In New York, however, only 38% of rental flats are priced at market value.
Approximately 1.3 million rental units in the city are regulated or subsidized in some fashion.
There are numerous low-cost housing options available. The issue is that obtaining one is difficult.
This is the primary flaw in New York's approach to cheap housing: it prioritizes preserving existing inhabitants, in some cases providing them with significant rent discounts, while restricting supply and making it more difficult for new people to establish households in the city.
New tenants do occasionally get into subsidized or controlled housing in New York and save money. Here's how you can go about doing that.
1. Submit an application for an inclusionary housing lottery and cross your fingers.
The "inclusionary housing" initiative in New York City encourages developers to set aside a percentage of new flats as affordable housing with low rents. The "poor door" construction that I reported about on Monday is an example of this: 20% of the flats will be set aside for low-income residents.
These apartments may be found at a fraction of the price on the Upper West Side: one-bedroom apartments can be found for around $1,000, less than a third of the current rate.
Many people want these flats, but there aren't many of them: only 2,800 have been constructed since the initiative began in 2005. You must win a housing lottery to obtain one. You may see a list of lotteries that are presently accepting applications here.
Although the lotteries are income-restricted, unless you earn well into the six figures, you should be able to locate one that you qualify for. Apartments are available for two-person households earning up to $180,000 per year in some cases. (Such is the case with "middle-income homes.") The biggest rent savings, however, are reserved for flats with low-income ceilings. You won't be allowed to rent in the "poor door" building if your annual income is less than $50,000.
The bad news is that, just like the normal lottery, you're extremely unlikely to win. "Many buildings in the outer boroughs receive 15,000 applications for about 200 affordable housing units," according to The Real Deal in 2011. You can only imagine how fierce the rivalry would be in Manhattan.
The good thing is that once you're in, you're in. You can stay in your inclusionary housing unit as long as the building is controlled providing you met the income requirements when you moved in. Those laws are usually in place for at least 20 years.
2. Look for a rent-controlled apartment and hope that market rents rise.
Rent regulation is by far the most comprehensive affordable housing policy in New York, covering the majority of the city's rental apartments built before 1974. In 2010, about 1.1 million of the 3.1 million households in New York City were subject to rent control.
That isn't to say that if you seek hard enough, you can locate a three-bedroom apartment in the West Village for $400.
First and foremost, a word about program names. Rent regulation is commonly referred to as "rent control" by most people. However, Rent Control is the name of a specific program that only covers roughly 50,000 very old flats, which is perplexing. When a New Yorker says he lives in a "rent-regulated apartment," he usually means rent stabilization, which covers approximately a million residences in the city.
Your rent can only go up by a certain percentage each year under rent stabilization, which is established annually by the Rent Guidelines Board to reflect increases in operational costs. The maximum increase allowed this year is 4%. And unless you move out voluntarily or die, your landlord must give you a renewal lease every year. If your relative has lived with you for two years at the time of your death, you can even give him or her the flat.
Rent regulation can result in a significant discount to market in a tiny percentage of circumstances. These cases are frequently made up. Rent regulation was how Rachel and Monica on Friends were able to afford their gorgeous condo while working part-time. You, on the other hand, are unlikely to discover a deal like this.
Most of the time, rent regulation results in a tiny or no decrease from market rent. I now reside in a rent-stabilized apartment with a legally permissible rate that is significantly higher than the market rent. As a result, my lease indicates a "rent preference" of several hundred dollars per month, yet I receive no regulatory savings.
This occurs for a variety of reasons. Most of the time, the legally permissible rent increase is similar to the rise in market rentals in most neighborhoods. Rent regulation has tended to mean substantial discounts to market rent primarily in very desirable locations, particularly in Manhattan below 96th street.
When a unit becomes vacant, landlords have a number of options for bringing the rent up to market for the new tenant. They get a 17 percent rent increase right away. Then, for every $40 they spend on capital improvements to the vacated apartment, they can raise the rent by $1, which means they can recoup the cost of renovation in less than four years.
