Effect of Rent Cut on New Tenant

Landlord asked the DHCR what the effect was of a rent reduction order when the complaining tenant moved out but the rent hadn't yet been restored. In an opinion letter, the DHCR explained the difference in the law for rent-stabilized and rent-controlled tenants. For rent-stabilized tenants, a rent reduction order freezes the rent until services are restored. If a new tenant moves in while the rent is reduced, landlord can collect only the reduced rent plus the statutory vacancy increase (calculated based on the unreduced rent) plus apartment improvement increases that landlord started collecting before the rent reduction order was issued. For rent-controlled tenants, if rent-controlled tenant moves out while a rent reduction order is in effect, landlord can charge new rent-stabilized tenant a fair market rent, but that rent remains frozen until the services are restored.

DHCR Opin. Ltr. by Charles Goldstein (7/11/00) [4-pg. doc.]