If you live in a rent-stabilized or rent-controlled apartment in New York City, you may have a rare opportunity to get a buyout from your landlord. A buyout is when your landlord pays you a lump sum of money to leave your apartment voluntarily. You can read more about what an apartment buyout is here.
This can be a good option if you want to move to a different place, need some extra cash, or have other plans for your future. But not all landlords are willing to offer buyouts, and not all tenants are eligible for them. Here are the top 4 ways to increase your chances of getting a buyout for your rent-stabilized apartment.
Some rent-stabilized apartments are in buildings that have been converted to co-ops or condos. This means that most of the units are owned by individual shareholders or owners, who can sell or rent them as they wish. However, some units may still be rent-stabilized and privately owned by a sponsor. If you are renting from the sponsor, you may have a good opportunity for a buyout.
That’s because the sponsor can sell or re-rent your apartment at market rate once you leave the rent-stabilized unit. This means they can unlock the equity in the apartment, which is likely to be substantial. The sponsor may also want to sell their remaining units to other buyers, who often prefer not to have rent-stabilized units in their portfolio.
Therefore, the sponsor may be willing to pay you, the rent-stabilized tenant a large amount of money to leave your apartment and deregulate the unit.
Preferential rent is when you pay less than the maximum legal rent for your apartment. The legal rent is the highest amount that your landlord can charge you under the rent stabilization laws. The preferential rent is a lower amount that your landlord agrees to charge you, usually to attract or keep tenants in the building when the market rent is lower than the ‘legal’ rent.
For example, the legal registered rent on unit A is $2,600/month. However, after marketing the space, the most someone was willing to pay was $2,200/month. The landlord agrees, The preferential rent which the tenant pays monthly is $2,200 and the legal registered rent is $2,600/month.
In the past, preferential rent was a temporary deal that could expire at any time. Your landlord could offer you a low, preferential “teaser” rent to get you into the building, and then raise it to the legal rent at renewal time. However, since 2019, when New York’s rent laws were overhauled, preferential rent is now in place for the entire tenancy. This means that your landlord can only increase your rent by the percentage allowed by the Rent Guidelines Board every year.
However, if you vacate your apartment, your landlord can raise the rent to the legal limit for the next tenant. This means they have an incentive to buy you out if there is a big difference between your preferential rent and the legal rent. In this case, your landlord may be willing to pay you a portion of that difference as a buyout.
Rent Control tenants are generally in buildings built before 1947, where the tenant is in continuous occupancy prior to July 1, 1971.
Once a Rent Controlled tenant vacates, the unit becomes rent stabilized, and the first rent upon vacancy, becomes the new rent-stabilized rent.
For example, a rent-controlled tenant was paying $1,200 per month and vacated. The new rent stabilized rent will be set at the new agreed upon rent, in this case, market rent of $4,600/month. This spread in added income is very valuable to the landlord and will generally lead to an apartment buyout opportunity of your rent controlled apartment.
Sometimes landlords want to change the use or layout of their buildings. They may want to demolish them and build something new, such as a luxury condo or hotel. They may want to combine them with other properties to create a larger development project. Or they may want to reconfigure them to create larger or more luxurious units that can fetch higher rents.
Rent-stabilized tenants have increased protections and rights under HCR laws, protecting their tenancy. In these cases, landlords may be forced to buyout rent stabilized tenants who are living there in order to move forward with their development projects.
This can be another opportunity for a buyout, especially if your apartment is in a prime location or has some unique features that make it attractive for development. For example, if you live in a corner unit with lots of windows and light, or if you have access to outdoor space such as a balcony or terrace, your landlord may value your apartment more than other rent-stabilized units in the building. Which would result in your landlord offering a buyout.
These are the top 4 ways to get a buyout for your rent stabilized apartment. Of course, there are no guarantees that your landlord will offer you one, or that it will be worth taking. You should always consult with an experienced lease buyout advisor before accepting any buyout offer, and make sure you understand the terms and consequences of leaving your apartment. A buyout can be a great deal, but only if it works for you and your goals.
Here at Lease Buyout Advisors, we are passionate about helping tenants get the best deal for their rent-stabilized apartments. We have over 18 years of experience in real estate and finance, and we specialize in lease buyouts in New York City. We represent tenants in rent-stabilized and rent-controlled apartments, and we know how to negotiate with landlords to secure the highest possible buyout amount.
We have a proven track record of getting our clients an average of 40% more than other tenants with similar leases. If you are interested in getting a buyout for your apartment, you can get a free evaluation from us today.
Find out your buyouts true value with our rent stabilized buyout calculator. How much is my buyout worth?