If you are a New York City renter, landlords may want to lease your rent stabilized or rent control apartment for a higher amount. The NYC Rent Guidelines Board approves any annual increases for rent-stabilized apartments. If the building’s owner wants to shed these regulations in order to maximize his/her monthly rental intake, he/she may want to provide you an incentive to vacate the apartment.
In these instances, you can turn the situation to your advantage, monetarily. You can approach your landlord, if he/she has not come to you already, regarding a lease buyout.
When you sign a lease, you agree to pay a certain amount of rent per month for a period of time (e.g. one year or two years. However, you may want to leave early. In this case, you approach your landlord, and, he/she may offer you a deal to leave. The landlord has the incentive to do so when your rent is below market, such as a rent-stabilized unit.
In other cases, the landlord may approach you since he/she wants to raise the rent, but the law forbids it since you are a rent-regulated tenant. There are various ways a rent-stabilized apartment becomes deregulated while a rent-controlled apartment becomes decontrolled through a vacancy.
If you do not want to move and receive the buyout, you can refuse the offer, and the landlord cannot contact you for six months. Otherwise, it is considered harassment.
What I need to know
In the past, the amount landlords have offered varied greatly. There is no regulation on the amount he/she can offer or even a standard for determining the amount. You are in a better position to negotiate if your unit is in a desirable location, your rent is well below the market rate, and you are one of the last holdouts. However, there are a host of other factors that can come into play.
It is a complicated area. Not only do you need to understand the economics, but also the building owner’s motivation, and the tax consequences to both you and the landlord.
Can someone advise me?
You can turn to a lawyer for advice. You should look for a real estate attorney that has done lease buyouts.
There are also specialized firms that are dedicated to the task. In some cases, you only make a payment should the deal go through.
You should expect an in-depth analysis, covering a multitude of factors. This allows you to come in with an offer with substantial data backing it up. Alternatively, if the landlord approached you, your counter offer will have a lot more weight, or you may decide to forgo the lease buyout since you determine the offer is below fair value.
You need to weigh the cost of moving and renting or buying another apartment. There are emotional factors that come into play, too. Perhaps the apartment has special meaning, or you like the location and you are surrounded by friends and family. Alternatively, you may wish to move since you have little family and friends remaining in the neighborhood.