Rent Stabilization Explained

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Rent Stabilization Explained

Staff Writer · Mar 5, 2010

Rent stabilization is a set of laws designed to protected tenants. Originally formed in the post-World War II era, the laws were created to induce tenants to rent apartments by guaranteeing lower than market-price rents.

The Three Rights of Rent Stabilization

Tenants in rent stabilized apartments are guaranteed three basic protections: the right to tenure, or the possibility of eviction based only on a limited number of specific grounds; security against steep rent increases; and the right to basic services and repairs. Additionally, tenants are entitled to lease terms and renewals of one to two years at their choice.

Rent Stabilized Apartments Defined

Not all apartments are able to be identified and governed by rent stabilization laws. To be entitled to rent stabilization, the apartment must have been inhabited between February 1, 1947 and January 1, 1974, contain six or more units that are no cooperatives, condominiums, owned by a charity or run not for profit and the tenant must have paid less than two thousand dollars a month when they initially occupied the apartment.

The length of the rent stabilization will only last as long as the landlord holds a tax abatement on the property, which usually runs anywhere between ten to fifteen years. However, the landlord must give the tenant a year’s notice prior to the end of the abatement period. After the end of the tax abatement period the landlord may raise the rent to current market rates. Additionally, there is often a clause in the lease agreement stating that the landlord is not obligated to renew the lease if the apartment is not the tenant’s main residence.

Rent Stabilization v. Rent Control

Often, the terms rent stabilized and rent controlled are used interchangeably or sometimes combined into the term “rent regulation.” The two terms, however are very different and should be fully understood prior to searching for or leasing an apartment. A landlord of a rent controlled apartment is prohibited from raising rents beyond a prescribed amount. This means that there is a price ceiling for rent on that specific apartment. A rent stabilized apartment, on the other hand, is governed by a different set of regulations stipulating grounds for eviction, required repairs and rent increases. A rent controlled apartment must have been built prior to February 1947. There are vastly fewer rent controlled than rent stabilized apartments.

Rent Stabilization and Rent Increases

Just because an apartment is rent stabilized does not mean its monthly rent cannot increase. A state or county often has a specific board that governs rent stabilized apartments, including any allowable increase the landlord may charge upon expiration of the lease. Check with your local state or county to read and research these guidelines.

The Argument against Rent Stabilization

Rent stabilized apartments are not universally well received. Critics claim that rent stabilization reduces the quality and quantity of available housing. Opponents claim that because a landlord’s income is capped there is less incentive to maintain old or build new properties. Furthermore they argue that the regulations require new tenants to pay more, which has substantial economic effects including, but not limited to, lack of diversification.

Rent stabilization differs from rent control in many aspects. Prior to apartment shopping or signing a lease you should research the distinction between the terms to make sure you fully understand the differences and their application to your apartment.

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