There has been much confusion about how building owners should treat permissible rent increases on lease renewals when accepting rent monies through the Emergency Rent Assistance
Program (ERAP), and how to register those rents properly with DHCR.
As most owners are aware by now, upon receipt of ERAP funds, owners must follow ERAP guidelines and agree to not increase the monthly rent above the level being charged at the time of the application, for twelve months following the receipt of ERAP funds. However, lawful rent increases are permitted to be preserved. And, when the ERAP rent freeze period is over, the higher legal rent that was preserved in the lease can then be collected.
DHCR advises owners to send a letter or prepare a lease rider to their tenants, clarifying that the lower rent is being charged pursuant to the rules of ERAP and that the higher legal rent cannot be collected during the period of the ERAP rent freeze (i.e., the 12-month period that starts to run from the date that the owner received the first rent payment from ERAP for that tenant).
Finally, with respect to the rent registration requirements, the legal rent provided in the lease or lease renewal should be registered. However, the frozen rent that is actually being collected due to ERAP should be set forth in the registration space termed “Actual Rent Payment by Tenant”; on the form, next to the field that indicates the reason why the lower rent is being accepted, the owner should write “ERAP”.
This information was recently clarified by DHCR on the Office of Rent Administration website under the “Recent News” heading.