DHCR issued new rules in regards to the Individual Apartment Improvements (IAIs) under Part FF of Chapter 56 of the laws of 2024, signed into law on April 20, 2024, effective October 17, 2024.

Key Changes and Updates:

1. Increased Cap and Permanent Rent Increase:

• The cap for IAI-eligible work has been raised to $30,000 over a 15-year period for all owners, up from the previous limit of $15,000 set by the Housing Stability and Tenant Protection Act of 2019 (HSTPA). Importantly, the rent increase resulting from IAIs is now permanent.

2. Calculation of Rent Increases:

• For buildings containing 35 or fewer apartments, the permitted rent increase is calculated at 1/168th of the total improvement cost.
• For buildings with more than 35 apartments, the permitted increase is calculated at 1/180th of the total cost of improvements.

3. New Method for Vacant Apartments:

• A new IAI cap of $50,000 applies specifically to vacant apartments. Eligibility requires timely registration as vacant with DHCR in specified registration cycles or occupancy by a tenant for 25 years or longer prior to vacancy. Certification from DHCR is required for eligibility under this method.
• Amortization rates for rent increases under this method are set at 1/144th for buildings with 35 or fewer units and 1/156th for buildings with more than 35 units. Similar to the first method, the rent increase is permanent.

4. New Procedures for Second Method:

• Pre-IAI Submission: Owners must submit evidence to DHCR demonstrating that the improvements are necessary due to substandard conditions or exceeded useful life of items. This includes photos of areas to be improved and necessary permits.
• Owner Affirmation: Owners filing applications must affirm that they have no findings of Harassment or willful Rent Overcharge from DHCR or a court of competent jurisdiction within the previous five years in any rent-regulated buildings they own.
• Post-IAI Submission: After completing IAIs, owners must pay a fee equivalent to one percent of claimed IAI costs. They must also submit evidence of completion, including photos of finished work, itemized receipts, and proof of payment to DHCR.