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Have RGB increases ever been lower than initial recommenda?

NYC Rent Regulation: Rent Control/Rent Stabilized, DHCR Practice/Procedures

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Have RGB increases ever been lower than initial recommenda?

Postby sr77 » Sat May 13, 2017 11:31 am

Has there ever been a year in which the new guidelines ended up being lower than those initially recommended (or lower than their lowest range -- e.g., lower than 2% in a recommended range of 2 to 4 %) by the RGB?

Also, would it be fair to conclude that under the current RGB recommendations for 10/1/17-9/30/18 anyone who has the option of choosing a 1-year lease at 0% before that period kicks in (i.e., their current lease expires before 10/1/17) would clearly want to do that?

Thanks.
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Re: Have RGB increases ever been lower than initial recommen

Postby TenantNet » Sat May 13, 2017 11:45 am

Did you check here? http://tenant.net/Rent_Laws/RGBorders/rgbtoc.html

Let us know what you find.

Why would you not want a 0% increase for as long as you can get it? Even with the preliminary vote, no one knows what the RGB will do in its final vote in June, much less future votes.

Historically during election years, Mayors seeking reelection tend to keep the RGB percentages on the low end. But consider that Mayor de Blasio has no serious opposition, so the pressure on him is not that great.
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Re: Have RGB increases ever been lower than initial recommen

Postby sr77 » Thu Jun 22, 2017 10:18 am

TenantNet wrote:Did you check here? http://tenant.net/Rent_Laws/RGBorders/rgbtoc.html

Thanks. That data would only show the actual final guidelines, not the initial recommendations, wouldn't it?

I was really just curious whether any final orders went lower than the initial recommendations. I assume not.

Why would you not want a 0% increase for as long as you can get it? Even with the preliminary vote, no one knows what the RGB will do in its final vote in June, much less future votes.

No reason other than a suspicion that the next Guidelines would have increases that would favor taking a 2-year lease instead of a 1-year lease (even with the latter's 0% increase). But as you've pointed out, that doesn't seem to be something that can be predicted (i.e., apparently, the past has shown no clear trends).

One might, however, act on evidence (if there were any) that larger increases 'next year' were likely. So I was in effect asking whether there were any such indications. I'm not aware of any.

Historically during election years, Mayors seeking reelection tend to keep the RGB percentages on the low end. But consider that Mayor de Blasio has no serious opposition, so the pressure on him is not that great.

But he's always making the case that he's a tenants' mayor, isn't he? Wouldn't seem smart for him to smile at increases, esp. if they're not minimal.
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Re: Have RGB increases ever been lower than initial recommen

Postby TenantNet » Thu Jun 22, 2017 10:56 am

Here's a test worth doing...

Go back to some arbitrary year, say 1980 and start with some arbitrary initial rent, say $500.

Then walk through the years and apply the 2-year RGB percentages every two years and see what the rent is in 2015 (before the 0-percent guidelines). What is that rent?

Then go back, also to 1980 and also starting at $500, and walk through the years applying the 1-year RGB percentages every year and see what the rent is in 2015. What is that rent?

How do they compare?

I'll bet in the end the 2-year cycle results in lower rent.

As for total rent paid over the years, add each column up and what do you get?

There are side notes to this exercise, in that to be completely accurate, one must apply the future value of money, an economists' thing that takes into account inflation, and alternative opportunity costs. If you take 2-year increases and pay an extra $10 per month, what could you do with that extra $10 if you instead took the 1-year alternative.

But for this exercise disregard those aspects. They are really only meaningful in larger quantities of money.
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Re: Have RGB increases ever been lower than initial recommen

Postby BubbaJoe123 » Thu Jun 22, 2017 7:08 pm

In terms of 2 year vs 1 year, it depends a lot on what you choose as your base year.
Certainly, taking 1980 as your base year, your cumulative rent since then would have been about 10% lower taking the two year vs. one year option.

