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It’s been just over a year since the implementation of New York’s historic rent reforms. At the time, landlords predicted that one of the big changes, a cap on the amount of security deposit they could collect, would inadvertently make renting more challenging for those who couldn’t meet the steep income requirements NYC landlords like to see. That scenario appears to be playing out.
Many landlords require renters to have both good credit and an annual salary of 40-45 times the monthly rent. In the past, if you had shaky credit or a lower income, you could offer a higher security deposit to offset the risk a landlord was taking on you. That option was taken off the table with new laws limiting the deposit to one month’s rent.
[Editor's note: An earlier version of this article ran in August 2019. It has been updated with new information for August 2020.]
Adam Frisch, managing principal at Lee & Associates Residential NYC, a company that represents small building owners in Manhattan, says he’s had to turn away renters that he would have accepted in the past. In one case, he says, in lieu of proof of employment, a renter provided a letter from her former boss explaining that she had been furloughed but would be rehired again soon, at a future date.
Because she didn’t meet the income requirements, Frisch could not qualify her as a tenant—even though she had substantial funds in her bank account. If the law hadn’t changed, he says he would have accepted her on the condition she provide three months of security—which the renter said she was willing to pay.
“I told her I couldn’t accept—it’s illegal,” Frisch says, adding that he was confident she would have been a good tenant.
In addition, the new law makes renting in NYC especially challenging for students without jobs and international employees without established U.S. credit (international students are now scarce in the city, a result of travel bans and threats from the Trump administration.)
In the past, Frisch says, “We essentially did them a favor by taking them at all with extra security and now the risk is so high, it’s better to find someone with U.S. credit and a good job,” Frisch says.
Even though the rental market has slowed down, it has not halted, he notes. A landlord can turn down a less qualified tenant and be relatively confident they can still fill the apartment, albeit with concessions and at a lower rent than pre-pandemic.
So how does renter who does not make the grade get an apartment?
In situations like these, a personal guarantor can be a solution. A personal guarantor is someone who will co-sign your lease and pay the rent if you don't. They are generally required to have a credit score of at least 700, an annual income of 80 times the monthly rent, and if the landlord is extra cautious, residence in the tri-state area (New York, Connecticut, or New Jersey).
Some renters may look first to their parents or other older relatives to serve as guarantors, but if they're retired—and lacking a steady income—this could be a problem. You can ask a friend or employer to guarantee your rental but given the risks that come along with doing so, you may find that non-relatives are reluctant to shoulder the responsibility.
Here are some other solutions to consider:
Hire an institutional guarantor
In New York City, you can pay someone to do almost anything that needs doing—including co-signing your lease. For about 70 to 85 percent of one month's rent if you have U.S. credit, and 90 to 110 percent of one month's rent if you're foreign with no U.S. credit, Insurent Lease Guaranty (a Brick Underground sponsor) can be your guarantor with far less strict income and employment requirements than most landlords. (To see if your prospective building or landlord accepts Insurent, click here.)
Offer to pay a higher rent
As landlords grapple with the cap on security deposits, it’s possible renters may find that an advertised rent goes up in response to an applicant’s credit history.
Frisch says this is something renters will likely see more of in the future. “Someone who just graduated and doesn’t want to—or can’t—use their parents as guarantors, we will let them take the apartment for an extra $100 in rent,” he says.
Paying a higher rent might be difficult to stomach but it may be enough for a landlord to offset the risks of renting to you if you have no credit history.
Opt for a sublet (or become the new roomie)
There are definite pros and cons to living in a place where your name is not on the lease, but one major "pro" is you might not have to go through the qualification gauntlet. There are plenty of places to seek out a sublet set-up, including online forums as well as sites that act as marketplaces for short-term rentals. If it's a roommate set-up you're in search of, there are lots of sites out there that'll help you find a spot.
Don't have a guarantor? The rental experts at Triplemint, a Brick Underground partner, can help you navigate the market and find a great apartment to rent without one. Sign up here to take advantage of Triplemint's corporate relocation rate—where you'll pay a broker's fee of 10 percent of a year's rent on open listings instead of the usual 12 to 15 percent. Bonus: The agents at Triplemint are a delight to deal with.
Go with a co-living company
Co-living offer the convenience of a furnished apartment with staples in the pantry and ready-made roommates—all for one monthly payment. Many companies vet tenants the same way traditional landlords do, with background checks, and credit and income qualifications, but you may find some are more flexible than others.
These days, you’ll find the emphasis is off group activities and networking events and on flexible lease terms, which are very much in demand during these uncertain times. Some co-living companies are even offering shorter-than-usual leases.
One important consideration, however, is the legality of the operation. You don’t want to find your unit abruptly shut down like hundreds of Bedly tenants did. You should know it’s illegal to rent a single room in a co-living space—all roommates need to be on a lease. You'll also want to do some due diligence on the company to make sure it is legal and the unit is properly set up for fire safety. Basement and windowless apartments are not legal—or safe.
Insurance that guarantees your rent
A relatively new kind of insurance will pay your rent if you lose your job. It's called rent guarantee, and it is considered job loss protection for which you pay a monthly fee. Rent guarantee insurance is typically obtained by landlords, so you may start to see it mentioned in listings. Landlords can roll it into the monthly rent, and if you're asked you to pay for it, it needs to be spelled out in the lease.
Keep in mind that by guaranteeing your rent, you lose your ability to withhold rent if a landlord isn’t fixing things, which is important leverage over a negligent owner.
Shop around for the right landlord
This can be tough in the already-exhausting process of apartment hunting, but especially in the winter months when the market is slower, you'll have a better chance of finding a landlord willing to work with your particular set of circumstances. Be upfront with your broker and the landlords you contact about your situation.
—Earlier versions of this article contained reporting and writing by Virginia K. Smith
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