As part of the 2025 Fiscal Year budget, Governor Kathy Hochul signed into law significant legislation affecting the New York City and State rental market, which is highlighted below:

Good Cause Eviction Law

As of April 20, 2024, a landlord must have “Good Cause” to evict a tenant. Unless an exemption applies, the new law applies to all residential apartments in New York City. Localities outside of New York City may opt in. A tenant cannot waive their right to the protections of “Good Cause” and any agreement to do so will be found void as against public policy. Under "Good Cause," unless an exemption applies, landlords are now restricted from removing a tenant from an apartment, unless it has "Good Cause" to do so.

What is "Good Cause"? “Good Cause” is defined under the law as follows:

• Failure to pay rent due and owing, unless the rent is “unreasonable.”
  • Rent increases will be considered reasonable if they are 10% or 5% + CPI (“local rent standard”), whichever is less. There is a rebuttable presumption that increase above is “unreasonable.”
  • Courts may consider all relevant facts to determine if the rent increase is reasonable, including, without limitation, fuel and other utility costs, insurance, maintenance, increases in property tax expenses and significant repairs.
  • Significant repairs include structural repairs, electrical, plumbing or mechanical repairs requiring a permit, abatement of hazardous materials, such as lead paint, asbestos or mold and exclude cosmetic repairs such as painting and decorating;
• Breach of a substantial obligation of tenancy, after 10-day written notice to cure;
• Nuisance conduct;
• Occupancy in violation of law unless the condition is created by landlord;
• Use of the housing accommodation for illegal purposes;
• Failure to provide access for necessary repairs;
• Owner occupancy for primary residence;
• Demolition or withdrawal from rental market; and
• A tenant’s refusal to agree to reasonable changes to a renewal ease, including, without limitation, a reasonable rent increase, provided that the proposed changes were provided no more than 90 and no less than 30 days prior to the expiration of the lease term.

Exemptions

Apartments exempted from the "Good Cause" law, include:

• Buildings for which a temporary or permanent certificate of occupancy was issued on or after January 1, 2009, for a period of thirty years following issuance of such certificate;
• Owner occupied housing accommodations with fewer than 10 units;
• “Small Landlord” who owns no more than 10 units in the State.
  • It is important to note, however, that beneficial interests in entities owning more than 10 units in New York State will defeat the exemption, and the burden is on the owner entity to disclose all natural persons with beneficial interests in order to obtain an exemption;
• Units occupied solely incident to employment and such employment is being or has been lawfully terminated;
• Units which are sublet, where the sublessor seeks to recover the unit for their own use;
• Hospital, continuing care retirement community, assisted living facility, adult care facility, senior residential community and not-for-profit independent retirement communities;
• Units otherwise subject to rent regulation under local, state or federal law, rule, or regulation;
• Units subject to affordability requirements pursuant to statute, regulation, restrictive declaration or regulatory agreement;
• Apartments owned as a condominium or cooperative, or subject to an offering plan submitted to the Attorney General;
• Seasonal use dwelling units;
• Manufactured homes on or in a manufactured home park;
• Hotel rooms or other transient use covered by the definition of a class B multiple dwelling;
• School dormitories;
• Housing accommodations within or for the use of a religious facility or institution; and
• Apartments for which the rent exceeds 245% of the monthly fair market rent published by HUD for the county in which the housing accommodation is located. Current amounts in NYC: Studio: $5,814.00; 1BR: $6,005.00; 2BR: $6,742.00; 3BR: $8,413.00.

Notice Requirements

Notice requirements under the statute do not take effect until 120 days after April 20, 2024 (August 18, 2024). Newly enacted RPL 231-c requires landlords to annex to any lease or renewal lease, a notice disclosing whether or not the "Good Cause" law applies to the lease, and must include the following information:

• Whether the unit is exempt from "Good Cause" and, if so, the basis for the exemption;
• If the unit is subject to "Good Cause," and the landlord intends to increase the rent above the local rent standard, the justification for such increase;
• If the unit is subject to "Good Cause" and the landlord is electing not to renew the lease, the basis for such non-renewal.
• The current notice requirements under RPL 226-c (30/60/90 Day Notice to tenants of Rent Increase or Non-Renewal) and RPAPL 711(2) (statute governing Rent Demands) have been amended, and are now required to include the RPL 231-c disclosures set forth above.
• Additionally, RPAPL 741 (statute providing contents of petitions in summary proceedings) is amended to require that the RPL 231-c disclosures are appended to or incorporated into any petition.
• All of the foregoing provisions sunset on June 15, 2034.

Individual Apartment Improvements

The budget also lifts the Individual Apartment Improvement (IAI) cap, which limits how much landlords can increase rents for rent stabilized apartments to compensate for renovations and creates a two-tier system. The changes become effective on October 17, 2024.

A. Tier 1

The IAI cap is now lifted to $30,000 from the $15,000 cap established by the Housing Preservation and Tenant Protection Act of 2019 (HSTPA), over a 15-year period, allowing for a rent increase up to roughly $178.

Additionally, the 1/168th (for buildings of 35 or fewer units) and 1/180th (for buildings with more than 35 units) amortization rates established by the HSTPA remain the same, but the rent increase is now permanent.

B. Tier 2

The IAI cap is $50,000 for IAIs conducted during a vacancy if:

• The prior tenant was in occupancy for a period of 25 years or longer; or
• If the apartment was timely registered as vacant with DHCR in the 2022, 2023, and 2024 registration cycles.

Under Tier 2, the allowable rent increases are $320 or $347, depending on the building size. The amortization rates for IAIs under Tier 2 are 1/140th (for buildings of 35 or fewer units) and 1/156th (for buildings of more than 35 units). As with Tier 1, the rent increase is now permanent.

Additionally, under Tier 2, IAI costs can only be received if, prior to the work, the landlord obtains certification that the apartment satisfies the eligibility requirements.

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