A young couple in search of their first apartment together is looking for a simple two-bedroom with enough space for a family. They view an apartment, which they absolutely love, and the landlord even agrees to charge them lower than the regulated rent, an arrangement known as preferential rent.
Without knowing any better, this seems like a wonderful arrangement and a very generous landlord. However, what they don’t realize is that the landlord is not offering them a discount out of the kindness of his heart.
Preferential rents have become increasingly common as landlords seek out each and every advantage they can offer tenants. Often, a preferential rent is merely the market rate for rental housing, and is not actually a discount at all for the tenant. Additionally, landlords are not subject to the same restrictions as are present with standard rent-regulated apartments.
The rent guidelines board sets allowable increases in rent-regulated apartments once per year. When a tenant has a preferential rent, the landlord is entitled to raise their rent up to the legal regulated rent on a renewal lease, even if that increase is several hundred or even a thousand dollars.
This results in people who cannot stand up for their basic rights as a tenant out of fear that their landlord will retaliate and raise their rent upon the next lease renewal. I have constituents with preferential rents who have suffered with leaks, mold, broken appliances and many other maintenance problems because they are reluctant to file a formal complaint.
I have other constituents who are hesitant to apply for a rent freeze because their rent would only be frozen at the legal regulated rent, and they are afraid of how their landlord might react. Even more are receiving improper lease renewals, extraneous charges, or suffer harassment, and again, are too scared to stand up for themselves.
Many people may not realize that they have a preferential rent. In a rent-stabilized apartment, a vacancy lease (initial lease) must include a preferential rent lease rider, if applicable. Subsequent renewal leases in rent-stabilized apartments are also required to use the standard forms provided by the state’s Division of Homes and Community Renewal, which includes both the legal regulated rent and the rent being charged to the tenant.
Every person who signs a lease should be aware of the risks that accompany preferential rents, and if anyone has concerns, they should feel free to contact my office for help.
Until 2003, landlords were required to honor the preferential rent for the duration of a tenancy, with rent increases permitted as set by the rent guidelines board. I believe this protection for tenants should be restored.
The New York State Assembly has repeatedly passed a bill which would prohibit a landlord from switching to the legal regulated rent amount until a tenant vacates the apartment. However, it continues to be blocked by upstate Republicans in the state senate.
According to the DHCR, the Bronx alone has 55,423 units with preferential rents, and the preferential rent problem is only going to get worse.
The law must be changed in 2018 to protect these tenants and stand up for affordable housing in New York City.
The author is the Assembly representative for the 81st District, which includes Riverdale, Kingsbridge, Van Cortlandt Village, Kingsbridge Heights, Marble Hill, Norwood, Woodlawn and Wakefield.