What is a rent-controlled apartment?
Rent control in New York City started in 1920 — just after World War I when a severe housing shortage led to high rents and rent strikes. To help remedy the problem, the New York State legislature “…passed a rent-control program designed to keep costs down and limit baseless evictions.”
Since 1920, many other laws and acts were passed to both regulate rents and decontrol units. Rent control is now defunct and the only people living in rent-controlled apartments are able to do so if it is inherited from a family member.
Essentially a form of nepotism, rent-controlled apartments can be passed down within a family from one person to the next whenever the existing tenant of the apartment vacates or dies. It’s worth noting that the inheriting family member must live in the apartment for two years prior to the previous tenant’s vacancy or death.
According to the New York City Rent Guidelines Board, rent-controlled apartments currently number about 27,000 units and are occupied largely by an elderly, low income population who have been in occupancy since July 1, 1971 or by their lawful successors.
What is a rent-stabilized apartment?
Rent-stabilized apartments occupy buildings that were constructed before 1974 and have more than six units; they usually lease for less than $2,700/month. The perks of rent-stabilized apartments include limits on how much your landlord can increase your rent each year and a guaranteed right to renew your lease. It’s important to note that a listing will not necessarily advertise that it’s rent-stabilized unit. However, it’s often possible to tell if it is based on the listing price and age of the building.
If you score a rent-stabilized apartment, make sure the lease indicates as much. You should have the option to sign a one- or two-year lease and usually you’ll also receive a rider to the lease from the landlord as well. The rider is essentially an amendment to the lease stating a financial concession to the rent. For example, if a rent-stabilized apartment is listed at $1,850/month, the lease would contain a rider for $850 to cover the discrepancy between the ostensible market value and the rent which the tenant will actually pay on a monthly basis. You are not responsible for covering the rider but the total monthly rent (rider + base rent) will be used to calculate 4 percent increase your landlord can issue the following year if he does minor renovations to the building or unit.
How do you find a rent-regulated apartment?
Although there are more than one million rent-regulated apartments in New York City, landing one can be tough because once a tenant moves into a rent-regulated place they are unlikely to want to leave anytime soon. (Note: Just because one unit in the building is rent-regulated does not mean that all units in the building are. A unit can become deregulated if the monthly rent rises above $2,700/month.)
Despite the mysteriously chaotic nature of New York real estate, it’s actually no secret where these rent-regulated buildings exist. Many are concentrated in places like the Upper East Side and Chelsea as well as neighborhoods in the Bronx and Brooklyn.
For the serious real estate hunters in search of a bargain, the Rent Guidelines Board has a comprehensive list of every single building in all five boroughs that are rent-stabilized.
Note that the inventory of actual rent-regulated units fluctuates due to changing tax exemptions and other criteria. For example, newly constructed buildings can have rent-stabilized units available if the building’s owner opts for tax exemptions in exchange for offering “discounted” rentals.