There are several ways landlords can get rent increases under the present rent control law.
One way is to take the 2 to 10 percent automatic increases, which are based on the utility costs the tenant pays.
If a tenant pays no fuel or utility costs, his rent may be raised 2 percent; if the rent covers the cost of heat and hot water, he can receive a 7 percent increase; he can receive an 8 percent increase if the rent covers the cost of heat, hot water and general purpose electricity and other cooking fuel, but does not cover air conditioning; or a 10 percent increase if the rent covers these items plus air conditioning.
Another way a landlord may get permission to raise rents is if he is experiencing a negative cash flow or if his rate of return is less than 8 percent. He may then petition for a rent increase, the amount of which is determined by a complex formula.
A staff member of the Rental Accommodations Office, who asked to remain anonymous, said one landlord recently filed a hardship petition seeking a 49 percent rent increase because of a negative cash flow. Although the landlord was receiving an 8 percent rate of return, he had financed his building over such a short period that the rental income was not sufficient to meet his high payments, the official said.
A new provision in the law allows a rent increase of any amount provided that 70 percent of the tenants agree to the increase. A signed agreement must be filed with the Rental Accommodations Office before it can be implemented, however.
Landlords may also petition for increases if they make capital improvements or substantially rehabilitate the property.