Smart landlords will use these options to make sure the legal maximum rent for a vacant apartment isn’t any lower than market rent. And if they get the rent up to $2,500, they can remove the apartment from regulation altogether.
According to the Furman Center at New York University, 35 percent of rent-stabilized residents have remained in the same flat for more than 20 years, whereas only 3% of market-rate tenants have done so.
It's also easy to stay because rent stability has absolutely no means test: your landlord can only raise your rent to market if you make more than $175,000 per year for two years in a row.
3. Join waiting lists for "Mitchell-Lama" housing for the middle class.
Beginning in the 1950s, New York State implemented a program that made a deal with developers: if you provide affordable housing to residents, we'll give you big tax breaks and lower mortgage rates.
The "Mitchell-Lama" projects created under this program (called for the state legislators who conceived it) are either rent-controlled rentals or "limited-equity co-ops," where you can buy an apartment for a bargain and have to give it back to management at a set price when you move out. In New York City, there are around 110,000 of these units or about 3% of the total housing stock.
Penn South, which spans six city blocks in Chelsea between 23rd and 29th Streets and 8th and 9th Avenues, is one of the most significant of these complexes. A one-bedroom limited-equity co-op in Penn South cost roughly $40,000 in 2011, with $400 in monthly upkeep. When compared to comparable rental apartments, that's a savings of about 85%.
Mitchell-Lama housing may appear to be a good deal, and it is. However, there is a catch. Years-long waiting lists exist for the most desirable developments (those in the nicest neighborhoods with the lowest pricing). Penn South's waiting list is so long that fresh registrations aren't being accepted. However, if you're ready to relocate to the boroughs beyond Manhattan, you can discover a Mitchell-Lama property with no waiting list or one with a short wait time.
4. Look for a housing complex or apply for Section 8 housing assistance.
People with moderate or even high incomes can take advantage of the first three choices I mentioned. These two solutions are only available to the impoverished. And they're both so oversubscribed that even if you're poor, they're unlikely to assist you.
Section 8 vouchers are a federal subsidy for those earning less than half of the regional median income. For a two-person household in Manhattan, the limit is $34,400. The program provides you with a voucher that can be used to assist pay for a private flat, limiting your effective rent to 30% of your salary.
Section 8 is unavailable. The certificates have all been redeemed. The Section 8 waiting list in New York City currently has approximately 120,000 people on it. Since 2009, the New York City Housing Authority has not accepted new Section 8 applicants.
There are also housing developments. There are 179,000 apartments in these buildings, with 227,000 households on the waiting list. According to The New York Times, the waiting list isn't first-in-first-out like Mitchell- Lama's; it's more of a black box, with some candidates getting in swiftly while others having to wait indefinitely.
Although project housing is unappealing, it is inexpensive if you can find it. Tenants must be low-income, and rent is limited to 30% of income, just like Section 8. The average apartment rent is $436 per month.
Here's a list of developments that are currently available. You may buy a one-bedroom co-op for $7,200 with around $700 in monthly expenses at Rochdale Village, and you'll only have to wait about six months on a waiting list. The disadvantage is that Rochdale Village is located so far east in Queens that the subway does not serve it.
Mitchell-Lama developments have income limits, but they are rather lenient. The "maximum" monthly income is generally seven times your rent, or seven times the expected cost of ownership in the case of a limited-equity co-op.
That one-bedroom apartment at Rochdale Village has a maximum income of around $66,000. Even if you earn up to 150 percent of the "limit," you'll still be eligible; you'll just have to pay a premium.
If you earn more than 150 percent of the maximum income while living in Mitchell-Lama housing, you could be evicted. However, a 2007 inspector general's study found that this regulation is rarely followed in practice.
It's easy to see why this is so. Rent and common charges are more likely to be paid by tenants with high incomes, and they are also vulnerable to additional surcharges that generate more money. Management businesses are reluctant to dismiss them and replace them with tenants who pay less and have a poor credit history.
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