ANHD 2016 Building the Community Development Movement
There is a major loophole in the system called the “1/40th program”. This loophole allows a landlord to raise the rent on an unoccupied apartment by passing the cost of physical improvements to the next tenant by raising the monthly rent an amount equal to 1/40th of the total cost of the improvements.
There is no oversight of any kind of the 1/40th program. Landlords are allowed to unilaterally impose 1/40th rent increases without prior approval, or even documentation. As a consequence of this lack of oversight, fraudulent abuse of the 1/40th program is increasingly common. This includes, for example, claiming a rent increase based on $40,000 when only $10,000 was actually spent on improvements.
The lack of oversight of the 1/40th program has led to widespread fraud, and a significant loss of affordable housing.
