In the folklore that surrounds New York City real estate, there exist a few mythical creatures... namely apartments with washer/dryers, apartments with dishwashers, and the seemingly ever-elusive rent-stabilized apartments. But believe it or not, unlike apartments with washer/dryers, rent-stabilized apartments are way more common than you might think. In fact, you might already be living in one! But for those of you who aren’t, and who strongly desire an apartment with a stabilized rent increase so that you can, you know, still afford to live here, here’s how to find one.
But first, what actually is a rent-stabilized apartment?
Before we even begin to talk about how you can get one, let’s make sure we’re all on the same page. First of all, rent-stabilized is NOT the same thing as rent-controlled. Rent-controlled means there's a limit price your landlord can charge you, and every two years the rent can be raised by 7.5% until that maximum is met (though often times this can be fought by the tenant on the basis that the landlord hasn't provided required services to the building and apartment. That's when you end up with a $500/month Classic Six). You aren’t getting a rent-controlled apartment unless someone in your family already has one (and has been living there since 1971) and passes it onto you. Now that that’s out of the way...
Rent stabilization protects tenants from sharp rises in rents. These apartments are subject to a percentage increase in rent with each lease renewal (which is set each year by the NYC Rent Guidelines Board). Currently, for leases that began between October 1st, 2015 through September 30th, 2016, the rent increase for a one-year lease is 0%. For a two-year lease it’s 2%. This will be the same going into next year.
There are two types of rent-stabilized apartments
The first includes apartments that were built between February 1st, 1947 and January 1st, 1974. These apartments are offered typically way below market level and are subject to that small percentage increase. Once the rent on these apartments hits $2,700 a month, it then becomes destabilized. “If you’re under $2,700 a month in a rent-stabilized apartment, you’re golden, because you’re only getting the city increase. The rent is usually that low for a reason -- it’s stabilized, and the landlord hasn’t done what is necessary to deregulate it and take it to market rent,” says Rory Bolger, a licensed real estate broker with Citi Habitats.
“The important thing to understand is that across the city, in all five boroughs, rent is going up annually, significantly more than the rent-stabilization board allows, meaning every year that passes, tenants are paying lower and lower below market,” says Jeffrey Schleider, senior vice president of business development at Citi Habitats. “Once a tenant moves out, a landlord can invest a certain amount of money and destabilize the apartment. The vast majority of landlords in the city, when they get a vacated rent-stabilized apartment, will do a gut renovation and spend enough money so that it’s no longer subject to rent stabilization. Often times they will buy out the tenant in order to do so.”
The other types of rent-stabilized apartments are ones that are newly constructed and take advantage of certain tax exemption programs (specifically 421-a and J-51). In return for the tax exemption, the developer or owner of the building must maintain units under the rent stabilization for the period of the tax exemption, which is about 10 to 20 years. These apartments will be rented at market value, but are still only subject to that small percentage increase.
... got it?
So… how many of these actually exist?
Are you ready for this? Approximately half of the housing inventory in all of New York City is rent-stabilized. Yes, that’s correct. But before you put your shoes on and start hitting the pavement, your chances of actually getting one aren’t super-great at the moment.
“It’s roughly half of the housing stock that is subject to some sort of rent regulation,” says Schleider. “But if you’re looking for one, it might not seem like that, since the apartments that are subject to stabilization have tenants who aren’t moving out, because if they did it would be impossible for them to find something comparably priced.”
OK, so how CAN you get one?
“Searching for apartments that are under $2,700 a month is one way to start,” says Bolger. “Those are the units that will likely be rent-stabilized.”
Schleider also suggests looking at places where market rents are less than $2,700. “It’s highly unlikely in prime Manhattan to have a rent-stabilized apartment because the landlord who has the unit with a rent-stabilized tenant that goes vacant will take it out of stabilization.”
So where should you be looking? “You’re most likely to find these apartments in places where the rent is lowest because the landlord doesn’t have incentive to spend the money to get it out of stabilization,” Schleider adds. “If the market in the neighborhood is below $2,700, there is no reason for them to spend money.”
Bolger recommends looking in areas like Upper Manhattan, Midtown West, Hell’s Kitchen, Harlem, South Bronx, and Central Brooklyn (Prospect Heights, Lefferts Gardens, Crown Heights).
“If this is a big priority for you, I would also recommend speaking with a real estate agent,” adds Schleider. “They know about apartments that aren’t publicly listed. If you have a broker who you like and trust, let them know what you’re looking for and maybe you’ll get that phone call before the apartment hits the market.” Just make sure they're not ripping you off.
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