Sec. 6. REGULATION OF RENTS.
a. Notwithstanding the provisions of any lease or other rental
agreement, no owner shall, on or after the first day of the
first month or other rental period following a declaration
of emergency pursuant to section three, which date shall be
referred to in this act as the local effective date, charge
or collect any rent in excess of the initial legal regulated
rent or adjusted initial legal regulated rent until such
time as a different legal regulated rent shall be authorized
pursuant to guidelines adopted by a rent guidelines board
pursuant to section four.
b. The initial legal regulated rents for housing accommodations
in a city having a population of less than one million or a
town or village as to which a declaration of emergency has
been made pursuant to this act shall be:
(1) For housing accommodations subject to the emergency
housing rent control law which become vacant on or
after the local effective date of this act, the rent
agreed to by the landlord and the tenant and reserved
in a lease or provided for in a rental agreement;
provided that such initial legal regulated rent may be
adjusted on application of the owner or tenant pursuant
to subdivision a of section nine of this act; and
provided further that no increase of such initial
regulated rent pursuant to annual guidelines adopted by
the rent guidelines board shall become effective until
the expiration of the first lease or rental agreement
taking effect after the local effective date, but in no
event before one year from the commencement of such
rental agreement.
(2) For all other housing accommodations, the rent reserved
in the last effective lease or other rental agreement;
provided that an initial rent based upon the rent
reserved in a lease or other rental agreement which
became effective on or after January first, nineteen
hundred seventy-four may be adjusted on application of
the tenant pursuant to subdivision of section nine of
this act or on application of either the owner or
tenant pursuant to subdivision a of such section; and
further provided that if a lease is entered into for
such housing accommodations after the local effective
date, but before the effective date of the first
guidelines applicable to such accommodations, the lease
may provide for an adjustment of rent pursuant to such
guidelines, to be effective on the first day of the
month next succeeding the effective date of such
guidelines.
c. The initial legal regulated rents for housing accommodations
in a city having a population of one million or more shall
be the initial rent established pursuant to the New York
city rent stabilization law of nineteen hundred sixty-nine
as amended.
d. Provision shall be made pursuant to regulations under this
act for individual adjustment of rents where:
(1) there has been a substantial modification or increase
of dwelling space or an increase in the services, or
installation of new equipment or improvements or new
furniture or furnishings, provided in or to a tenant's
housing accommodation, on written tenant consent to the
rent increase. In the case of a vacant housing
accommodation, tenant consent shall not be required.
The permanent increase in the legal regulated rent for
the affected housing accommodation shall be one-
fortieth of the total cost incurred by the landlord in
providing such modification or increase in dwelling
space, services, furniture, furnishings or equipment,
including the cost of installation, but excluding
finance charges. Provided further than an owner who is
entitled to a rent increase pursuant to this paragraph
shall not be entitled to a further rent increase based
upon the installation of similar equipment, or new
furniture or furnishings within the useful life of such
new equipment, or new furniture or furnishings.
(2) there has been since January first, nineteen hundred
seventy-four an increase in the rental value of the
housing accommodations as a result of a substantial
rehabilitation of the building or the housing
accommodation therein which materially adds to the
value of the property or appreciably prolongs its life,
excluding ordinary repairs, maintenance, and
replacements, or
(3) there has been since January first, nineteen hundred
seventy-four a major capital improvement required for
the operation, preservation or maintenance of the
structure. An adjustment under this paragraph shall be
in an amount sufficient to amortize the cost of the
improvements pursuant to this paragraph over a seven-
year period, or
(4) an owner by application to the state division of
housing and community renewal for increases in the
rents in excess of the rent adjustment authorized by
the rent guidelines board under this act establishes a
hardship, and the state division finds that the rate of
rent adjustment is not sufficient to enable the owner
to maintain approximately the same ratio between
operating expenses, including taxes and labor costs but
excluding debt service, financing costs, and management
fees, and gross rents which prevailed on the average
over the immediate preceding five year period, or for
the entire life of the building if less than five
years, or
(5) as an alternative to the hardship application provided
under paragraph four of this subdivision, owners of
buildings acquired by the same owner or a related
entity owned by the same principals three years prior
to the date of application may apply to the division
for increases in excess of the level of applicable
guideline increases established under this law based on
a finding by the commissioner that such guideline
increases are not sufficient to enable the owner to
maintain an annual gross rent income for such building
which exceeds the annual operating expenses of such
building by a sum equal to at least five percent of
such gross rent. For the purposes of this paragraph,
operating expenses shall consist of the actual,
reasonable, costs of fuel, labor, utilities, taxes,
other than income or corporate franchise taxes, fees,
permits, necessary contracted services and non-capital
repairs, insurance, parts and supplies, management fees
and other administrative costs and mortgage interest.
For the purposes of this paragraph, mortgage interest
shall be deemed to mean interest on a bona fide
mortgage including an allocable portion of charges
related thereto. Criteria to be considered in
determining a bona fide mortgage other than an
institutional mortgage shall include; condition of the
property, location of the property, the existing
mortgage market at the time the mortgage is placed, the
term of the mortgage, the amortization rate, the
principal amount of the mortgage, security and other
terms and conditions of the mortgage. The commissioner
shall set a rental value for any unit occupied by the
owner or a person related to the owner or unoccupied at
the owner's choice for more than one month at the last
regulated rent plus the minimum number of guidelines
increases or, if no such regulated rent existed or is
known, the commissioner shall impute a rent consistent
with other rents in the building. The amount of
hardship increase shall be such as may be required to
maintain the annual gross rent income as provided by
this paragraph. The division shall not grant a hardship
application under this paragraph or paragraph four of
this subdivision for a period of three years subsequent
to granting a hardship application under the provisions
of this paragraph. The collection of any increase in
the rent for any housing accommodation pursuant to this
paragraph shall not exceed six percent in any year from
the effective date of the order granting the increase
over the rent set forth in the schedule of gross rents,
with collectability of any dollar excess above said sum
to be spread forward in similar increments and added to
the rent as established or set in future years. No
application shall be approved unless the owner's equity
in such building exceeds five percent of: (i) the arms
length purchase price of the property; (ii) the cost of
any capital improvements for which the owner has not
collected a surcharge; (iii) any repayment of principal
of any mortgage or loan used to finance the purchase of
the property or any capital improvements for which the
owner has not collected a surcharge; and (iv) any
increase in the equalized assessed value of the
property which occurred subsequent to the first
valuation of the property after purchase by the owner.
For the purposes of this paragraph, owner's equity
shall mean the sum of (i) the purchase price of the
property less the principal of any mortgage or loan
used to finance the purchase of the property, (ii) the
cost of any capital improvement for which the owner has
not collected a surcharge less the principal of any
mortgage or loan used to finance said improvement,
(iii) any repayment of the principal of any mortgage or
loan used to finance the purchase of the property or
any capital improvement for which the owner has not
collected a surcharge, and (iv) any increase in the
equalized assessed value of the property which occurred
subsequent to the first valuation of the property after
purchase by the owner.
This subdivision shall apply to accommodations outside
a city of one million or more.
e. Notwithstanding any contrary provisions of this act, on and
after July first, nineteen hundred eighty-four the legal
regulated rent shall be the rent registered pursuant to
section twelve-a of this act subject to any modification
imposed pursuant to this act.