I just received a new, two-year lease with a rent increase of 7%. (My apartment has preferential rent.) Is this relatively high or low, and is there any kind of standard for how much market-rate rents go up every year? Does that change if you have preferential rent?
As with most things in the world of New York City real estate, as long as landlords can find someone willing to pay new, higher prices, the sky’s the limit, say our experts.
“To state the obvious, market rental rates are governed by supply versus demand,” says Sotheby’s International Realty broker Gordon T. Roberts. “There is no rule-of-thumb percentage — it’s pretty much whatever the market will bear.”
Whether or not a 7% increase for a two-year lease is a good deal, then, is highly subjective. “It depends on what your old rent was, and whether rents have escalated in your area,” says Roberts.
Since you have preferential rent, your situation is slightly different. This means your apartment is rent-stabilized, but for some reason the landlord is charging you less than the maximum legal rent — usually because the market price for the neighborhood is less than the legally allowed amount. (Again, supply and demand.)
But unlike other rent-stabilized apartments — which currently have a “rent freeze,” meaning landlords can’t raise the rents at all — your landlord is free to hike up your rent however much they like until you hit the legal rent, and many landlords often do hit preferential renters with steep hikes in order to edge them out of the building. (For more details, we’ve got a guide to preferential rents here.)
To get a better sense of what kind of deal you’re really getting, it’s time to do a little internet sleuthing.
“Theoretically, you can negotiate the proposed rent, and you’d start by looking at comparable apartments currently on the market,” says Roberts. “You might discover that your 7% increase is still a pretty good deal, or you might find something better.”
Virginia K. Smith is the senior editor at BrickUnderground.com, the online survival guide to finding a NYC apartment and living happily ever after. To see more expert answers or to ask a real estate question, click here.