As soon as your landlord registers your building, your rent is frozen, unless you had an active lease in June 2010 with rent increases built in, in which case you are required to pay those. As soon as you get a docket number from the Loft Board, NYCLT recommends you do not take any other increases until milestones are reached.
From then on, your landlord is only allowed to raise your rent:
- by any increases in the existing lease of June 21, 2010,
- by fixed percentages when they reach certain milestones during the legalization process,
- by temporary pass-along costs,
- and finally through rent stabilization after becoming a legal residential unit.
You can check your building’s legalization status through the DOB Building Information Search (BIS)
Some landlords may never pass any legalization milestones, and cannot collect any increases beyond those in an existing lease. Landlords who do legalize enter a very complicated and slow process, so these increases may be spread out over many years. They are often referred to the as “the 6/8/6” – but they’re now 3/3/4!!!
6/8/6 or 3/3/4?
6/8/6 if before June 1, 2012, 3/3/4 if after
6%/3%: The Loft Law allows an owner to increase an IMD tenant’s rent by this amount upon the owner’s filing of a building alteration application. This is a very easy bar to pass. The application need not be complete and can be amended.
8%/3%: The proposed changes in the application then go through the narrative statement process, where tenants get to propose alternate plans which get reconciled by the Loft Board. Once this is settled and the owner obtains an alteration permit from the DOB, the owner is entitled to this increase.
6%/4%: The owner does the work, and upon the owner’s achievement of Article 7-B compliance, the final milestone increase.
Once the owner gets a C of O and leaves Loft Board jurisdiction, the covered units are a legal residential space and subject to rent stabilization increases. (Unless the landlord bought the rights or won an abandonment claim on a unit.)
At this point, the owner may apply for pass-along costs, rent adjustments based on the costs incurred for legalizing the building. That means that a portion of the costs will be added to your rent, spread out over 10 years (or 15 years if your landlord gets financing).
NOTE: the “built-in increases” mentioned above don’t include “options to renew”. It’s usually only if you had an active multi-year lease in June 2010 that you have to pay any lease increases. If the lease just said you had an option to sign a new one at some increase, that doesn’t count as a built-in increase.
NOTE: Under the original Loft Law, there was an initial rent increase on units whose rent had not gone up recently. The Loft Board set these Interim Rent Guidelines increases at 0%. Read about it.