Understanding NYC Market Rate, Stablized, and Subsidized Housing

What is the difference between a market rate apartment, a rent stable apartment and subsidized housing?

More than half of the 2 million rental units in New York City are called “market rate” apartments. Generally speaking, a market rate apartment is one in which the rental rate is set largely by supply and demand. If there are more renters looking for a type of property than there are units, the market rate goes up as landlords can charge more. If there are more units than there are potential renters, then the market rate goes down as landlords have to offer incentives to entice tenants. In New York City, a market rate apartment also means that it is an apartment in which the rent is not regulated by law.

Rental rate regulations were brought into affect in order to insure that the working class and poor weren’t pushed out of Manhattan by the influx of wealth and development. Over the years however, various programs have come and gone. Typically, an apartment building that was built or renovated after January 1, 1974 is considered a market rate unit. There are some exceptions, if the owner of the building applied for special tax abatements, but generally speaking, “modern” units are market rate. Buildings with five or fewer units or units which are over $2,000.00 per month are not rent regulated. In addition, co-op and condo units which are rented out by an owner are almost always market rate.

A rent stable unit is one in which the law established the rental rate or rather, how much the rent can increase each year. If the building was built before 1974, has six or more units, and the rental rate (with legal increases) has not reached the $2,000.00 threshold, the building may be under rent stabilization rules. Because the price of these units can be significantly less than market rate, the competition can be fierce.

Subsidized housing falls into two categories; public housing and Section 8 housing. Buildings managed by the City of New York specifically for middle and lower income families are referred to as “public housing.” The wait list for public housing can be years. Section 8 housing is essentially a “voucher” system where low income families can live in private housing, provided that the owners are willing to accept the vouchers as rent. The vouchers are then redeemed by owners.

originally posted January 6, 2007