Here’s Why Some Rent Stabilized Tenants Are Seeing Huge Rent Increases
(DNAINFO) Amy Zimmer | April 20, 2016 — A primer on preferential rent and why advocates believe it could lead to tenant displacement.
Despite this year’s historic rent freeze on one-year leases for rent-stabilized apartments, thousands of tenants in the city’s estimated 840,000 rent-stabilized units are being hit with large rate hikes when they renew their leases — much to their surprise.
It’s because of something called “preferential rent.”
What is preferential rent?
Landlords often say they lease rent-stabilized units for less money than they are legally allowed to charge — a figure determined by a unit’s rental history and increases allowed under rent regulation — to be competitive in their neighborhood’s market.
But the landlord can take away the preferential rate — which must be listed as such on the lease along with the legal rent — and hike up the rent whenever the lease is renewed.