"Individual Apartment Improvement" rent increases are how landlords hope to "add value" to rental apartments. The unspoken but necessary step: pushing out the low-rent tenants.
An excerpt is below, but it's worth reading the whole blogpost.
EXCERPT:
Let’s take the example of the Individual Apartment Improvement loophole, which allows landlords to take major increases on vacant apartments. The best way to understand how landlords really use this rent increase mechanism is to read what they say when they are selling their buildings. Here are a few quotes from building sale notices in Harlem:
“Tenants are between the ages of 60-91 years old and the two oldest are 84 and 91.”
“Near the truly gentrified section of Harlem.”
“The average rents for the rent stabilized units are low…offering the investor an attractive value-add opportunity.”
These quotes are disturbing, but they shouldn’t be surprising. Unfortunately, this is how speculation works. Landlords will pay increasingly high prices for rent-regulated buildings assuming they can make their money back by aggressively pushing out the low-rent-paying tenants. Here’s how brokers for buildings in the West Village and Chelsea explain it in their own advertising:
“The remaining rent regulated apartments offer potential for significant rental increases when brought to market levels…”
“The rent stabilized component of the property offers long-term potential…through buyouts of existing tenants…”
“An investor has the opportunity to add value by renovating the deregulated units and increasing rents.”
The foundation of this speculative logic is the Individual Apartment Improvement loophole because that’s how the “value add” actually happens after a low-rent paying tenant is pushed out. [Bold face added.]
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