Compliance guide

MCI and IAI rent increases

Two mechanisms let an owner raise the rent on a regulated apartment beyond the annual guideline: a Major Capital Improvement (MCI) for building-wide work, and an Individual Apartment Improvement (IAI) for work inside a specific unit. Both were sharply limited by HSTPA in 2019. Getting the caps and the lookback right is what separates a lawful uplift from an overcharge.

What MCI and IAI increases are

Rent stabilization caps the annual renewal increase, but it also lets an owner recover certain capital costs through a rent increase that sits on top of the guideline:

IAI (Individual Apartment Improvement) — improvements made inside a single apartment, such as a new kitchen or bathroom. The cost translates into a per-unit monthly increase.
MCI (Major Capital Improvement) — building-wide capital work that benefits all tenants, such as a new boiler, roof, or windows. The cost is spread across the building and recovered as a per-unit increase.

Both are governed by NYS DHCR (Fact Sheet #12 covers IAI; Fact Sheet #24 covers MCI), and both were significantly tightened by the 2019 Housing Stability and Tenant Protection Act (HSTPA). The high-level rule: these are cost-recovery mechanisms with hard ceilings and documentation requirements, not open-ended ways to reach market rent.

IAI — individual apartment improvements

An IAI lets an owner raise a regulated rent to recover the cost of qualifying improvements made inside a unit. HSTPA capped the total spend that can be counted and put it on a rolling clock.

The lifetime cap and the 15-year lookback

There is a lifetime IAI ceiling per apartment, measured on a rolling 15-year window. Improvement costs older than 15 years drop out of the running total. The ceiling amount changed:

IAI cost ceilings. The system enforces the $15,000 figure today; the post-2024 increases are described below. Verify the current ceiling and tier rules with DHCR before relying on a figure.
Period	IAI cost ceiling	Lookback
Post-HSTPA, through Oct 16, 2024	$15,000 per unit	Rolling 15 years
On/after Oct 17, 2024 — Tier 1	$30,000 per unit	Rolling 15 years
On/after Oct 17, 2024 — Tier 2*	$50,000 per unit	Rolling 15 years

*Tier 2 applies in specific qualifying circumstances (for example a long-vacant or long-tenancy unit) under the 2024 amendments. The exact conditions and the divisor used to convert cost into the monthly increase are detailed by DHCR — confirm them for your situation.

The monthly increase is derived from cost — not chosen.

An IAI doesn’t add an arbitrary amount to the rent. The qualifying cost is divided by a fixed amortization factor (which depends on building size and the applicable tier) to produce the permitted monthly increase. The total counted cost can’t push the unit’s 15-year IAI spend over the ceiling.

How long an IAI increase lasts

For improvements with an effective date in the window from June 14, 2019 through October 16, 2024, HSTPA made the IAI increase temporary — it is removed after 30 years. For IAI work on or after October 17, 2024, the 2024 amendments treat the increase as permanent. Pre-HSTPA increases generally remain in place.

Urbero enforces the IAI ceiling at the moment an adjustment is recorded: it sums the prior IAI cost in the rolling 15-year window, rejects a new improvement that would push the unit over the cap, and stamps the expiry so the gate stops applying a temporary increase after its 30-year life. The rent gate then folds active adjustments into the maximum allowed rent.

CalculatorIAI / MCI increase calculatorEstimate the permitted monthly increase from an improvement cost, and check it against the rolling IAI ceiling.

MCI — major capital improvements

An MCI recovers the cost of building-wide capital work — a new boiler, roof, elevator, windows, or similar — by spreading it across the building’s units as a monthly increase. HSTPA tightened MCIs as much as it did IAIs:

Collectibility cap — the annual MCI increase a tenant can be charged is capped at 2% per year (down from 6% before HSTPA).
Longer amortization — the cost is spread over a longer schedule (roughly 12–12.5 years), which lowers the per-unit monthly increase.
30-year removal — the MCI increase is removed after 30 years rather than becoming a permanent part of the rent.
Building eligibility — MCIs are barred in buildings where 35% or fewer of the units are rent-regulated.
Documentation — an MCI requires a DHCR order; an owner can’t self-apply it. DHCR reviews the work and the cost before approving the increase.

MCI is a DHCR-approved process, not a self-service uplift.

Unlike a renewal increase, an MCI doesn’t take effect because the owner says so. It requires an application to and an order from DHCR. Treat any claimed MCI increase without a DHCR order reference as unverified.

What HSTPA changed — and a caution about rent-controlled units

The 2019 HSTPA is the throughline for both mechanisms. It introduced the IAI lifetime ceiling and 15-year lookback, the temporary (30-year) life for post-2019 IAI increases, the 2% MCI collectibility cap, the longer MCI amortization, and the regulated-share eligibility bar. The 2024 amendments then raised the IAI ceiling and added the tier structure described above.

Don't confuse the rent-controlled MCR factor with a 7.5% cap.

Rent-controlled units (a separate, much smaller program) use DHCR’s Maximum Collectible Rent (MCR) process. Post-HSTPA, the MCR annual increase is the lesser of 7.5% or the average of the five most recent RGB one-year renewal rates — which in recent cycles has been roughly 2.55%, far below 7.5%. The 11.5% Maximum Base Rent “Standard Adjustment Factor” is part of the MBR calculation and is not the cap a tenant actually pays. Apply the lesser-of rule, not the headline factor.

These figures move. The IAI ceiling, the MCI amortization schedule, and the rent-controlled MCR factor are all set by statute or by DHCR and change over time. Anchor on the rules — the lifetime ceiling and lookback for IAI, the 2% collectibility cap and DHCR order requirement for MCI, the lesser-of test for MCR — and verify the current numbers against DHCR before you rely on them.

Common scenarios

You renovate a vacant stabilized kitchen

The qualifying cost counts toward the unit’s rolling 15-year IAI total. If the unit’s prior 15-year IAI spend plus this job would exceed the ceiling, only the remaining headroom counts. The monthly increase is the qualifying cost divided by the applicable amortization factor — keep the receipts.

The building gets a new boiler

That’s a candidate MCI, but you can’t simply add it to the rent. File with DHCR; if approved, the per-unit increase is subject to the 2% annual collectibility cap and is removed after 30 years.

A prior owner claims a large IAI uplift

Verify it against the DHCR registration and the 15-year window before relying on the legal rent. An IAI that wasn’t properly documented or that breached the ceiling can be the root of an overcharge the new owner inherits.

Frequently asked questions

What is the IAI cost ceiling?: Post-HSTPA it was $15,000 per unit on a rolling 15-year window. The 2024 amendments raised it — $30,000 for the standard tier and up to $50,000 in specific qualifying circumstances. Confirm the current ceiling and tier rules with DHCR.
Are MCI and IAI increases permanent?: For IAI work effective June 14, 2019 through October 16, 2024, the increase is removed after 30 years; IAI on or after October 17, 2024 is treated as permanent under the 2024 amendments. MCI increases are removed after 30 years. Pre-HSTPA increases generally remain.
Can a landlord apply an MCI increase without DHCR?: No. An MCI requires an application to and an order from DHCR. A claimed MCI with no DHCR order reference should be treated as unverified.
Is the rent-controlled cap 7.5% or 11.5%?: Neither as a flat number. Post-HSTPA the MCR annual increase is the lesser of 7.5% or the average of the five most recent RGB one-year renewal rates — recently around 2.55%. The 11.5% Maximum Base Rent Standard Adjustment Factor is an input to the MBR calculation, not the increase a tenant pays.