It’s a new year, so that means that new laws begin to affect our daily lives. Since this is New York, it goes without saying that at least a few of these new laws will affect real estate. This year a prohibition against discriminating against victims of domestic violence in housing went into effect. The Real Property Law was amended to add a section, 227-d, which now makes it a misdemeanor to discriminate based upon a person’s status as a victim of domestic violence in housing. Additionally, Section 744 was added to the Real Property Actions and Proceedings Law (RPAPL). Section 744 provides an additional defense to a proceeding to recover possession of a residential unit, based upon the tenant’s status as a victim of domestic violence. An exemption to these changes was created for an owner occupied building with two or fewer units. Tenants of rent controlled apartments are facing potentially significant rent increases. Unlike tenants in rent stabilized apartments, whose rent increases are regulated by the New York City Rent Guidelines Board, the rents for rent controlled are controlled by a mathematical formula which considers landlord costs such as taxes. This past year, the Rent Guidelines Board voted for no rent increases for a one year lease for a rent stabilized apartment and a 2% increase for a two year lease, a historic low. The rents in rent controlled apartments, on the other hand, are governed by the Maximum Base Rent System. In theory, the system approximates the income required to manage the unit in question. The Maximum Base Rent is adjusted every two years. The next two year cycle begins in 2016. The anticipated Maximum Base Increase for 2016/2017 is 9.6%. The Maximum Base Rent establishes the maximum allowable for a rent controlled apartment, not what the actual rent of the rent controlled unit will be. As a rough example, a rent controlled unit with a rent of $1,000 a month, can have a potential maximum rent of $1,096. The actual increase in rent may be much less. An owner must maintain the building, provide all essential services and have no outstanding violations at the time application to increase the rent is made. Additionally, Maximum Collectable Rents limit the one year increase in rent. Maximum Base Rent is based upon the economics of operating the older buildings within which these rent controlled units exist. To qualify for rent control a unit must be in a building built before 1947 and the tenant must be in continuous occupancy since 1971. When a unit no longer qualifies for rent control it will usually, but not always, become a rent stabilized unit. The formula to determine the Maximum Base Rent takes taxes, operational costs and sewer and water costs into account. Unlike the method for determining the increases to rent stabilized apartments, the Maximum Base Rent is determined based upon the increased expenses of operating and maintaining a building. Not to be outdone, the State’s Tenant Protection Unit, will soon be sending letters to owners who deregulated apartments while receiving J-51 tax benefits. J-51 tax benefits is a tax incentive for the renovation of multi-unit buildings. Prior to 2009, many owners took advantage of the J-51 tax incentive and then deregulated the apartments while receiving the benefits. In 2009 the Court of Appeals ruled that an apartment could not be deregulated while receiving the J-51 benefits. While many owners who received the benefits, and deregulated their apartments, “re-regulated” their apartments, many owners did not. Determining the correct rent for a regulated apartment is complicated under the best of circumstances subsequent to a renovation. Determining the correct regulated rent for a re-regulated apartment will be that much more complicated. Owners who receive a letter from the Tenant Protection Unit would do well not to ignore it. Steven Glassberg is the founder of Glassberg & Associates, LLC, New York, N.Y. and Port Washington, N.Y. Tags: