Rental Building News and Offers

Due to the fallout of the coronavirus pandemic, enough New Yorkers have relocated, temporarily, or permanently, to the point it has greatly affected the overall vacancy rate and rent prices. Last month, Manhattan’s median asking rents fell below $3,000/month for the first time in nearly a decade. The discounts are likely temporary as history has shown the city's diverse industries and population has on countless occasions led to its reimagination and recovery.

Already, thanks to lower prices and a record-breaking number of landlord and rent concessions to sweeten the deal, people are starting to return - The Real Deal reports that last month was the busiest October in 12 years with renters eager to lock in a good deal and our listing counts show the number of rental and sale availabilities slowly falling over the last several weeks. One concern with taking the bait on an incentivized apartment may be unpredictability. Come one year from now, if there is a vaccine and an economic restart, landlords will be inclined to dramatically increase rents to or near pre-pandemic levels.

Some residents are better equipped to weather an economic storm and are unlikely to move since they have already secured stable and affordable rents. Fictional New York characters have long enjoyed low rents, living in apartments that would really be well over their budget (ahem, Friends and Sex and the City) that tend to come with a throwaway line about rent-controlled or rent-stabilized apartments. This isn’t a fictional concept - off-screen, rent-controlled and rent-stabilized apartments are heralded as the holy grail of New York real estate. But these are two very different concepts with their own complicated laws and different factors that can both determine and end it.

What is rent regulation?

Both rent control and rent stabilization fall under the headline of rent regulation, a blanket term for laws designed to protect residents from dramatic rent increases by their landlords. Rent regulation dates back to the 1920’s, when the city enacted a series of emergency rent laws in response to an increase in evictions and a decrease in housing construction following World War I. Since then, the city has upheld different forms of rent regulation and updated the laws to adapt to the changing marketplace.

What is rent control?

Rent control applies to buildings constructed before 1947 in municipalities that have not declared an end to the postwar rental housing emergency. This limits the rent the owners may charge for an apartment, and restricts the right of the owners to evict tenants paying what are essentially 1970’s-era rents in neighborhoods that have exploded in value. Ergo, some residents of rent-controlled apartments have declared that the only way they’re giving it up is upon their death. Some of them aren’t kidding, which is how a very few continue to enjoy the practice and keep it alive in New Yorkers’ imaginations (see more details on who qualifies below). But if the apartment is vacated, it may be rent stabilized (see below) or leased at market rate.

What is rent stabilization?

Rent stabilization generally applies to apartments with six or more units constructed between 1947 and 1974. Rent stabilization may also occur in buildings with three or more units constructed or extensively renovated since 1974 with certain tax benefits. While not as dramatic as their rent-controlled counterparts, residents of rent-stabilized units often enjoy lower rents that can only be increased by usually a manageable amount determined by the Rent Guidelines Boards. The program offers additional perks that include an automatic lease renewal every year or two and no grounds for the landlord to evict you if you abide by the rules of the lease.

How can I find a rent-controlled or rent-stabilized apartment?

When a rent-controlled tenant dies or moves, certain family members who have been living in the apartment have the right, under certain conditions, to take over the lease and keep the rent-controlled status (further details and criteria may be found here). Otherwise, it’s all but impossible - roommates not in a family relationship do not qualify to take over the lease, nor do subletters or family members not living in the apartment.

The outlook is rosier for finding a rent-stabilized unit, though, but it’s important to do your homework - sometimes in older buildings, landlords don’t necessarily advertise rent stabilization; some will even keep the status a secret and charge more than the law allows them to. This tool can help determine if your building is subject to stabilization; if it turns out to be so, that’s something to bring up in negotiations.

Rent-stabilized units also appear in some of the city’s new, amenity-rich buildings, but are more commonly known today as affordable housing. A full list of ongoing lotteries and criteria may be found here.

What did the new laws do for rent regulated tenants?

Until recently, some rent-stabilized units became deregulated if the rent exceeded $2,700/month and the tenants’ income exceeded $200,000/year for two consecutive years. However, the practice was abolished in the Housing Stability and Tenant Protection Act of 2019, a sweeping package of rent laws signed last summer. Additional protections include making “preferential rents” permanent and abolishing the “vacancy bonus” that allowed landlords to increase a rent-regulated apartment’s price by 20 percent upon the tenant’s departure.

Moreover, some landlords have used major capital improvements to the building as an excuse to raise stabilized rents and keep them high. The new law sharply curtails the amount these rents may be raised, and the state is required to inspect and audit a portion of improvements.

What’s next for rent regulation?

As described above, rent regulation was introduced to prevent a tight housing market from jacking rents up. But if vacancies rise, rents will fall on their own, much as we’re seeing happen now. The pandemic has caused vacancy rates to inch closer to the crucial 5 percent mark. If it were to surpass that number, rent regulation laws are supposed to expire according to state law. The New York Post thinks it’s about time - the abundant supply of apartments would theoretically keep rents reasonable and cut renters some slack.

However, Mayor de Blasio and New York State officials alike are in favor of keeping rent regulation alive for continuity’s sake and for the tenant protections it offers. State Senator Brad Hoylman and Assembly Member Harvey Epstein have proposed a bill that would extend the city’s declared housing emergency for two years beyond the pandemic.

Indeed, when the coronavirus vaccine becomes available and New York makes a full comeback, residents of rent-regulated apartments will not need to worry about their monthly rents skyrocketing. However, as simple economics tells us, if the city simply allowed developers to build enough units to meet demand, the city would not be facing a no-end-in-sight housing crisis.