Rent stabilization and rent control laws can be very confusing. However, I went to law school and worked at a nonprofit law firm where I focused on this specific area of law so you wouldn’t have to be confused about this! You’re welcome! Please note that even though I am an attorney this is not legal advice (no attorney-client relation has been established) and if you have any questions, you should consult your attorney. There are a lot of nuances to the New York City rent stabilization and rent control laws so this was not meant to be an all-encompassing guide, but you should know the basics of rent stabilization after reading this.
When purchasing a new building or apartment, you may notice that the rent received for certain apartments in very desirable parts of the city are below market rate. This may be because the apartment you are looking at is rent controlled or rent stabilized. There is a body of regulation in New York City that governs certain rental units, which require guidelines to be followed when increasing rent. The New York City Rent Guidelines Board is responsible for setting rent adjustments for rent stabilized (but not rent controlled) apartments. The New York City Division of Housing and Community Renewal (NYCDHCR) is responsible for regulating both rent controlled and rent stabilized apartments – this is the agency you should contact if you want to determine if your apartment is rent stabilized or controlled.
Very basically, rent stabilization was enacted in 1969 in response to the rising rent in post-war buildings. Rent regulated tenants are protected from unregulated increases in rent and must be offered renewal leases. Rent stabilized apartments are only allowed set percentage rent increases on renewal leases, set annually by the NYC Rent Guidelines Board.
In 2011, there were about 38,000 rent controlled apartments and 1 million rent stabilized apartments.
In New York City, residential buildings constructed before February 1947 may be rent controlled. Rent controlled apartments are not very common anymore as the tenant or successor to the apartment must have been living in the apartment continuously since July 1971 (or April 1, 1953 for a one or two family house). Once the apartment is vacant, it becomes rent stabilized if it is in a building with six or more units (and if not, it is generally no longer regulated). It is possible for an apartment to become rent controlled as a penalty.
In NYC, rent stabilized apartments are generally those apartments in buildings of six or more units built between February 1, 1947 and January 1, 1974. Certain buildings that were newly constructed or renovated and receiving tax benefits (421a and J-51 tax exemption programs) may also be rent stabilized.
A rent stabilized apartment may become deregulated in many ways. A landlord who wishes to take over an occupied rent stabilized apartment for personal and family use may do so with 90-150 days notice prior to lease expiration and must prove in court that it is being used for his family. Rent stabilized tenants who are disabled or 62 years old or older have certain protections against removal.
Also, if the legal monthly rent is above $2,500, after the apartment becomes vacant, it may become deregulated. This is called luxury deregulation. Furthermore, if the apartment is in a building that was converted to a co-op, it may be deregulated once the apartment becomes vacant.
If you are buying a rent stabilized apartment, or a building with rent stabilized tenants, those renters are allowed to remain and have the right to renew their leases. Once the tenant moves out or is evicted (for example, for nonpayment of rent), the apartment is no longer rent stabilized. The conversion plan for the building to become a co-op or condominium allows the apartment to be rent stabilized until it becomes vacant.
If I know this much about an obscure area of law such as this one, imagine what I know about real estate. If you’re looking to buy/rent or sell real estate, feel free to contact me.
–Joseph Fan
Licensed Real Estate Salesperson
