NYC is known for being expensive, which is why so many renters hunt for affordable housing. The average rent in NYC is $3,938/month, which is 153% higher than the national average of $1,559. However, to help keep rent more affordable, New York has a unique system of rent regulations known as rent stabilization. It continuously changes and expands to help protect renters. According to the NYC Rent Guidelines Board, about one million apartments in New York are rent-stabilized. To take advantage of this system and protect your tenant rights in New York, it is key to know topics surrounding rent stabilization, such as preferential rent.
- What is preferential rent in New York?
- Understanding NYC’s preferential rent laws
- Why do NYC landlords offer preferential rent?
- How to know if you have preferential rent in New York
What Is Preferential Rent in New York?
Preferential rent is when your landlord charges you a lower rent than the maximum legal rent they could collect. New York does have a rent cap for rent-stabilized apartments that is set by rent-stabilizing laws. For example, your landlord might be able to charge you up to $2,500 a month for rent. However, other landlords in the neighborhood don’t charge that much for rent; the average rent is $2,100. To stay competitive, your landlord might offer you $2,100 in rent even though they could charge up to $2,500.
What you need to know about preferential rent in New York
If you have preferential rent, a landlord cannot take it away or increase the rent to the legal limit mid-lease or when you renew. As long as you continue to rent that apartment, you can pay the preferential rent. Landlords are able to raise rent when you renew, but only in accordance with the set guidelines. That means it should only be raised by small amounts and not to the legal maximum. As soon as you vacate the property, you will lose that preferential rent, and the landlord can charge the legal limit to the next renter.
Understanding NYC’s Preferential Rent Laws
Rent stabilization in New York is always changing, and so are the laws surrounding preferential rent. Staying up to date on these changes is essential for renters.
The Housing Stability and Tenant Protection Act of 2019
The Housing Stability and Tenant Protection Act of 2019 (HSTPA of 2019) changed laws affecting renters, including guidelines surrounding preferential rent. It established that renters paying a preferential rent on or after June 14, 2019, can continue paying that same amount as long as they continue to rent the property. However, if you move out, then the landlord can raise the rent to the legal limit. Landlords can’t do this when you renew your lease; it is only for the next renter who moves in after you vacate the property.
There are two other changes that the HSTPA of 2019 made that renters with preferential rent should know. If you fail to pay rent on time, landlords cannot end your preferential rent. Landlords also can’t require that you pay preferential rent via a specific method like electronic payments.
Rent increases with preferential rent
Rent increases on preferential rent are allowed as long as the landlord follows the guidelines created by laws and the Rent Guidelines Board. This means that rent increases must be based on the preferential rent amount and can only be increased in accordance with the relevant guidelines. If there is a new renter, the landlord can increase it by a larger amount or increase the rent to the legal limit.
Are fees allowed with preferential rent in NYC?
The laws regarding what fees rent stabilized tenants can be charged also apply to preferential rent. So, any fee or surcharge cannot be part of the preferential rent and can’t be added to the calculations for lease renewal increases.
Preferential rent laws before the HSTPA of 2019
Before the HSTPA of 2019, landlords could get rid of your preferential rent whenever they wanted; they could do it when you were renewing the lease, and there was no guarantee that it would continue throughout your lease. The rent could also be raised to any amount up to the legal limit, which led to large increases.
Why Do NYC Landlords Offer Preferential Rent?
While preferential rent may seem like a good thing, you need to be aware that there are some landlords who offer it with ulterior motives. There have been some cases where landlords have used preferential rents to try to cover up the fact that they submitted a false legal rent to the New York State Homes and Community Renewal and the Division of Housing and Community Renewal. Most of the time, the landlord is trying to meet market conditions by being competitive and filling their property. It may be more worthwhile for them to charge a lower amount than they legally could and fill a vacancy than leave the property empty.
How to Know if You Have Preferential Rent in New York
If you don’t know if you have preferential rent, the first step is to check your lease. The lease should tell you if the rent is preferential or not. It may be called another phrase like actual rent, lower rent, or temporary rent. You can also submit an online form to the NYS Homes and Community Renewal to see if your apartment is stabilized or get a rental history.
This article is for informational purposes only. Contact the New York State Homes and Community Renewal or look on their website for the latest information on rent stabilization and preferential rent.
FAQs
What should I do if I think my landlord is charging me too much for rent?
If you think your landlord is overcharging you or there is another issue, you should contact the Division of Housing Community Renewal (DHCR). They can help you with the next steps.
How do I find a rent-stabilized apartment?
Finding a rent-stabilized apartment can be difficult because even though there are a lot of them, they are in high demand. You can find a list of buildings with rent-stabilized apartments on the NYC Rent Guidelines Board website. It doesn’t say which apartments are rent-stabilized; it just says one is in the building. The New York Housing Lottery is another way to get a rent-stabilized apartment. It may be a long shot and take a while, but many of the apartments offered are rent-stabilized. On Apartments.com, you can add “rent-stabilized” to the keyword section in filters to pull up apartments with the phrase in the description.
How much can a landlord increase rent?
Rent increases are different depending on if you have a rent-stabilized or unregulated apartment. Landlords are allowed to increase rent as long as they follow the applicable laws and guidelines for rent-stabilized apartments. However, if you have an unregulated apartment, rent increases can be applied when a lease expires or if there is no lease. There are no limits except when your apartment is under the Good Cause Eviction Law. Landlords need to send a rent increase notice if they are raising rent more than five percent or do not want to renew the lease within specific time periods.
