What Is an Unregulated Apartment?

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Unregulated apartments are also known as free-market apartments.
Unregulated apartments are also known as free-market apartments. (Image: Jupiterimages/Pixland/Getty Images)

In some large cities, real estate values may make the housing market prohibitively expensive for tenants who earn working-class wages. To help provide affordable housing and offer protections to these tenants, some cities, most notably New York, passed rent stabilization and rent control ordinances that limit rent increases, eviction powers and other landlord-tenant issues in some buildings. Housing that doesn’t fall under these laws is considered an unregulated apartment, and landlords have much more freedom to raise rents or force tenants out for redevelopment reasons.

Unregulated Apartments

Unregulated apartments are those that may be let to any tenant and for which the rent isn’t governed by state or local regulations. Also known as fair-market housing, these apartments lease under conditions completely ruled by the economic conditions that drive the housing market. In New York, all apartments in buildings with five or fewer units are usually unregulated housing, as are apartments that rent for more than $2,500 monthly. Individually owned units in a condominium or co-op building are usually unregulated apartments.

Rent-Controlled Apartments

Rent-controlled apartments are residential units of six or more units built before 1947. Owners of rent-controlled apartments can’t raise the rent on tenants outside of a base-rent figure calculated on a biannual basis. Base-rent figures are based on operating costs of the building, and tenants may challenge rent increases in court if they feel their rent increase violates these limits. A rent-controlled apartment must have been continuously occupied by the same tenant since at least July 1, 1973. When tenants of a rent-controlled apartment move, the apartment either becomes deregulated or rent-stabilized.

Rent-Stabilized Apartments

Rent stabilization is similar to rent control; rent-stabilized apartments are in high-occupancy buildings built between 1947 and 1973. Similar in effect to rent-controlled limitations, landlords of rent-stabilized buildings can’t excessively raise rent and are also required to allow tenants the chance to renew their lease each time it expires; tenants also are protected by succession rights that allow spouses or family members to assume the lease. Occupants in rent-stabilized apartments can’t be evicted unless they violate the terms of their lease or fail to make rent payments. Developers of new buildings may apply for rent-stabilized status and receive tax incentives.

Locating Rent-Stabilized Apartments

The majority of housing in New York is unregulated, so locating a rent-controlled or rent-stabilized apartment may be difficult. The New York Rent Guidelines Board maintains a list of rent-stabilized buildings. Because the board’s list of buildings isn’t complete – landlords who didn’t register with the board and rent-stabilized single units in condominium buildings aren’t listed – renters should expand their search outside the list. Because rent-stabilized units are much easier to rent, many landlords don’t publicly advertise vacancies, merely listing them on the building, so on-foot surveys of neighborhoods may reveal affordable housing.

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