In a previous post we covered the details of rent-controlled apartments. In this follow-up, with a little help from Curbed New York, we cover the second most highly coveted apartments in New York City — rent-stabilized apartments.
The good news about rent-stabilized apartments is that they are way more common than rent-controlled apartments. While less than 1% of New York City apartments are rent-controlled, roughly 50% of them are rent-stabilized. Rent stabilization generally applies to apartments in buildings of six or more units constructed before 1974.
Once you’ve secured a stabilized apartment, your landlord can only increase your rent by a percentage determined by the Rent Guidelines Board, which holds public hearings that culminates in the release of the percentage increase for the following year. (For a look into this year’s proceedings, please see our post “After a Two Year Freeze, NYC Renters to Face Increases.”) While some newer buildings receive tax breaks from the city as a part of affordable housing programs, and therefore specify or verify a prospective tenant’s income level, apartment size, intended occupants, and other needs-based factors, older buildings do not.
The biggest impact on the rent is how often the apartment has turned over in the past, as well as any renovations the landlord has undertaken. Renovations or capital improvements is one of the ways landlords can hike up the rent for both rent-stabilized and rent-controlled apartments. Every time a tenant moves out, the landlord can hike the rent by roughly 20 percent, as well as raise the rent by a fraction of the cost of any upgrades. A landlord can also raise the rent if they’ve done a major building repair.
Aside from recouping the costs laid out to maintain or improve the property, pay property taxes and cover other miscellaneous expenditures, landlords of rent-stabilized apartments keep two figures in mind as they raise rents. One is $2,700 — that’s the amount of rent that a legal regulated unit has to surpass before a landlord can charge market rate (something known as High-Rent Vacancy Deregulation); the second is $200,000 — that’s the amount a tenant’s income would have had to exceed in each of the the previous two calendar years. If any of these should occur, a landlord can deregulate an apartment and bring it to market rate.
So those are the rent-regulation guidelines that every New Yorker should be aware of. As always, the team at Waterman Realty and Tax Pro is here to help you make sense of it all. Contact us today.