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ENDING A PREFERENTIAL RENT

Real Estate Q & A

By JAY ROMANO

Understanding ‘Preferential Rent’

Q. I moved into an apartment and signed a rent-stabilized lease, which has a “preferential rent” significantly lower than the stabilized rent the landlord can charge. The landlord has said he will not extend that preferential rate when my lease expires — which means my rent will almost double. Is this some sort of scam?

A. “It depends,” said Lucas A. Ferrara, a Manhattan real estate lawyer and an adjunct professor of law at New York Law School. Under state law, he said, a “preferential rent” — an amount below what an owner could legally charge a regulated tenant — can be either temporary or permanent, depending on what the lease provides. “If the ‘preferential rent’ is temporary, the landlord may charge a higher rent — that is, the legal regulated rent plus any allowable increase — at the time of a lease renewal or when the tenant permanently vacates the apartment,” Mr. Ferrara said. But if the “preferential rent” is for the entire tenancy, the landlord must base rent increases only on the preferential rent. A “fact sheet” on the topic can be found at the New York State Division of Housing and Community Renewal Web site.

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