Preferential rent...how to guage risk? (apartments, rent stabilized apartments, tenants)

[gingercat]

I got a lease to review today, and discovered that my rent is "preferential rent," which may be changed to market at the end of the lease term. I did a little research and understand what it means legally.

My question is, how does one assess the likelihood that the landlord will bump you up to market on the renewal? Are there conditions to look for, or is it more gut instinct when talking to them?

[lamontnow]

Originally Posted by gingercat

I got a lease to review today, and discovered that my rent is "preferential rent," which may be changed to market at the end of the lease term. I did a little research and understand what it means legally.

My question is, how does one assess the likelihood that the landlord will bump you up to market on the renewal? Are there conditions to look for, or is it more gut instinct when talking to them?

I have a feeling you're confusing the terms preferential rent and market rent. What you call the "market" rent is probably the legal rent specified in the lease. In this market, the legal rent is probably above the market rent and that's why you're getting a preferential rent. Your preferential rent is probably the market rent.

The amount of your increase at lease end will probably depend on a couple of things: the change in market rents and your performance as a tenant. Based on a combination of these factors the rent may stay the same, go up slightly, or go up to the legal rent.

[gingercat]

Hmmm...the lease uses the term "market rent" in the rider.

Heh...you know, if they really tried, could make renting in NYC a *little* more bizarre...

[cirlin6]

Yeah...basically when thinking about what your rent could increase to, just pretend your lease isn't stabilized at all. The only way its helping you is giving you a guaranteed renewal every year (though the rent isn't guaranteed). It also might be hurting the maintenance of your building overall, since other tenants who've lived there for a while are paying below market rent.

Rent stabilized apartments are way overrated for people who haven't lived in a location for a long time. A ton of the rent stabilized places I looked at in Harlem were "stabilized" but above market rate. And of course, the Realtor would act about how it's such a great deal to get a stabilized apartment, knowing that his prey didn't know much about the city.

[ddhboy]

Originally Posted by cirlin6

Yeah...basically when thinking about what your rent could increase to, just pretend your lease isn't stabilized at all. The only way its helping you is giving you a guaranteed renewal every year (though the rent isn't guaranteed). It also might be hurting the maintenance of your building overall, since other tenants who've lived there for a while are paying below market rent.

Rent stabilized apartments are way overrated for people who haven't lived in a location for a long time. A ton of the rent stabilized places I looked at in Harlem were "stabilized" but above market rate. And of course, the Realtor would act about how it's such a great deal to get a stabilized apartment, knowing that his prey didn't know much about the city.

What's happening now is that many landlords that have stabilized apartments don't want to convert them to market rate because they might actually earn less at market rate than with stabilized apartments. Also under the current housing rules, the landlord is able to raise his stabilized rent every time a new tenant occupies the space, so its in the best interest in the landlord that a constant stream of new tenants enter the property so he can legally adjust his rents.

[Henna]

Originally Posted by ddhboy

What's happening now is that many landlords that have stabilized apartments don't want to convert them to market rate because they might actually earn less at market rate than with stabilized apartments.

How would they earn less at market rate?