What Are Rent-Controlled Apartments in NYC?

Rent-Controlled Apartments in NYC

In New York City, where more than 65% of residents rent their homes, the cost of rent is always a hot topic. Since the pandemic, rent prices have surged across the city – at least, they have for market-rate apartments.

The situation is a bit different for rent-regulated units. However, even rent-controlled and rent-stabilized NYC apartments are seeing increases in 2022.

What is Rent Regulation?

Although the terms are often used interchangeably, “rent regulation,” “rent control” and “rent stabilization” refer to three different things.

For starters, rent regulation is an umbrella term encompassing rent-controlled and rent-stabilized units. Rent regulation is designed to limit how much landlords can charge – and how much they can increase the rent in a given period.

Rent-Controlled Apartments

Highly coveted by price-conscious New Yorkers, rent-controlled apartments are slowly but surely being phased out of existence. According to the 2021 New York City Housing and Vacancy Survey, HVS, there are around 16,400 rent-controlled units across the city’s five boroughs.

Since rent-controlled apartments account for only around 1% of NYC rental units, they are difficult to come by. To qualify as a rent-controlled unit, an apartment must be located in a building constructed prior to 1947. The tenant must have been continuously living there since at least July 1, 1971.

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Rent-Stabilized Apartments

According to the same survey, there are approximately 1,050,000 rent-stabilized units in New York City. To qualify as a rent-stabilized apartment, a unit must be in a building built before 1974 with a minimum of six units. Newer buildings can opt-in to rent stabilization status in exchange for various tax abatements and exemptions.

A Brief History of NYC Rent Regulation Laws

New York’s rent regulation laws are among the oldest in the U.S. Their origins stretch back to 1942, when the federal government enacted legislation freezing rent prices amid skyrocketing housing inflation prompted by World War II.

President Franklin Delano Roosevelt signed the Emergency Price Control Act to prevent “intolerable” rent increases. In the decades following his administration, state agencies gradually loosened the ultra-strict regulations and deregulated many types of rental units to maintain a good equilibrium for tenants and landlords.

Rent regulation continues in many forms to this day. Proponents say it is necessary to prevent the displacement of economically disadvantaged residents – especially in cities like New York, where housing costs increase faster than wages. Approximately two-thirds of rent-stabilized tenants in NYC are low-income, elderly or both.

Landlords and affiliated groups oppose rent regulation for many reasons. In particular, they believe it makes it difficult to maintain buildings at optimal standards. Many believe that rent control lowers property values, reducing property tax revenues and harming the city.

How Are Rents Regulated in NYC?

Today, the New York State legislature is in charge of NYC’s rent control laws. Rent prices are set by the NYC Rent Guidelines Board, which consists of nine members the current mayor appoints. Therefore, rent increases on rent-controlled units are heavily impacted by who is currently in office. Two members of the Rent Guidelines Board are tenants, two are landlords and five are members of the general public.

Rent-Controlled NYC Apartments – The Basics

Only around 1% of NYC rental units are rent-controlled apartments. The numbers are dwindling because units drop off of rent-controlled status over time.

As noted previously, for a unit to be rent-controlled, the tenant must have been living there continuously since July 1, 1971. When a tenant moves out, it automatically becomes a rent-stabilized unit if it is located in a building with at least six units. If located in a building with fewer than six units, the unit may become a market-rate apartment.

By law, the rent charged for rent-controlled apartments can’t exceed the Maximum Base Rent, which is determined on a per-unit basis and covers the landlord’s maintenance costs. The rent can be increased by up to 7.5% every two years.

Rent-controlled tenants can pass their units on to relatives when they die. However, the person inheriting the unit and its rent-control protections must have lived there for at least two years.

Rent-Stabilized NYC Apartments – The Basics

With more than 1 million units across NYC, rent-stabilized apartments are easier to come by – but they are still challenging to secure.

Such apartments are located in buildings with six or more units constructed before 1974. As noted previously, newer buildings can opt-in to become rent-stabilized properties – something property owners may do to qualify for tax exemptions.

The Rent Guidelines Board set limits on rent increases on one- and two-year leases for rent-stabilized apartments in NYC. Over the last 10 years, the board has authorized increases ranging from 0% to 4.5% per year. The board considers things like cost of living and real estate costs when establishing increases.

In a single building, some units may be rent-stabilized while others are market-rate. To be rent-stabilized, an individual unit must charge rent below a certain threshold based on when the current tenant moved in. For instance, if the tenant moved in between 1993 and 2011, the rent must be less than $2,000 per month.

Rent-stabilized tenants also have the right to renew their leases. The only exception is for owner occupancy by the landlord or their relative. Therefore, rent-stabilized apartments provide more security for those seeking long-term housing.

