Increase Your Rent Stabilized Rents: DHCR Updates MCI Schedule for 2025
DHCR Updates Reasonable Cost Schedule for MCIs (2025): What NYC Owners Need to Know
On Jan. 8, 2025, New York State Homes & Community Renewal (DHCR) issued the fourth update to Operational Bulletin 2021-1, revising the Reasonable Cost Schedule for Major Capital Improvements (MCIs). The schedule sets maximum recoverable costs for MCI items and certain related expenses. It applies to eligible improvements that commence on or after Jan. 1, 2025 (with special treatment for first-time listed items).
Below is a concise owner’s guide—what changed, what still governs eligibility, how waivers work, and how to use the Useful Life Schedule to plan capital projects and MCI filings.
What Is an MCI?
An MCI is a building-wide improvement that preserves, modernizes, or enhances building systems (for example, boilers, windows, rewiring, plumbing, roofs). To qualify for a temporary MCI rent increase, the work must be:
- Depreciable under the Internal Revenue Code (not ordinary repair),
- Essential to preservation, energy efficiency, functionality, or infrastructure,
- Beneficial directly or indirectly to all tenants, and
- Consistent with the Useful Life Schedule (or have an approved waiver).
DHCR Fact Sheet #24: Major Capital Improvements
What Changed in 2025: Update #4 Highlights
Update #4 to Operational Bulletin 2021-1 expands and adjusts costs across categories (chimney, doors, façade, heating systems, roofs, windows, and more). It also adds new line items and clarifies related expenses deemed recoverable when necessary to complete an eligible MCI.
Download the 2025 DHCR Reasonable Cost Schedule (Update #4)
Sample Cost Highlights (Selected Items)
These examples are not exhaustive. Always consult the current DHCR schedule for exact eligibility and pricing.
| Category | Item | 2025 Max Cost | Unit |
|---|---|---|---|
| Chimney | Counter Flashing at Chimney | $31 | Per linear foot |
| Chimney | Chimney Cap | $1,647 | Per cap |
| Façade/Exterior | Balcony Drains | $547 | Per drain |
| Façade/Exterior | EIFS (Exterior Insulation Finishing System) | $29 | Per sq ft |
| Façade/Exterior | Beam Reinforcement — Steel | $131 | Per linear foot |
| Parapet | Parapet Coping & Flashing | $39 | Per linear foot |
| Heating System | Pipe Insulation | $23 | Per linear foot |
| Doors | Apartment Entry — Full Frame Steel Door | $4,409 | Per door |
| Windows | Metal Window Sill Capping | $12 | Per linear foot |
Tip: Some “related” line items (e.g., scaffolding, site safety, certain sealants/caulking) may be recoverable only when necessary to complete the eligible MCI scope—see the bulletin notes.
Eligibility & Limits Under HSTPA (Still in Force)
- 2% annual cap on collectible MCI increases.
- MCI increases are temporary and must be removed after 30 years.
- Buildings with 35% or fewer rent-regulated units are not eligible for MCI increases.
- Applications may be denied if there are hazardous or immediately hazardous violations on file.
- Amortization period: 12 years (≤35 units) and 12.5 years (>35 units).
See DHCR Fact Sheet #24 (MCI rules, caps, amortization, violations)
Useful Life Schedule: Planning Your Project
To qualify, the replaced system must meet the Useful Life Schedule. If the item hasn’t reached its listed life, you’ll generally need a waiver (see below) unless extraordinary conditions apply.
DHCR Fact Sheet #33: Useful Life Schedule for MCIs (Full List)
Examples (Excerpt from DHCR Useful Life):
- Cast Iron Boiler: 35 years; Steel or Package Boiler: 25 years
- Windows (Aluminum): 20 years; (Wood/Steel): 25 years
- Roofs (3–4 Ply Asphalt): 15 years; (5 Ply): 20 years
- Rewiring: 25 years • Parapet (Brick): 25 years
For items not listed, you must document the prior item’s useful life and condition.
Applying for a Waiver (Cost or Useful Life)
If your scope exceeds the Reasonable Cost Schedule or the item hasn’t reached its useful life, you may apply for a waiver with your MCI application. Your submission should show that:
- The work isn’t on the schedule or is necessarily and appropriately priced higher than listed, and costs are accurate and reasonable; or
- Applying the schedule would cause an undue hardship and an alternative is in the interest of owners, tenants, and the public.
Important: If a waiver is denied, recoupment is limited to the lower of actual verified costs or the scheduled maximums, plus any relief allowed by DHCR. Include full documentation (scope, bids, invoices, approvals, proof of payment) with Forms RA-79 and RA-79i.
Operational Bulletin 2021-1, Update #4 (2025) ·
Fact Sheet #24 ·
Fact Sheet #33
Filing Steps (Owner Checklist)
- Pre-scope: Confirm eligibility, violations cleared, and useful life status; obtain necessary DOB/agency approvals.
- Budgeting: Price against the Reasonable Cost Schedule; plan documentation if costs exceed listed maximums.
- Execute work: Use licensed contractors; maintain detailed contracts, change orders, permits, and paid invoices.
- Apply: File RA-79 with supporting documents; serve tenant summary; track DHCR correspondence.
- Post-order: Implement granted increase within the 2% annual cap; calendar the 30-year removal.
Frequently Asked Questions
Per Update #4, costs apply to eligible work that commences on/after Jan. 1, 2025 (with special handling for items newly appearing on the schedule).
No. Some are related necessary expenses. Only items that are MCI-eligible or necessary related costs are recoverable.
You can request a waiver with your application. If denied, recovery is limited to the lower of actual verified costs or scheduled amounts.
2% annual cap on collectibility, temporary increases removable after 30 years, and amortization over 12/12.5 years depending on unit count. Buildings with ≤35% regulated units or with hazardous violations aren’t eligible until cured.
See Fact Sheet #33. If replacing before end of life, request a waiver with documentation (emergency, failure, DOB orders, etc.).
Official source documents: DHCR Operational Bulletin 2021-1, Update #4 (2025) · DHCR Fact Sheet #24 (04/2025) · DHCR Fact Sheet #33 (Useful Life)
