lease options in a rent-stabilized apt

It's a bet on what you think the next year's one-year increase will be.

E.g., a renewal in October 2009 on a $4,000 rent could be 3% for one year or 6% for two. If you thought the October 2010 one-year increase was going to be 5.75% or more, you'd have taken the 6% for two.

As it happened, though, the October 2010 one-year increase was only 2.25%. You'd have ended up paying $1770 more over the two years. Even worse, the basis for your October 2011 renewal would be $27 higher.

In other cycles, of course, you'd win by plumping for the two-year lease. It probably evens out in the end, unless you consistently guess wrong. Even then, no big deal.

"why sign a two year lease in a rent-stabilized apartment?"

So that you can at least skip a year of realizing that as a renter you have no real permanence in your living situation?

"no real permanence" in a rent-stabilized apt?

Thanks, everyone, and thank you NWT for the numbers analysis. Very helpful. And yes, Sunday's right, it's theoretically not a question of sense of permanence in a rent-stabilized situation. Thanks again, all.

Looking at the last 21 Rent Guidelines Orders, you'd have been better off to always take the two-year option. Here're the orders and their percentage increases:

# 1-yr 2-yr
21 5.50 9.00
22 4.50 7.00
23 4.00 6.50
24 3.00 5.00
25 3.00 5.00
26 2.00 4.00
27 2.00 4.00
28 5.00 7.00
29 2.00 4.00
30 2.00 4.00
31 2.00 4.00
32 4.00 6.00
33 4.00 6.00
34 2.00 4.00
35 4.50 7.50
36 3.50 6.50
37 2.75 5.50
38 4.25 7.25
39 3.00 5.75
40 4.50 8.50
41 3.00 6.00
42 2.25 4.50

For example, my sponsor gave me a $900 interim lease in 1991, so I could move in until the co-op became effective in 1992.

Had it not become effective, e.g. if not enough apartments sold, then it would've been just a regular stabilized lease. I've compared always taking the one-year versus always taking the two-year, starting with the first renewal in 1992.

With the one-year options, rent would now be $1668 and the total $312,050.
With the two-year options, rent would now be $1526 and the total $299,950.

Either way, the feral jealousy (thanks alanhart!) would be priceless.

Great analysis, NWT. Thank you for that.

"So that you can at least skip a year of realizing that as a renter you have no real permanence in your living situation?"

Not very familiar with rent regulations, huh, Matt? Hint: the landlord is obliged to offer renewals for rent stabilized leases in almost all situations.

October's increases were just announced. (The Rent Guideline Board's 44th order.)

# 1-yr 2-yr
21 5.50 9.00
22 4.50 7.00
23 4.00 6.50
24 3.00 5.00
25 3.00 5.00
26 2.00 4.00
27 2.00 4.00
28 5.00 7.00
29 2.00 4.00
30 2.00 4.00
31 2.00 4.00
32 4.00 6.00
33 4.00 6.00
34 2.00 4.00
35 4.50 7.50
36 3.50 6.50
37 2.75 5.50
38 4.25 7.25
39 3.00 5.75
40 4.50 8.50
41 3.00 6.00
42 2.25 4.50
43 3.75 7.25
44 2.00 4.00

...so hopefully you chose the one-year option last year.

Staying with 1-year renewals has actually been advantageous recently. For example, renewal increases beginning with order #39, order #41, or order #43, and renewing through the end of order #44, pay less with a series of all one-year renewals than with all two-year renewals. It will vary depending on the year you started your stabilized lease.

Of course, tenants with a Sept. 1 lease date get the best deal -- since the rate announcement is mid-June, but doesn't take effect until October 1 renewal dates, September-renewing tenants are certain to have the next two one-year increase %s, as well as the two-year increase %, available before they sign, and can always make the optimal decision.

> ...so hopefully you chose the one-year option last year.

We did! Pretty happy about that. Remember that you are not stuck with the same option. Did the math once, in our case, if the 2 year lease was 5% or lower, it was a good bet to go for the 2 year. otherwise, the 1. Depends on which year you moved, as the 2 year leases will not allow for all combinations.

