Understanding Rent Regulation in NYC

The rent-regulation system has been in place for decades to help insulate rents from market forces, and rent-stabilized homes remain a crucial component of New York City’s dwindling affordable housing stock. The panel that regulates the rents of roughly one million homes across New York City has approved some of the largest increases in years. Here’s what you should know about how this system works.

Rent control is not the same as rent stabilization in New York City. Rent control measures were established in New York City during the 1920s as eviction cases rose and new construction slowed down during World War I. Similar measures were put in place during World War II to fight inflation and prevent housing shortages. After the war, the state, and then the city, kept a form of those measures in place as the city’s population boomed.

Rent control became politically popular after World War II when soldiers returned home and sought apartments for their families. The demand caused rents to increase, which led to a housing shortage.

Today, the number of rent-controlled units is shrinking. An estimated 16,400 units, with a median monthly rent around $858, remain. Landlords typically apply to the state to adjust the amount of rent they can charge, and adjustments are made every two years.

For an apartment to be rent-controlled, a tenant or family member must have been living in the unit since at least July 1971, and the building must have been built before 1947. Families can pass the unit to another member and preserve the rent- control status, but units are decontrolled once vacant. A unit that is no longer rent-controlled can sometimes become rent-stabilized or be leased at the market rate.

The second system, rent stabilization, applies generally to apartments in buildings with at least six units that were built either from 1947 to 1974, or before 1947, where an apartment was leased after June 1971. It also applies to newer buildings that receive tax breaks for having units that rent at below the market rate.

The median monthly rent is about $1,400 for rent-stabilized units, compared with $1,845 for unregulated units, according to a recent city survey. Every year, the Rent Guidelines Board, a nine-member body first established in 1969, approves the percentages by which landlords can legally increase rents for stabilized units. The mayor appoints the board’s members to terms of two to four years, and its membership is made up of two tenant representatives, two landlord representatives and five members of the public with experience in housing or economics.

A preferential rent is a discounted rent for a set period, as defined in your lease.

When landlords offer a preferential rent, they also list a “legal rent” — or the stabilized rent of the apartment. Landlords have the option to end the discount and raise the rent to its legal maximum only after the apartment is vacated.

Preferential rent is typically offered in areas that are about to gentrify. Think of it as a kind of insurance policy for landlords: The larger the preferential discount, the more likely a tenant will leave if it is taken away.

If you have a preferential rent, you can request your apartment’s rent history from the Division of Housing and Community Renewal to see whether the legal rent has been calculated properly.

There are roughly 3,644,000 homes in New York City.

The roughly 1,006,000 rent-stabilized homes make up about 28 percent of the overall housing stock, and 44 percent of all rentals.

Only a tiny fraction of the city’s housing — about 16,400 homes — are rent-controlled.

The Rent Guidelines Board has the final say on the maximum increase in rent that landlords can charge the tenants of the city’s rent-stabilized apartments. The board is mandated to establish fair rents for property owners and tenants.

Board members consider detailed reports that outline the condition of the housing stock, the rent that tenants are already paying and landlords’ operating costs. After several public meetings, the members hold a final vote on the maximum rent increases landlords can charge.

The amount by which rents are allowed to increase typically differs for one- and two-year leases.

Landlords will be allowed to raise the rent by 3.25 percent on one-year leases starting on or after Oct. 1, and 5 percent on two-year leases.

Last year, for one-year leases, the board barred rent increases for the first six months and then allowed a 1.5 percent increase for the next six months of the lease. It allowed 2.5 percent increases for two-year leases. These rate increases took into consideration the economic impact of the pandemic, according to board members.

To find out if your apartment is rent-stabilized or rent-controlled, request its rent history from the Division of Housing and Community Renewal.

Leave a Comment