The Housing Stability and Tenant Protection Act of 2019

Over the last few years, much has changed across NYC’s rent regulation landscape. The Housing Stability and Tenant Protection Act, enacted in 2019, made sweeping changes to regulatory laws.

Primarily beneficial to tenants, the new legislation eliminated many loopholes landlords used to remove apartments from rent-stabilized status. Before the enactment of the new law, a landlord could switch a rent-stabilized unit to a market-rate one under the following circumstances:

Thanks to the new law, when a tenant vacates a rent-stabilized NYC apartment, the landlord can only increase the rent by a maximum of 20%.

Where to Find Rent-Regulated Apartments in NYC

If you’d like to secure a rent-controlled apartment in New York, your only option is to move in with a relative who currently rents one for at least two years. Every year, fewer and fewer rent-controlled units are available, so focusing on finding one isn’t practical.

Compared with rent-controlled apartments, rent-stabilized units are more abundant. Still, with just over 1 million across the city, they are few and far between. Most rent-stabilized units are studios or one-bedroom apartments, so they aren’t usually suitable for families.

You can find rent-stabilized rental units across NYC, but they are especially prevalent in the following areas:

The NYC Rent Guidelines Board maintains a list of rent-stabilized buildings on its website, which can be a good place to start when seeking this type of housing. You can search for rent-stabilized buildings by borough to locate one in an area you are considering. You can also search to find out if a particular building is rent-stabilized.

Again, however, just because a building is rent-stabilized doesn’t mean all of its units are. The only way to find out for sure if a particular unit is rent-stabilized is by contacting the New York State Homes and Community Renewal agency, also known as HCR. The agency maintains an online portal you can use to submit inquiries as well.

Rent Increases on Rent-Regulated NYC Apartments

Rent-Controlled Units

With the passage of the sweeping legislation in 2019, rent increases for regulated units are handled much differently.

Rent-controlled units fall within the Maximum Base Rent system, or MBR system. A Maximum Base Rent is established for every eligible NYC apartment and is adjusted every two years based on current operating costs.

Owners of rent-controlled units may raise rents by the lesser of the following: the average amount of the five most recent annual rent increases by the Rent Guidelines Board for one-year leases or up to 7.5% per year until rent reaches the MBR.

Landlords of such buildings may only increase the rent if the properties are free of violations. Therefore, tenants can challenge rent increases if the building has violations or the requested increase is not warranted.

Rent-Stabilized Units

The NYC Rent Guidelines Board controls rent increases for rent-stabilized apartments. For leases starting on or after October 1, 2021 and on or before September 30, 2022, landlords may increase the rent on one-year leases by 0% for the first six months and up to 1.5% after and on two-year leases by up to 2.5%.

Market-Rate NYC Apartments

Unregulated apartments, also known as market-rate apartments, are not subject to the rent control and regulation laws in effect across NYC. There are no limits on how much a landlord may increase the rent at the end of a lease. During a lease, however, rents may not be increased.

If a lease expires for a market-rate apartment, the renter becomes a month-to-month tenant. The landlord can raise the rent on such a tenant with their consent. If they can’t get the tenant’s okay, they can terminate the tenancy with the appropriate amount of notice.

Benefits of Rent-Stabilized Buildings in NYC

Unless you know someone currently renting a rent-controlled NYC apartment, you shouldn’t bother trying to find one.

However, given the many advantages of rent-stabilized NYC apartments, focusing your search on them may be worthwhile.

Some of the top benefits of renting a rent-stabilized apartment include the following:

Rent Increases Are on the Horizon for Rent-Stabilized NYC Apartments

As the pandemic that started in early 2020 began waning, demand for NYC rentals skyrocketed. In 2022, rent prices for market-rate units hit record highs, and more increases are likely throughout the year.

With inflation and cost-of-living soaring, the NYC Rent Guidelines Board has preliminarily approved rent increases for rent-stabilized units. In May, the board voted by 5-4 to increase rents on one-year leases by 2% to 4% and on two-year leases by 4% to 6%.

These increases are the largest in nearly a decade. Throughout Mayor de Blasio’s term, the board increased the rent by little or nothing. Due to the pandemic, there was a 1.5-year freeze on rent increases.

The 2022 rent increases will impact more than 2.4 million rent-stabilized tenants across the city and more than 940,000 apartments. Most of those tenants have household incomes below $40,000, and more than 600,000 people across the city were behind on their rent as of May 2022. All told, tenants owed more than $2.4 billion in back rent at that time.

Looking for a Rent-Stabilized Apartment in NYC? BCP Real Estate Group Can Help

If you want to lock in the affordability and security of a rent-stabilized NYC apartment, you’ll want as many resources at your disposal as possible. To enhance your search, connect with the experts at BCP Real Estate Group. We’ll give you access to our online NYC rental listings, provide you with informative resources and give you referrals to talented and experienced real estate brokers throughout New York. Call today for more information.