Have you been wondering why so many people live in rented rooms in New York? The answer may be here.
According to the latest market report by Douglas Elleman, to apply for an apartment in the Big Apple, a tenant needs to earn about $160,000 annually.
This is because of the 40 times rent rule, or 40 times rent rule, which states that a tenant must earn an annual salary equal to approximately 40 times the monthly rent for their New York City apartment.
Taking into account this study that ensures that by May 2022, the average rent in Manhattan has reached the threshold of $4,000 per month, the annual salary of a tenant should be between $157 and $160,000 per year.
When broken down into the data, it shows that the median rent for a studio in Manhattan was $2,850 a month (an increase of 28.4% from last year), which means eligible renters must earn $114,000 to pass the 40 times rule. Prices for one-bedroom apartments have risen to $3,995 a month, compared to $3,000 a year ago.
The study also reaches Brooklyn, where median rent is $3,048, up from $2,730 a year ago. A studio in the largest area of the city will cost you $2,674, which means that to move to Brooklyn, you would need a minimum income of $106,000 per year.
Queens waterfront neighborhoods cost more. Median rent in northwest Queens rose to $3,126 a month from $2,581 a year ago. A studio apartment in an area like Long Island City will now cost $2,929, up 51% from what it did in 2021.
The forty times rule
According to the Property Club, a portal that specializes in apartment rentals in New York, this is one of the main rules when renting an apartment in New York, but it is not the rule.
That is, landlords are asking tenants to get 40 times the monthly rent as salary, due to the price of living in New York City. This is an income guide that helps landlords qualify people as renters.
Some owners have different parameters, and do not use this rule. This is just one of the most common. Of course, rising rents and stagnating wages have changed some of the parameters that people have changed.
The portal says that many major management companies are beginning to rethink how they manage the income requirements of their tenants. The Real Estate Club stresses that “people cannot be expected to earn twice the average salary for an apartment that is not even equal to the average price of an apartment.”
The portal also highlights some requirements that can help tenants avoid the 40x rental rule, some of which are:
Get good credit, find more roommates (partner, roommate, etc.), find a tenant who does not adhere to this rule, find a guarantor for rent, find housing based on income.