Preferential rent in NY after the 2019 law

If you pay a preferential rent on a rent-stabilized apartment, New York’s 2019 rent law lets you keep it for as long as you live there, and each renewal increase is calculated on the lower rent you actually pay. The owner can switch to the higher legal regulated rent only after you permanently move out.

Legal regulated rent vs preferential rent

Every rent-stabilized apartment has a legal regulated rent: the maximum the owner may lawfully charge, registered with New York State Homes and Community Renewal (HCR). Sometimes the market won’t bear that amount, so the owner agrees to charge less. That lower figure is the preferential rent. Your lease should show both numbers.

Before the 2019 law, an owner could often treat a preferential rent as a temporary discount and raise the tenant to the full legal rent at renewal. The Housing Stability and Tenant Protection Act (HSTPA), effective June 14, 2019, ended that for tenants paying a preferential rent on or after that date.

How a renewal increase is calculated

The Rent Guidelines Board (RGB) percentage, plus any other increase the Rent Stabilization Law allows, is applied to the preferential rent. The legal regulated rent goes up by the same percentage, but you only pay the preferential amount.

HCR’s example

A tenant signed a one-year lease starting October 1, 2018, with a legal regulated rent of $1,200 and a preferential rent of $1,000. At the October 1, 2019 renewal, the RGB increase was 1.5%:

Under the old practice, the owner could have moved this tenant to $1,218 at renewal. Under HSTPA, the tenant pays $1,015.

The same math with today’s guidelines

Say your legal regulated rent is $2,400 and your preferential rent is $1,900, and your lease renews:

Run your own numbers here:

What the owner can’t do

According to HCR Fact Sheet #40, an owner cannot use or enforce a lease clause that:

• ends your preferential or discounted rent because you paid late or after a certain day of the month; or
• makes the discount depend on something you have to do, such as paying rent electronically.

If your lease contains a clause like that, you can challenge it in a rent overcharge or lease violation complaint with HCR, or a court can review it.

The exceptions

• When you move out. Once the tenant permanently vacates, the owner may charge the next tenant the higher legal regulated rent, with lawful increases.
• The legal rent must be on paper. To charge that higher legal rent on a vacancy, the owner must have written it in the lease where the preferential rent was first charged and in every renewal after that. Registering it with HCR is not enough on its own.
• Some government-regulated affordable housing. HCR notes that certain buildings under a government regulatory agreement or financing program may not be bound by these limits. If you live in one, ask the supervising agency.
• Timing in 2019. The rule applies to tenants paying a preferential rent on or after June 14, 2019. In HCR’s second example, a renewal signed in April 2019 that tried to end the preferential rent did not take effect until July 1, 2019. Because the lease in effect on June 14, 2019 had a preferential rent, the renewal had to be based on it.

If your owner raised you to the legal rent

1. 1

   Find your leases

   Look at the lease in effect on June 14, 2019 (or your first lease, if you moved in later) and every renewal since. Note the legal rent and the rent you actually paid.
2. 2

   Get your rent history

   HCR’s rent registration history shows what the owner registered each year. Request it here.
3. 3

   Recalculate

   Apply each year’s RGB percentage to the preferential rent, not the legal rent. Compare that with what you paid.
4. 4

   Ask the owner to correct it in writing

   Some owners fix errors quickly once a tenant points to HCR Fact Sheet #40.
5. 5

   File a complaint if needed

   You can file a rent overcharge or lease violation complaint with HCR, or go to court. Since HSTPA, overcharges are generally reviewed and collectible for six years. See how to file a rent overcharge complaint and estimate the amount with the rent overcharge estimator.

Common questions

Does the 2026 rent freeze apply to a preferential rent?

Yes. The RGB guideline is applied to the preferential rent, and Order #58 sets 0% for one- and two-year leases starting October 1, 2026 through September 30, 2027. If your renewal starts in that window, your preferential rent stays the same. See NYC 2026 rent freeze.

I moved in after June 2019 with a preferential rent. Am I covered?

Yes. HCR’s rule covers tenants paying a preferential rent on or after June 14, 2019, so a tenant whose first lease started later with a preferential rent keeps it for the life of the tenancy too.

Do other increases, like an MCI, also apply to the lower rent?

HCR says Rent Guidelines Board increases and other increases allowed by the Rent Stabilization Law are applied to the preferential rent. So a lawful increase is calculated on what you pay, not on the higher legal rent. See MCI and IAI rent increases.

My lease doesn’t show a legal regulated rent. Does that matter?

It matters mostly for the next tenant. If the legal rent was not written in the lease where the preferential rent started and in every renewal after that, HCR says the owner cannot later charge that prior legal rent on a vacancy. Registering it with HCR does not fix the gap on its own.

Renewal deadlines still apply while you sort this out: you have 60 days to return a renewal offer. See rent-stabilized renewal leases. This guide is general information, not legal advice. HCR’s Office of Rent Administration answers questions at rent.hcr.ny.gov.