Summary: They could screw you over if you try to sub-lease; and they may not really be regulated (ie the preferred rent) Details: Almost all newer rental buildings have a subset of their units (usually studios) as Rent Regulated as part of a tax break the rental company gets. They pitch the units as a benefit -- that you'll get a regulated rental increase as determined by the city every year. But... [more]
Summary: They could screw you over if you try to sub-lease; and they may not really be regulated (ie the preferred rent)
Details:
Almost all newer rental buildings have a subset of their units (usually studios) as Rent Regulated as part of a tax break the rental company gets.
They pitch the units as a benefit -- that you'll get a regulated rental increase as determined by the city every year.
But they're allowed to set the "Regulated Rent" to an inflated number and then make the actual rent at a lower "Preferred Rent" number and any increases will be based on the "Regulated Rent" not the actual rent. Or they could offer 1 or 2 months free, which inflates the rent for the next year.
Also they are allowed to charge up to a 20% sub-lease rent increase -- making subleasing a pain -- when normal apartments can be subleased without the owner forcing an increase.
The upside is if you plan on staying for years, and it's a brand new building (without a preferred rent number), then you could end up having a nice deal in a few years.
But if you don't plan on staying, the sub-lease downside is a potentially huge issue that could cost you money.
My story:
I recently rented one of these units.
The prior tenant who had been there for 4 years needed to move and was looking for someone to take over the lease. He was paying 2450 and was told by the leasing office someone could sign a new 1 year lease for that same amount if he found the person; or could take over the remaining 1.5 years of his lease at a higher number (that confused me until I learned about the vacancy rate increase).
I initially turned down the unit, but then the tenant offered to subsidize the rent as he was motivated cause the building was going to charge him multiple months rent to break the lease.
We met with the leasing agent, who confirmed the rent would be the same if I signed a new lease.
The next day, after I had submitted the background check authorization and payment, the leasing agent sent an email saying "they just realized they were allowed to make a vacancy adjustment and the new rent would be 2600".
How they could just realize that when knowing rental rules is their job is beyond me, but whatever. I did some research and figured it out:
http://www.housingnyc.com/html/guidelines/vacancy.html
The building can charge ~20% increase for sub-leases or between tenants.
And ~20% would've been ~2900, so they really just made up that 2600 number.
2900 is way above market for this apartment; 2600 is slightly above market as well.
The prior tenant offered to cover this diff as well, so it ended up being fine with me.
Now the lease I signed said the rent was ~2900 (the 20% increase) and the 'Preferred Rent" is 2600.
Which effectively means there's nothing regulated about the apartment cause they can make up a rent for next year anywhere from 2600 to (2900+~3%)
And if I ever need to sublease the apartment, they can make it really tough on me like the prior tenant by forcing the take-over tenant to pay up to ~3500.
Luckily I knew all this and don't plan on staying for more than a year, so the likelihood of needing to sublease is small.
But it's a serious issue that most studio renters in newer buildings are unaware of, and is even more compounded by the use of 'Preferred Rent' which most tenants wouldn't understand
[less]
Response by jason10006
over 12 years ago
Posts: 5257
Member since: Jan 2009
Yep, my unit has a legally allowed rent that is DOUBLE the actual rent. So the "market" or "preferential" rate on my unit is half what "rent stabilization" says the building can charge. And I know its market because the other new doorman buildings within a block or two of me also charge the same-ish "market" rates despite not having rent stabilization. Since its a new building, they get tax breaks for this arrangement. How these tax breaks are allowed I will never understand.
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Response by jason10006
over 12 years ago
Posts: 5257
Member since: Jan 2009
I mean, I just think of my place as market rate. But the slimy Citihabitats broker who was leasing all the units for my building when it first opened lied in the ads and in person, by constantly saying it was rent controlled and rent could never be raised above what the city allowed. I checked with a lawyer before signing my lease and of course it was a lie since the legal rent was double my preferred rent. I recommend anyone check your lease with a layer.
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Response by wavedeva
over 12 years ago
Posts: 209
Member since: Jan 2006
Thanks for the warning.
Ignored comment.