Obviously even as a rent stab there's a premium for mobility, you never know either you might move out of town or the foreclosure pipeline in the 3 state area might shrink to less than 65 years long making buying tempting? LOL So if there's little difference, we would go for the 1 year. worked nicely so far! No regrets. :-)

> Of course, tenants with a Sept. 1 lease date get the best deal -- since the rate announcement is mid-June, but doesn't take effect until October 1 renewal dates, September-renewing tenants are certain to have the next two one-year increase %s, as well as the two-year increase %, available before they sign, and can always make the optimal decision.

So true!!! So the answer to the question is: get a September lease. Wonder whether landlords avoid this month.

Here's are my thoughts and my calculations.
My experience is that it depends on the year and
how long you plan to stay in your apartment.
I am in my rent stabilized apartment for 20 years.
My initial rent was 990.29
I did the calculations if I did a one year lease every year and if I did a two year lease ever year.
The results are: One year every year my rent would be $2,023.14
Two year leases every other year would be $1787.88
Over the 20 years depending on how large the per cent was I ended up doing a combination and my rent with my renewal will be 1745.47.
So my recommendation is look at the percents and decide each renewal.
One year may save in the actual year over a two year, but in the long run my rent would have been close to $300.00 more now.
Hope this helpls

October's increases were just announced. (The Rent Guideline Board's 45th order.)

..# 1-yr 2-yr
21 5.50 9.00
22 4.50 7.00
23 4.00 6.50
24 3.00 5.00
25 3.00 5.00
26 2.00 4.00
27 2.00 4.00
28 5.00 7.00
29 2.00 4.00
30 2.00 4.00
31 2.00 4.00
32 4.00 6.00
33 4.00 6.00
34 2.00 4.00
35 4.50 7.50
36 3.50 6.50
37 2.75 5.50
38 4.25 7.25
39 3.00 5.75
40 4.50 8.50
41 3.00 6.00
42 2.25 4.50
43 3.75 7.25
44 2.00 4.00
45 4.00 7.75

Appraiser's question is right on the money, in my experience. With few exceptions, landlords are *required* to offer renewal leases.
Since 1991 I've never seen a two-year lease beat two single-year leases. Stabilized leases are the only service I know of where a buyer pays *more* money, right from the start, to lock-in a *longer* term. Every year I've signed a one-year lease I've *saved* money for those first 12 months, compared to what I would have paid in the first twelve months of a two-year lease.
Never forget to factor in the savings from the first twelve months when calculating a renewal's costs.

anyone done the math - better to take a 1 year or a 2 year? Or take the 1 year when the increases are high, and the 2 year when the increase are low?

> "why sign a two year lease in a rent-stabilized apartment?"
> So that you can at least skip a year of realizing that as a renter you have no real permanence in your living situation?

oh boy! you should like sby who bought during the bubble and drunk the kool-aid. imho there's no better deal in this city than a decent rent-stab in a nice area, at least in an area that's improving.

@ NYCMatt, meant "you sound like sby who bought during the bubble and drunk the kool-aid"

..# 1-yr 2-yr
21 5.50 9.00
22 4.50 7.00
23 4.00 6.50
24 3.00 5.00
25 3.00 5.00
26 2.00 4.00
27 2.00 4.00
28 5.00 7.00
29 2.00 4.00
30 2.00 4.00
31 2.00 4.00
32 4.00 6.00
33 4.00 6.00
34 2.00 4.00
35 4.50 7.50
36 3.50 6.50
37 2.75 5.50
38 4.25 7.25
39 3.00 5.75
40 4.50 8.50
41 3.00 6.00
42 2.25 4.50
43 3.75 7.25
44 2.00 4.00
45 4.00 7.75
46 1.00 2.75

..# 1-yr 2-yr
21 5.50 9.00
22 4.50 7.00
23 4.00 6.50
24 3.00 5.00
25 3.00 5.00
26 2.00 4.00
27 2.00 4.00
28 5.00 7.00
29 2.00 4.00
30 2.00 4.00
31 2.00 4.00
32 4.00 6.00
33 4.00 6.00
34 2.00 4.00
35 4.50 7.50
36 3.50 6.50
37 2.75 5.50
38 4.25 7.25
39 3.00 5.75
40 4.50 8.50
41 3.00 6.00
42 2.25 4.50
43 3.75 7.25
44 2.00 4.00
45 4.00 7.75
46 1.00 2.75
47 0.00 2.00