NYC Affordability

When a landlord offers a concession, usually a free month or two, NYC listings often advertise the net effective rent: the total rent due over the lease divided by the number of months. The gross rent is the full monthly rate before the concession. The RGB’s glossary describes a concession as an owner-tenant agreement letting the tenant pay less than the otherwise-lawful rent for a limited time, not the whole lease, which is exactly why the two numbers differ.

How the free month shows up varies by deal. According to Brick Underground, the typical arrangement is that you pay the gross rent each month and get one month (often the first or last) free; sometimes the discount is spread evenly, so you actually pay the net effective amount every month. Either way, the net effective figure is an average, not necessarily what leaves your account on the 1st.

The catch is renewal time. Both Brick Underground and Hauseit report that landlords generally base renewal offers on the gross rent, not the discounted net effective rent, so a renewal can look like a much bigger jump than the headline percentage. That’s market practice on unregulated apartments, not a legal rule, and it doesn’t override caps that apply to rent-stabilized units.

Worked example

Hypothetical numbers: a listing says “$3,850 net effective, 1 month free on a 12-month lease.” Working backward, the gross rent is $3,850 × 12 / 11 = $4,200. Working forward, $4,200 × 11 / 12 = $3,850, so you pay $4,200 in eleven months and $0 in one, totaling $46,200 for the year. At renewal, if the landlord offers a 5% increase on the gross rent with no new concession, the new rent is $4,200 × 1.05 = $4,410/month: $560 (about 14.5%) more per month than the $3,850 average you were paying. Budget on the gross rent, not the advertised average; the 40x rule guide and the Rent Affordability Calculator are good places to start.