Major Capital Improvement and Individual Apartment Improvement increases for rent-stabilized NYC units are tightly capped by HSTPA 2019. MCI hikes are limited to 2 percent per year and expire after thirty years. IAI increases are capped at $89.29 per month, lifetime.
Under HSTPA 2019, Major Capital Improvement (MCI) rent increases under 9 NYCRR §2522.4(a)(2) are capped at 2 percent of the prior rent per year, must be amortized over 12 to 13 years for buildings of 35 or fewer units, and sunset after 30 years. The improvement must be building-wide, depreciable under IRS rules, and approved by DHCR. Individual Apartment Improvement (IAI) increases under §2522.4(a)(1) are capped at the cost of three IAIs over 15 years, with a lifetime monthly cap of approximately $89.29 (lower in smaller buildings). DHCR audits are mandatory at random; pre-1990 IAIs cannot be used. Buildings with 35 percent regulated units are subject to additional scrutiny. Pass-through utility charges require DHCR rule approval, not landlord discretion.
Charging MCI or IAI hikes without DHCR approval, exceeding the 2 percent or $89 caps, or failing to remove sunset MCIs creates rent overcharges. Treble damages apply when willful, recoverable for up to six years.
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