How do some renters end up with incredible apartments full of historic New York City charm and pay next to nothing? It’s all about landing a rent stabilized apartment. Here’s what you need to know about this important, and more common than you think, NYC apartment type.
The Difference between Rent Stabilization and Rent Control
New York has two forms of rent regulation: rent control and rent stabilization. Both are mandated by the New York State government with the intention of preventing average city-dwellers from getting priced out of the rental market. It goes without saying that price controls are always controversial and a source of heated debate.
Rent Control Explained
Less than 2 percent of NYC apartments are rent-controlled. To be designated as a rent controlled unit, the apartment must be located in a building built before 1947 and have been occupied by the same family since 1971 (when Nixon was president!). These apartments can only be passed down within a family — but only to a family member living in the unit for two years before the existing tenant leaves or passes away. It’s NYC’s own perverse form of nepotism. Unless you’re in one of these blessed families, wipe the term “Rent Control” from your brain.
Rent Stabilization Explained
There are no set requirements for an apartment to qualify as rent stabilized, but most are in 6+ unit buildings built before 1974 and were priced below $2,000 before 2011 or below $2,500 today. Once an apartment is stabilized by the government, the landlord can only increase the rent by a small percent .
Once rent reaches $2,500, or if the tenant’s income exceeds $200,000 for two consecutive years, however, the landlord can deregulate the apartment and bring it up to market-rates. Part of this law dictates that even if the tenant is a complete nightmare, the landlord is forced to renew their lease annually. For that reason, landlords are extremely picky when they “marry themselves” to a rent stabilized tenant.
Rent Stabilized Apartments are More Common Than You Think
Rent stabilized apartments are very common (about 50 percent of all apartments) but nearly impossible to find because once you land a rent-stabilized apartment, you don’t leave it. With rent-stabilized apartments priced $1,200 cheaper than the average rent in Manhattan, it’s understandable why renters don’t leave them. Not only are they saving $14,400 in after-tax cash each year; but to qualify for the equivalent market-rate apartment, you’d need $48,000 more in annual income.
How to Find a Rent-Stabilized Apartment
By their nature, rent-stabilized apartments are an incredible deal. When a rent-stabilized apartment becomes available landlords will have no trouble finding a tenant. As a result, landlords of rent-stabilized apartments don’t spend a lot of time, money or effort advertising them. Accordingly, there’s no tried-and-true formula for finding these gems, but generally your chances are higher if you’re looking for a 1-bedroom or studio in older buildings for under $2,500.