Since 2000, though, you've been better off with a 1 year lease for all but three base years. Again, the differences aren't big (mostly 1-2% in cumulative rent). Looking at start years in 2000 and thereafter, the biggest difference in cumulative rent in the 1 vs 2 year scenario is for leases starting in between 10/1/03 and 9/30/04, who had their first renewal between 10/1/04 and 9/30/05. For them, going 1 year saved 6% cumulatively vs going 2 year.

Thought of another way, there were only three years since 2000 where the total rent you paid over a two year period was less by taking the two year lease vs. two consecutive one year leases.

One final thought - it's not just the rent you'll pay over the next two years that matters, though, since the rent at the end of the two years is the base for the next renewal (and next renewal increase). A two year lease with a 4% increase, or two consecutive one year leases with a 2.65% increase, both yield the same total rent over two years. In the former case, though, your rent (assuming it was $1000 in the previous lease) is $1040 at the end of year two. In the latter case, it's $1054, so your rent in year 3 will be higher, since the year 3 increase is applied to a higher base.

Long story short, in recent history, choosing one or two year leases really hasn't made much of a difference one way or the other, but one year leases have been slightly cheaper.
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Re: Have RGB increases ever been lower than initial recommen

Postby TenantNet » Thu Jun 22, 2017 7:50 pm

Which just goes to show that one can spend all day dwelling on this, and still not have the best scenario. Over time, 2 year renewals are probably better, but there are exceptions like the last two years. Life is too short.
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Re: Have RGB increases ever been lower than initial recommen

Postby BubbaJoe123 » Fri Jun 23, 2017 8:48 am

TenantNet wrote:Which just goes to show that one can spend all day dwelling on this, and still not have the best scenario. Over time, 2 year renewals are probably better, but there are exceptions like the last two years. Life is too short.


Agreed. My advice, if you expect to be in your apartment for at least two years, get the two year lease, and be done with it.
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Re: Have RGB increases ever been lower than initial recommen

Postby TenantNet » Fri Jun 23, 2017 10:17 am

Unless it's something like the last two years with 0% increase. Even a 1% increase is sufficiently low to consider a 1-year renewal.
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Re: Have RGB increases ever been lower than initial recommen

Postby sr77 » Tue Jun 27, 2017 10:36 pm

Thanks for those replies.

I agree with TenantNet that advice to 'always take the 2 year option' doesn't apply when a 1-yr. renewal has a 0% increase.

Now with the new RGB guidelines in, I would say it's clear that anyone with the option to take a 1-yr. renewal during the *current* guidelines period (0% increase) should do that. And then take the 2-year lease (2%) next year. (Unless 10/1/18-9/30/19 gets another 0% increase for 1-yr. leases.)
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Re: Have RGB increases ever been lower than initial recommen

Postby TenantNet » Wed Jun 28, 2017 12:48 am

The new RGB percentages are 1.25 and 2%. That's still low enough to consider a one-year renewal lease. Of course, my LL is refusing to give me any renewal, so if that continues, I will still have a 0% increase.
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Re: Have RGB increases ever been lower than initial recommen

Postby sr77 » Wed Jun 28, 2017 5:19 pm

TenantNet wrote:The new RGB percentages are 1.25 and 2%. That's still low enough to consider a one-year renewal lease. Of course, my LL is refusing to give me any renewal, so if that continues, I will still have a 0% increase.

My thinking was that if the next guidelines don't include a 0% increase for 1-yr. lease, taking a 2 year lease at 2% is a fair gamble that no 2-yr lease under the next guidelines after those is likely to be lower than 2%.

IOW, you could take a 1.25% 1-yr. lease for 10/1/18-9/30/19, but might then face a 3 or 4% increase for a 2-year lease for 10/1/19-9/30/20.

But as you and Bubba have pointed out, there's no assurance that a guess one way or the other will work out best, and historically the difference hasn't usually turned out to be significant whichever renewal period you chose.
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