Landlord May Be Able to Charge First Rent for Decreasing Apartment Size

Landlord asked the DHCR if it could create a new apartment by decreasing the size of an existing rent-stabilized apartment. In an opinion letter, the DHCR stated that landlord could collect a first rent by significantly altering the outer dimensions of a vacant apartment. Does a smaller-size apartment constitute a significant alteration because one room was removed? That would depend on the size of the room that was removed, the costs of removal, and the permanence of the alteration. Landlord would be entitled to a first rent if the room removed was large, if landlord incurred significant costs in removing the room, and if the alteration was permanent. Otherwise, landlord could recoup the costs of the room removal and any improvements by adding a 1/40th increase to the rent. And if the resulting new rent was $2,000 or more on the applicable high-rent deregulation date, the apartment would be exempt from stabilization.

DHCR Opin. Ltr. by Nathaniel Geller (7/28/94) [2-page document]