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Still confused about 1 v 2 year lease renewal stablized apt

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

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Still confused about 1 v 2 year lease renewal stablized apt

Postby CityChick » Mon Sep 19, 2016 9:22 pm

So I've read the relevant threads but I'm still confused... The 1-year lease increase of 0% is awfully tempting. But, then again, the 2 year lease is a very low 2%. We intend to stay here, so long-term savings is the goal. Please weigh in. Thanks so much!
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Re: Still confused about 1 v 2 year lease renewal stablized

Postby TenantNet » Tue Sep 20, 2016 3:14 am

There's not much to be confused by. You have a choice. As with any RGB year, even before when one of the increases was not zero percent, you had a choice.

Yes, historically taking two year renewals led to lower rents in the long term. But this year and last year are outside of the norm. In my opinion, you can't really ignore zero percent. OTOH, as you point out, the two year rate of 2 percent is still pretty low when compared to rates over the years.

If you take a one year now, you don't know the rates, 1 or 2 year, that will be voted in next year.

My guess - and just a guess - is that we won't see a zero percent rate for a third year in a row, but we won't go back to the 7% and 9% range either, that is, unless there are major economic changes.
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Re: Still confused about 1 v 2 year lease renewal stablized

Postby BubbaJoe123 » Tue Sep 20, 2016 9:28 am

It's really difficult to forecast, since to really know what's the better choice, you'd need to know what the future rate increases will be, and to know that, you'd need to know a whole bunch of things (inflation, fuel costs, NYC political environment, etc. etc.).

In the early days of rent stabilization, two year leases were a MUCH better deal. In recent years, it's been essentially neutral, and even occasionally negative.

As an example of how hard it is to predict, if you had moved into a new RS unit in 2009 with a starting rent of $1000, you'd have paid about $800 more in total rent (through the end of this year) by going with one year leases rather than two year leases. If you moved in in 2008, however, one year leases would have cost you about $4600 _less_ to date than two year leases.

Bottom line, it's really hard to predict, and, on average, it doesn't make a heck of a lot of difference.
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Re: Still confused about 1 v 2 year lease renewal stablized

Postby CityChick » Tue Sep 20, 2016 4:32 pm

Thanks to you both.

I guess there's no right answer -- that's probably why it's difficult to decide what to do!
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Re: Still confused about 1 v 2 year lease renewal stablized

Postby Cranky Tenant » Fri Sep 23, 2016 1:48 am

It depends on when your lease ends. Mine ends on August 31st so I always wait until after the RGB makes it's decision before renewing for the next year.

Renewal increases for 1 and 2 years have been odd for the past few years. Before the 0% increase on one year leases, a two year lease renewals were nearly twice the amount. Calculate the difference over two years and you may find it's actually costing you more. You might want to gamble and take the one year renewal, and then keep your fingers crossed that the following increase won't be too high.
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Re: Still confused about 1 v 2 year lease renewal stablized

Postby TenantNet » Fri Sep 23, 2016 7:56 am

Cranky, if your lease ends Aug. 31, then the LL must offer you a new lease between 90 and 150 days beforehand. That would be between April 1 and June 1.

Of course the RGB increase percentages are not known until late June of each year. Once the renewal offer is made, tenants are supposed to respond within 60 days. In your timeline, that would be by July 31. By then the RGB rate would be known.

I remember seeing some document that laid out what LLs must do in situations like this ... but I can't remember where it was/is.

But the jist is that while LLs must offer the renewal, they can indicate on the renewal form that the rates will depend on the RGB vote and they should resend the renewal offer once that occurs.

As for 1/2 year renewals, up until 2015, taking a two year renewal over time usually meant overall lower rents.

The flaw in BubbaJoe's analysis is that it presumes one will always take a one year vs. one always taking a two year renewal. But most people will mix and match. So while one usually takes a two year, they can occasionally take a one year.

That way one can respond to unusual changes in the RGB rates. Over time the rates somewhat reflect the political cycle. Unless that market is doing strange things, you often find lower rates around the time a mayoral general election occurs. So if there have been a string of 4/8% renewals, and in an election year you see a 1/2% or even 2/3.5%, then you can take advantage of that. You can even try to predict your eligibility for this by taking a one year renewal the year before so you won't be locked in a two year renewal (and therefore not eligible) when the dip occurs.
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Re: Still confused about 1 v 2 year lease renewal stablized

Postby Cranky Tenant » Fri Sep 23, 2016 1:30 pm

My landlord often fills out and dates the renewal form in early May but he never mails it before the end of the month. Sometimes it doesn't arrive in the mail until June so I always note the date I received it.

Waiting until after the RGB made their decision allowed me to avoid one of two minimum increases for RS apartments under $1000 a month,(2009?) so it seems to be worth the wait.

Whatever the OP decides, it's definitely better to do some homework before signing. deBlasio is coming up for re-election so there's a fair chance next year's rate will be low so he can claim he cares about tenants.
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