2 yr leases - pro or con?

poshspice · August 2007

The stats:

1. Now have the option to sign a one or two year renewal on current 1BR in rent stabilized apt in PH. One year deal will increase rent by 5.5% (I'm estimating since its paperwork is not in front of me), the two year deal by about 8%. For reference, based on current market rates, I am paying roughly 15-17% below market.

2. In love with my apt. I know I lucked out and from the looks of it, can see no reason why I would move any time soon...

3. BUT - 2 years sounds like a long time.

Another one year deal is a no brainer. That said, I want to cover my options and make sure I'm thinking smart.

Does it sound like a good idea to bite the bullet and commit to 2 more years? Anyone else toying with the same? Will I screw myself out of a good deal if I only sign the one year? I'm 80% convinced I should do 2 yrs (small, quiet bldg, good space, the nabe continues to be on the uptick, etc.) but then my transient, single girl self starts hand wringing with commitment issues. The biggest con I see to this is what if something happens and I need to move during my 2 year lease....I could sublet it, right? Is that legal?

The other nag factor is ATL Yards, of which I will be VERY close to. Do you guys think the pending drama will make 2 years in my bldg a bum deal?? Help!

--A wishy-washer.

ben · August 2007

The economics of a 1 or 2 yr lease work out to be about the same if analyzed on their own. The real impact is what the increases will be next year. If they are higher than this years then you make out, if they are lower you end up paying a little more.

On the sublet thing, you have the right to sublet if you want and the landlord cannot unreasonably refuse to allow you to. If they do they have to let you out of your lease. Since you are paying less than market rent you probably won't have a problem either finding a subletor or breaking your lease.

BTW, this year's increases are 3% and 5.75% http://www.housingnyc.com/html/guidelines/orders/order39.html

poshspice · August 2007

Ben wrote: The economics of a 1 or 2 yr lease work out to be about the same if analyzed on their own. The real impact is what the increases will be next year. If they are higher than this years then you make out, if they are lower you end up paying a little more.

GOOD point. So I guess another question would be what kind of rent increases an expert would project for our area in '08-'09?

bunnycup · August 2007

Actaully, the mechanics of subleasing on an RS lease are slightly different than Ben explains it, IIRC. The effect of an "unreasonable" refusal is that it is deemed an acceptance of the sublease. That is to say, on an RS lease the landlord must grant any reasonable request to sublease (reasonable is defined in the case law and I can't usefully opine on exactly what is "reasonable"). If a landlord ("unreasonably") refuses a reasonable request, the refusal is given no effect. This does NOT mean you are released from the lease obligations or let out of your lease, rather simply that you may proceed with the reasonable sublease without regard to the landlord's refusal of permission.

I am not an expert on this, jsut really enjoy this area of law. Ben may have special expertise or knowledge and if I'm wrongfully contradicting, or seeming obnoxious, I apologize.

kick rocks!!!! · August 2007

I'd lock in on the 2 year lease. 2 years passes pretty quickly. When I was renting, I always signed the 1 year lease and when the next lease rolled around, I was always kicking myself for not signing the 2 year. For many years the rent board would pass 2-3% increases, but I think those days are LONG gone! If it's RS most likely your LL will let you out of the lease. Better for them anyway. They can do a minor reno and raise the rent.

As to AY, you probably will have to deal w/the noise. That would be the deciding factor for me, can I live w/impending noise from construction?

poshspice · August 2007

Judging by my current schedule I should be able to make it thru the noise. I think you're right, I should go for the 2 year lease.

livetotravel · August 2007

Definitely - having a RS apt in this day and age is like owning property - you are in the driver's seat.

flux · March 2008

at the current rates, I would definitly sign a 2 year lease.

meganlibrarian · March 2008

When I moved into my current apartment just over 2 years ago, we were offered a 2-year lease. It was super-handy to have that fixed expense for 2 years, to know that our rent was stable at the same amount month after month. 2 thumbs up for the longer lease!

ntpeace · April 2008

2 years is fine if you really plan on staying there; even if you decided to move later on; you can always find someone, qualified to take the apartment, which will get you out of your lease ~ usually no problems, doing this....

vanilla · April 2008

with a rent stabilized apt., the landlord can raise the rent 20% when the next tenant moves in or more if s/he renovates. therefore, usually if you want to get out of a rent stabilized apt. lease, the landlord usually doesn't mind b/c they can try to bring the apt. to market rate.

garfunky · May 2008

fwiw

IF your rent is $1500 and

you take 2 successive 1 year leases at 5.5%
(assumes the rate stays the same this year - considering fuel costs this makes it a rather large assumption but anyway ..)

you pay 1582.50 the first year,
1669.53 the second year
resulting in a 24 month total of 39024.45

IF

you take the 2 year at 8%
you pay $1620 a month for both years.
resulting in a 24 month total of 38,880

so at a rent of 1500 the 2 year lease saves you 140 over the 2 years.
an average saving of $1.34 per month.

so the difference over 2 years is actually negligible.

the decision should be based on your expectations of staying.

if you really dont think youre going to be there 2 years
why pay 40 a month MORE the first year ?

you can bet your bippy that if you try to sublet most LL will at least look for a reasonable and legal method to block it. (they dont make enough money to qualify , have a credit issue, are trying to stuff 4 adults into a 1 bedroom apt, etc etc).

why ? In a legal sublet you will still get the automatic RS renewal .

more likely LL would let you out of the lease altogether so that they get both a vacany increase and a construction increase.

best wishes

2 yr leases - pro or con?

Comments

Howdy, Stranger!

Categories