of the basis for the previously filed application, and that the rent will be increased if the MCI application is approved. If the landlord fails to include this notice of an anticipated rent increase in the tenant's vacancy lease or attached riders, then the landlord cannot charge the new tenant this rent increase BUT only during the terms of the vacancy lease.  Upon renewal of the lease, the landlord can then charge the MCI rent increase.  An owner who charges these rent increases without this notification may be subject to overcharge penalties.