I fell into the trap of a greedy landlord with preferential rent, here is my story:
2016 I felt it was my best year. I was 26, and I felt like I had a lot going for myself. I've saved up a substantial amount with the hopes of buying a home, I had paid off a lot of my debt, I decided to apply to grad schools. I had also put my foot down and have started expressing myself more in relationships (it worked).
Most importantly, I was able to move forward with my plans of buying a home only to shift the approach and rent instead. New York City apartment search is never fun, I had a strict budget with goals to move out by July 2016. I searched high and low on StreetEasy, HotPad, and many other sites. I even went on Reddit to ready advice forums.
It was not until I stumbled upon a property on Craigslist did I finally reach the jackpot. It was a 1 bedroom apartment conveniently located in the Bronx. I knew I had to go see it. I called the Property Manager and scheduled a walkthrough with the building super. A pre-war building with great bones and lots of potentials.
The super an I hit it off. He told me that he would put in a good word for me, but I needed to fill out the application online. I knew that I had to put together an impressive application package because this was technically my first post-college apartment #adulting. I created a curated book of documents and fired it off in an email with proof of application payment.
Less than a week I was called in, the landlord mentioned that although I was young, he was willing to chance it. I went in on a weekday to sign my lease.
I loved this apartment, it was my first place to myself. And I was able to decorate it as I pleased. I started Grad school here and I even started my blog here.
The document that I signed was a preferential rent document. At that time I was led to believe that it was a rent-stabilized lease. I went the year thinking that the apartment was a steal.
A year went by, then I received an increase of $20 - I found that odd but was okay with it. I wasn't expecting to pay more.
The following year I received an increase of $60 a month. I immediately called my landlord to understand the hike. He rudely told me that the price was still a fair price and that units in the Bronx are never that cheap. The nerve. If I wanted to pay for an expensive apartment in the Bronx, then I wouldn't live there.
Eventually he agreed to wave $20 off my rent but I was already frustrated. I decided not to renew my lease.
A preferential lease means that a sponsor can cover the percentage of the lease, allowing the tenant to pay less than the amount valued of the property.
The sponsor can decide to pay less and less each year, forcing the tenant to cover more and more.
Resources to Read:
How New York’s preferential rent loophole is unfairly used against tenants
Ask Sam: What does "preferential rent" mean, and are there any downsides?
Widespread confusion over preferential rents opens the door for rent hikes
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