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Response by jim_hones10
over 12 years ago
Posts: 3413
Member since: Jan 2010
rapat
about 3 hours ago
Posts: 6
Member since: Apr 2012
ignore this person
report abuse
Summary: They could screw you over if you try to sub-lease; and they may not really be regulated (ie the preferred rent)
Details:
Almost all newer rental buildings have a subset of their units (usually studios) as Rent Regulated as part of a tax break the rental company gets.
They pitch the units as a benefit -- that you'll get a regulated rental increase as determined by the city every year.
But they're allowed to set the "Regulated Rent" to an inflated number and then make the actual rent at a lower "Preferred Rent" number and any increases will be based on the "Regulated Rent" not the actual rent. Or they could offer 1 or 2 months free, which inflates the rent for the next year.
Also they are allowed to charge up to a 20% sub-lease rent increase -- making subleasing a pain -- when normal apartments can be subleased without the owner forcing an increase.
The upside is if you plan on staying for years, and it's a brand new building (without a preferred rent number), then you could end up having a nice deal in a few years.
But if you don't plan on staying, the sub-lease downside is a potentially huge issue that could cost you money.
My story:
I recently rented one of these units.
The prior tenant who had been there for 4 years needed to move and was looking for someone to take over the lease. He was paying 2450 and was told by the leasing office someone could sign a new 1 year lease for that same amount if he found the person; or could take over the remaining 1.5 years of his lease at a higher number (that confused me until I learned about the vacancy rate increase).
I initially turned down the unit, but then the tenant offered to subsidize the rent as he was motivated cause the building was going to charge him multiple months rent to break the lease.
We met with the leasing agent, who confirmed the rent would be the same if I signed a new lease.
The next day, after I had submitted the background check authorization and payment, the leasing agent sent an email saying "they just realized they were allowed to make a vacancy adjustment and the new rent would be 2600".
The building can charge ~20% increase for sub-leases or between tenants.
And ~20% would've been ~2900, so they really just made up that 2600 number.
2900 is way above market for this apartment; 2600 is slightly above market as well.
The prior tenant offered to cover this diff as well, so it ended up being fine with me.
Now the lease I signed said the rent was ~2900 (the 20% increase) and the 'Preferred Rent" is 2600.
Which effectively means there's nothing regulated about the apartment cause they can make up a rent for next year anywhere from 2600 to (2900+~3%)
And if I ever need to sublease the apartment, they can make it really tough on me like the prior tenant by forcing the take-over tenant to pay up to ~3500.
Luckily I knew all this and don't plan on staying for more than a year, so the likelihood of needing to sublease is small.
But it's a serious issue that most studio renters in newer buildings are unaware of, and is even more compounded by the use of 'Preferred Rent' which most tenants wouldn't understand
Of course they are aware of it. It is in the legal document (called THE LEASE) that they sign prior to moving in. No one has a gun to your head when you sign a lease. If they are unaware it is because they haven't read the lease.
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Response by jason10006
over 12 years ago
Posts: 5257
Member since: Jan 2009
"Of course they are aware of it. It is in the legal document (called THE LEASE) that they sign prior to moving in. No one has a gun to your head when you sign a lease. If they are unaware it is because they haven't read the lease."
Nope, my Citihabitats broker flat out lied. I told him I was PRETTY sure his ad and statements were incorrect, and that the place was not rent controlled in the sense he was selling the place. He said he'd check. I checked with my lawyer and low and behold, I was correct. The broker was sweating bricks the next time we spoke and said I was correct. After I signed the lease I contacted the company who owned the building by phone and told them of this, and THEY said in no uncertain terms the broker was wrong and should have pointed out that the legal rents were much higher than the market rents, and apologized. They no longer advertise the bldg as rent controlled.
But my point is BROKERS LIE ALL THE TIME.
Ignored comment.
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Response by jason10006
over 12 years ago
Posts: 5257
Member since: Jan 2009
...And again, this was the building's leasing agent, not mine.
Yep, my unit has a legally allowed rent that is DOUBLE the actual rent. So the "market" or "preferential" rate on my unit is half what "rent stabilization" says the building can charge. And I know its market because the other new doorman buildings within a block or two of me also charge the same-ish "market" rates despite not having rent stabilization. Since its a new building, they get tax breaks for this arrangement. How these tax breaks are allowed I will never understand.
