RGB Approves Rent Hikes for One-Year, Two-Year Leases

Use our chart to help calculate the increases.

On June 17, the NYC Rent Guidelines Board (RGB) voted to raise rents on rent-stabilized apartments. In a 5 to 4 vote, the RGB adopted guidelines for Rent Guideline Board Order (RGBO) #56, which sets the rent increases you may take for rent-stabilized tenants in New York City on leases beginning anytime on or after Oct. 1, 2024, through Sept. 30, 2025.

According to RGBO #56, you may take a 2.75 percent increase on a one-year lease. This increase for one-year leases is the lowest one-year increase approved under the Adams administration. Last year, the one-year increase was set at 3 percent.

In addition, two-year leases get a 5.25 percent increase. Last year, RGB created a step-up in rent increases for two-year leases with a 2.75 percent increase in year one and a 3.2 percent increase in year two.

Nestor Davidson, chair of the RGB, released a statement at the public meeting in which he stated, “There is no simple formula for determining fair rent adjustments based on the significant and detailed data presented to the Board.” He highlighted the persistent and growing challenges for tenants.

But Davidson also pointed out that owners face significant challenges maintaining the quality of rent-stabilized housing and preserving this vital stock for tenants in the long run. The RGB’s 2024 Price Index of Operating Costs Report showed prices facing owners rose 3.9 percent from April 2023 through March 2024, following the previous year’s increase of 8.1 percent. And it’s likely that elements of these trends, including rising insurance costs and property taxes, will persist, with RGB staff projecting that the rise in prices will increase to 4.4 percent next year.

Also, RGB’s 2024 Income and Expense Study showed evidence that owners are having trouble mitigating rising costs with available revenue. Although, from 2021 to 2022, the most recent data available to the RGB, average net operating income (NOI) in buildings with rent-stabilized units citywide increased by 10.4 percent. This increase follows two years of decline in NOI of 7.8 percent and 9.1 percent respectively.

Importantly, much of the most recent growth in NOI can be attributed to factors distinctive to Core Manhattan, where NOI rose 42.3 percent. NOI in the remainder of the city was nearly flat, rising 0.3 percent over the same period. A closer look at the data shows that buildings built before 1974 outside of Core Manhattan saw NOI decline 7.0 percent and buildings with 80–100 percent of their units rent stabilized experienced an NOI decline of 8.0–9.1 percent. All in all, older buildings that are predominantly rent stabilized outside Core Manhattan experienced an NOI decline of between 7.0 percent and 9.1 percent.

This RGBO marks the third time during Mayor Adam’s tenure that the RGB allowed stabilized rents to increase. This is in contrast to the rent guidelines approved under his predecessor, Bill de Blasio, who had three years of rent freezes and didn’t have rent increases over 1.5 percent for one-year leases and 2.75 percent for two-year leases.

To help you calculate the rent hike you may charge for each of your tenants when you renew a lease, we’ve included a rent increase calculation chart—Apartment Law Insider’s RGBO #56 Rent Computation Form for Renewal Leases. Remember that for renewal leases, you calculate all rent hikes based on the rents charged on Sept. 30, 2024.

Rent Increase Permitted

The RGBO applies to renewal leases for rent-stabilized apartments, beginning anytime on or after Oct. 1, 2024, through Sept. 30, 2025. You can take 2.75 percent on a one-year lease and on two-year leases you can raise rents by 5.25 percent.

It’s important to note that as a result of the Housing Stability and Tenant Protection Act (HSTPA), these rent guidelines apply to both renewal and vacancy leases. Remember that HSTPA eliminated the statutory vacancy rate and doesn’t permit Rent Guidelines Boards to establish a separate vacancy rate. However, if authorized by the Rent Guidelines Board, the owner may add a one or two-year guideline to all leases. And the owner cannot add more than one guideline adjustment within the same guideline year.

If Rent Cut in Effect

How do you calculate the rent increase for a renewal lease on an apartment where a Division of Housing and Community Renewal (DHCR) order cutting the rent for reduced services was in effect on Sept. 30, 2024? Base the renewal increase under RGBO #56 on what the tenant’s rent was before the DHCR-ordered rent cut. That’s because a rent cut for a reduced service is temporary. When you fix the problem, you can apply to the DHCR to restore the rent. But don’t collect the guidelines increase until after the DHCR restores the rent.

Example: On July 1, 2024, a tenant’s monthly rent is $1,300. In August, the DHCR cuts the monthly rent by $200, to $1,100. The tenant’s lease is up for renewal on Jan. 1, 2025. The tenant decides to sign a two-year lease. To calculate the guideline increase, multiply $1,300 (the rent the tenant was paying before the rent cut order) by 5.25 percent. If you use our Rent Computation Form for Renewal Leases, you would enter $1,300—not $1,100—on line 1 (rent charged for apartment on Sept. 30, 2024). But remember: You may collect the guidelines increase only after you get a rent restoration order.

How to fill out DHCR renewal lease offer form. In New York City, owners must give written notice of renewal by mail or personal delivery not more than 150 days and not less than 90 days before the existing lease expires on a DHCR Renewal Lease Form. You can find the renewal lease form (#RTP-8) at https://hcr.ny.gov/leases#forms.

When a tenant signs the Renewal Lease Form and returns it to the owner, the owner must return the fully signed and dated copy to the tenant within 30 days. A renewal should go into effect on or after the date that it’s signed and returned to the tenant, but no earlier than the expiration date of the current lease. In general, the lease and any rent increase may not begin retroactively.

On the renewal lease offer form, fill out section 2 (which shows your calculation of the rent increase) as if no rent cut is in effect. In section 2, column b, enter the rent that you could have charged on Sept. 30, 2024, if no rent cut had been in effect. Base the rest of your section 2 calculations on the rent you entered in column b. Make sure you check the box at the top of column f, which indicates you’ll be charging the tenant a lower rent than the amount you’ve entered.

Then fill out section 5. Enter the lower rent you’ll be charging the tenant until you get a rent restoration order from the DHCR. Also, check the box that indicates that an agreement is attached to the renewal lease offer form. The agreement is the lease rider discussed in the next paragraph.

Once you get a rent restoration order, you may collect the higher rent listed in section 2, column g, of the renewal lease offer form. To head off tenant confusion and complaints, let the tenant know when and why you’ll be collecting the higher rent. You can add a rider to the renewal lease offer form you send to the tenant. Here’s a sample rider that attorney Karen Schwartz-Sidrane has drafted:

Model Language

A DHCR rent reduction order is currently in effect; therefore, the tenant will be obligated to pay only the reduced rental in effect pursuant to said order until such time as the DHCR issues an order restoring the rent based upon the restoration of services or upon other grounds. Upon the issuance of said order, the tenant will become obligated to pay the increased rental reserved in this lease, effective as of the date specified in the DHCR’s order.

After the renewal offer is made, the tenant has 60 days to choose a lease term, sign the lease, and return it to the owner. If the tenant doesn’t accept the renewal lease offer within this 60-day period, the owner may refuse to renew the lease and may also proceed in court after the expiration of the current lease, to have the tenant evicted.

If Rent Overcharge Order Issued

What if the DHCR has issued an order finding that you’ve collected a rent overcharge, and that order includes a finding that the rent you charged on Sept. 30, 2024, should have been lower? You must base the increase available to you under RGBO #56 on the lower amount that the DHCR found was the legal rent you could charge on Sept. 30, 2024. If you use our Rent Computation Form for Renewal Leases, enter that lower amount on line 1 of the form.