Rent Control was originally established in 1947 as a "temporary" measure, to protect returning World War II servicemen and their families. The politicians have repeatedly renewed it, stating in recent years that it is necessary to protect elderly tenants. Over the years, the Rent Control system has been widely abused by tenants who pass apartments on to relatives and sublet for profit. However, the Rent Regulation Reform Act of 1997 has finally set limitations on succession rights.
For an apartment to be Rent Controlled, the tenant must have been living there continuously since before July 1, 1971. To increase the rent, every two years (in the even year) a Landlord must file a Violation Certification stating that there are all "Rent Impairing" violations and 80% of all other violations in the building have been removed or will be removed. Next, the Landlord must file an Operation Maintenance and Essential Services (OMES) Certification, in which the he/she must state the building's income and expenses. If the building's profit exceeds a certain amount, (as calculated by a complicated formula based on nothing in particular) the Landlord will not be eligible for any increase. However, if the forms are properly filled out most buildings do qualify for increases. Finally, about two months after the Landlord has filed the OMES, he/she will receive a request for payment of a fee of $30 per Rent controlled apartment (up from $20 in 1998).
The reason Rent Controlled rents are generally lower is because many Landlords do not file for increases because it may not be cost effective. Other Landlords do not file because the forms are complicated and the return is usually nominal, even though the increase is 7.5% per year (up to the Maximum Base Rent), which is greater than the Rent Stabilized increases (currently 2% for 1 year and 4% for 2 years). This is unfortunate, since Rent Controlled tenants who have not received increases in years sometimes tend to act like they own the building, especially since there are restrictions on the right of Landlords to evict them. Landlords need to file all of the required forms and increase these rents as much as they can, whenever they can, in order to let the tenants know who owns the building. Click here for Rent Control Histories
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