I mean, I just think of my place as market rate. But the slimy Citihabitats broker who was leasing all the units for my building when it first opened lied in the ads and in person, by constantly saying it was rent controlled and rent could never be raised above what the city allowed. I checked with a lawyer before signing my lease and of course it was a lie since the legal rent was double my preferred rent. I recommend anyone check your lease with a layer.
Thanks for the warning.
rapat
about 3 hours ago
Posts: 6
Member since: Apr 2012
ignore this person
report abuse
Summary: They could screw you over if you try to sub-lease; and they may not really be regulated (ie the preferred rent)
Details:
Almost all newer rental buildings have a subset of their units (usually studios) as Rent Regulated as part of a tax break the rental company gets.
They pitch the units as a benefit -- that you'll get a regulated rental increase as determined by the city every year.
But they're allowed to set the "Regulated Rent" to an inflated number and then make the actual rent at a lower "Preferred Rent" number and any increases will be based on the "Regulated Rent" not the actual rent. Or they could offer 1 or 2 months free, which inflates the rent for the next year.
Also they are allowed to charge up to a 20% sub-lease rent increase -- making subleasing a pain -- when normal apartments can be subleased without the owner forcing an increase.
The upside is if you plan on staying for years, and it's a brand new building (without a preferred rent number), then you could end up having a nice deal in a few years.
But if you don't plan on staying, the sub-lease downside is a potentially huge issue that could cost you money.
My story:
I recently rented one of these units.
The prior tenant who had been there for 4 years needed to move and was looking for someone to take over the lease. He was paying 2450 and was told by the leasing office someone could sign a new 1 year lease for that same amount if he found the person; or could take over the remaining 1.5 years of his lease at a higher number (that confused me until I learned about the vacancy rate increase).
I initially turned down the unit, but then the tenant offered to subsidize the rent as he was motivated cause the building was going to charge him multiple months rent to break the lease.
We met with the leasing agent, who confirmed the rent would be the same if I signed a new lease.
The next day, after I had submitted the background check authorization and payment, the leasing agent sent an email saying "they just realized they were allowed to make a vacancy adjustment and the new rent would be 2600".
How they could just realize that when knowing rental rules is their job is beyond me, but whatever. I did some research and figured it out:
http://www.housingnyc.com/html/guidelines/vacancy.html
The building can charge ~20% increase for sub-leases or between tenants.
And ~20% would've been ~2900, so they really just made up that 2600 number.
2900 is way above market for this apartment; 2600 is slightly above market as well.
The prior tenant offered to cover this diff as well, so it ended up being fine with me.
Now the lease I signed said the rent was ~2900 (the 20% increase) and the 'Preferred Rent" is 2600.
Which effectively means there's nothing regulated about the apartment cause they can make up a rent for next year anywhere from 2600 to (2900+~3%)
And if I ever need to sublease the apartment, they can make it really tough on me like the prior tenant by forcing the take-over tenant to pay up to ~3500.
Luckily I knew all this and don't plan on staying for more than a year, so the likelihood of needing to sublease is small.
But it's a serious issue that most studio renters in newer buildings are unaware of, and is even more compounded by the use of 'Preferred Rent' which most tenants wouldn't understand
Of course they are aware of it. It is in the legal document (called THE LEASE) that they sign prior to moving in. No one has a gun to your head when you sign a lease. If they are unaware it is because they haven't read the lease.
"Of course they are aware of it. It is in the legal document (called THE LEASE) that they sign prior to moving in. No one has a gun to your head when you sign a lease. If they are unaware it is because they haven't read the lease."
Nope, my Citihabitats broker flat out lied. I told him I was PRETTY sure his ad and statements were incorrect, and that the place was not rent controlled in the sense he was selling the place. He said he'd check. I checked with my lawyer and low and behold, I was correct. The broker was sweating bricks the next time we spoke and said I was correct. After I signed the lease I contacted the company who owned the building by phone and told them of this, and THEY said in no uncertain terms the broker was wrong and should have pointed out that the legal rents were much higher than the market rents, and apologized. They no longer advertise the bldg as rent controlled.
But my point is BROKERS LIE ALL THE TIME.
...And again, this was the building's leasing agent, not mine.