Calculating Long-Term Prior Tenant Vacancy Increase

Q A long-term tenant, who lived in the same apartment for 40 years, died recently. I wish to verify the calculation of the new rent. If I calculate the prior legal rent, plus the long-term prior tenant increase, plus the Rent Guidelines Board Order (RGBO) #40 percentage increase, plus 1/40th of the cost of improvements, would this be the allowable computation?

A No. You can't charge a vacancy allowance and a renewal increase in the same year for the same apartment. Generally, there are four main ways to increase the rent on a rent-stabilized apartment:

• Sign a renewal lease with the current tenant, to which you can apply the percentage allowances of RGBO #40;

• Sign a vacancy lease with a new tenant after the current tenant leaves the apartment;

• Improve the apartment; or

• Complete a building-wide major capital improvement.

In your situation, the vacancy rent increase is made up of the “vacancy bonus” and an “additional vacancy bonus.” The additional vacancy bonus is included because you haven't signed a vacancy lease on the apartment for eight years prior to the date of the new vacancy lease. This year, the vacancy bonus is 20 percent if the new tenant signs a two-year lease, or 16 percent if the new tenant signs a one-year lease.

The additional vacancy bonus is calculated by multiplying the number of years since you took your last vacancy increase by .006 of the rent charged to the last tenant.

Also, if you intend to make improvements to the apartment, you should add 1/40th of the cost of the improvements after you apply the applicable vacancy lease rent increases. You can't add the increase and then compound it by the vacancy bonuses.

To recap, assuming that you have a rent-stabilized apartment, the new rent is calculated by adding the prior rent plus a 20 percent vacancy allowance for a two-year vacancy lease, plus the long-term 0.6 percent additional vacancy bonus, plus 1/40th the cost of improvements.