How to Deregulate a Rent-Stabilized Apartment?

If you own a rent-stabilized apartment and find yourself reading this, then you most likely want to know whether it’s possible to deregulate the apartment.

Well, the answer to that question is yes. However, it’s not as simple. You can deregulate a rent-stabilized apartment only in specific situations.

Before we get into the details of deregulating the apartment, it’s essential that you understand what rent stabilization is in the first place.

Keep reading to learn more about this below!

What is a Rent Stabilized Apartment?

Rent-stabilization is a rent regulation law that was implemented by the government in 1969. It was put in place to control the rapidly increasing rents in the postwar apartment buildings.

Simply put, rent stabilization is the regulation of rents by the government. This means that landlords can only increase the rent by a designated amount every year.

The tenants of rent-stabilized apartments are not affected by the increasing market-rate rent because the limit of rent increase is already set by the Rent Guidelines Board.

But how do you know which apartments and buildings are rent-stabilized?

Well, rent-stabilized apartments are in buildings that were constructed before the year 1974.

However, there is one more condition that the pre-1974 buildings need to fulfill in order to be considered rent-stabilized. They must have more than six units in the building. These apartments usually have a rent of less than $2,700 per month.

Living in rent-stabilized apartments is very beneficial for the tenants.

The biggest benefit is that the landlord can’t increase their rent past a set limit each year. Moreover, the tenants have the legal right to keep renewing their lease for as long as they want to occupy the apartment.

This is commonly the reason why advertisements of these apartments do not display that the apartment is listed as a rent-stabilized unit.

However, it’s not difficult to find out: you can determine the status of the apartment by estimating the age of the building and the listed price.

Can a Rent Stabilized Apartment be deregulated?

Deregulating a rent-stabilized apartment is no easy feat.

The rights of the tenants are strongly enforced by the local authorities. According to the regulations, you have to renew a tenant’s lease with the same conditions and terms every time except in certain conditions.

That is why many landlords think that deregulating their apartments is impossible.

However, contrary to popular belief, there are a few circumstances in which a rent-stabilized apartment can be deregulated.

Keep reading below to learn how you can deregulate a rent-stabilized apartment.

Occupy the unit yourself

One of the easiest methods of deregulating a rent-stabilized apartment is to occupy it yourself.

You can refuse to renew a tenant’s lease if you or your family member needs the apartment for occupation. However, the apartment must be your or your loved ones’ primary residence.

The only risk in this method is that if you or your family does not occupy the apartment for three years after taking possession, you can lose the right to increase the rent of the other units owned by you in the building.

So, it’s better to only use this method when you actually do intend on occupying the unit.

Prove that the tenant has a high income

Another instance in which you can deregulate a rent-stabilized apartment is if you can prove that your tenant has a high income.

According to the regulations, if the rent of your apartment has reached the limit of $2,700 per month and the tenant has been making a total federal adjusted gross income of higher than $200,000 for the past two years, then you may have a solid claim for deregulation.

However, before you proceed with this, make sure that you consult with legal and financial advisors to see if you have a legal standing to pursue the process of deregulation.

If you don’t ensure the legality of your claim, it can have severe consequences.

Also, you must remember that you cannot dislocate a senior of 62 years of age or older without providing them with an equivalent property at the same or lower rent.

Demolish the building

When all else fails, and you desperately need to deregulate your apartments, then you can consider demolishing the building.

It may sound extreme at first, but real estate investors usually manage to find great deals on a distressed property.

If your building is already worn out or in need of thorough repair, then it will make even more sense for you to consider this option.

However, in order to go through with the demolition, you’ll have to get DHCR’s permission. You’ll also have to prove that you are financially able to manage the demolition project.

How to know if a building is rent-stabilized?

If you’re a tenant looking for a rent-stabilized building, it wouldn’t be very difficult to find one.

The biggest identifier of a rent-stabilized building is the year it was built. If a building was built before 1974, has at least six apartment units, and charges a monthly rent of $2,700 or less, then you can assume that it is a rent-stabilized building.

However, there are some exceptions to this.

A tenant can still be charged a rent of over $2,700 per month in a rent-stabilized apartment. The most reliable method of checking whether the building is rent-stabilized or not is to contact your city and ask for the rent history of the said apartment.

In New York, you can do this by calling the DHRC at (718) 739-6400. Alternatively, you can also check online as there are several websites with listings of rent-stabilized apartments.

Final Thoughts

Deregulating a rent-stabilized apartment isn’t really possible in all circumstances except a select few that we discussed above.

If you can move into the apartment, then that’s possibly the most convenient method of going through with deregulation.

It’s not very likely, but if your tenant has a high income, then you can also use that as a basis to deregulate the apartment.

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