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Q. I have an appointment to see a studio apartment in SoHo advertised as “rent stabilized.” What exactly does that mean?
A. It means you should act quickly if you like the apartment.
Stabilized leases provide tenants with an automatic right of renewal each year. Moreover, the Rent Guidelines Board regulates the amount by which the landlord can increase the rent each year. The increases are often lower than what landlords of market rate apartments ask for and thus, over time, rent many stabilized apartments have come to have "legal rents" (the maximum amount a landlord can legally charge) well below the current market rent.
Though tenants of rent stabilized apartments have the right to renew their lease every year, some events can trigger the destabilization of an apartment. The most common methods are as follows:
1. If the apartment becomes vacant and the legal rent would rise above $2,500 for the next tenant (factoring in increases permitted by the Rent Guidelines Board as well as any further increases allowed by law) then the apartment becomes “deregulated” and will no longer be subject to the rent stabilization law; or
2. A landlord can petition to have an occupied apartment deregulated if:
- The legal rent for the apartment is $2,500 or more; and
- The resident household earned $200,000 or more in two consecutive years on their tax returns
Bottom line: The rent for a stabilized apartment is likely below market, you will be offered a renewal lease every year unless the apartment becomes deregulated, and any rent increases will be limited to those allowed by the Rent Guidelines Board. A deal like this, especially in SoHo, are the things many New Yorkers' dreams are made of.
Mike Akerly is a New York City real estate attorney, landlord, and real estate broker. He is also the publisher of the Greenwich Village blog VillageConfidential.
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