Apartments subject to Rent Stabilization because Landlord Receives J-51 or 421-a tax abatement
When a landlord receives a J-51 or 421-a tax benefit, the building and its apartments are generally subject to rent stabilization for the duration of the benefit period. The length of coverage depends on the program: J-51 benefits often run for approximately twelve (12) years, while 421-a benefits vary, sometimes extending twenty (20) or more years depending on the project. Apartments that are regulated because of these tax benefits remain stabilized until the benefit period ends, provided the landlord has given proper written notice in the initial lease and all renewal leases. If the landlord fails to provide the required notice—even once—then the apartment remains subject to rent stabilization for the entire tenancy, even after the abatement expires.
In buildings receiving these tax benefits, the legal regulated rent for a new apartment is set by the first lease entered into under rent stabilization, and that rent becomes the basis for lawful increases. Where a tenant is charged a preferential rent below the legal regulated rent, that lower rent must serve as the base for all future lease renewals during the tenancy. Tenants are also entitled to choose between a one- or two-year lease term; a landlord may not restrict the initial lease to fourteen (14) months or otherwise deny the tenant’s choice.
Issues of Rent Stabilization coverage in tax-benefited buildings remain highly technical and fact-specific, and they can have lasting consequences for both tenants and landlords. We strongly recommend consulting an attorney before proceeding. We offer complimentary, no-obligation consultations and you are welcome to schedule your consultation by calling us at 212-921-1600.
