Signal 1: Preferential Rents: A Loophole from New York Landlords to Increase Rents Arbitrarily
Preferential rents which owners of rent-stabilized apartments offer are lower than maximum legal regulated rents to attract tenants. The following table apparently shows that they become more prevalent in NY during the past 15 years. To tenants, preferential rents seem to be a bonus and bargain at first. However, they can be exploited as a loophole by landlords to freely boost rents to much higher legal regulated rents whenever renewing a lease, because rent stabilization only applies to legal regulated rents, instead of preferential rents.
Meanwhile, tenants are not able to verify legality of legal regulated rents from Division of Housing and Community Renewal (DHCR) because the division declares it does not attest them. Thus, landlords have more freedom to set legal regulated rents. Take my lease as an example, this year’s legal regulated monthly rent increases $900 compared to last year, a real spike.
Therefore, I suggest tenants should read the lease thoroughly and pay attention to preferential rents, mostly named temporary rent concession in a lease, before signing to prevent themselves from being exposed to much higher rents when a lease expires. And DHCR should collaborate with data technicians and analysts to establish an online intelligent platform, dealing with preferential rent complaints timely and effectively, perform duty to oversee the reports provided by landlords in order to prohibit them from freely setting legal rents and finally improve relevant regulations.
Source:Podkul, C. (2018). New York Landlords Exploit Loophole to Hike Rents Despite Freeze — ProPublica. Retrieved from https://www.propublica.org/article/new-york-landlords-exploit-loophole-to-hike-rents-despite-freeze
