As Rents Soar, Tenants Battle Apartment Qualifications

The demand by landlords that prospective tenants earn 40 times their monthly rent to qualify for an apartment is becoming more troublesome as rents soar in the city, far outpacing rising incomes.

The burden of income proof did not stop tenant Harry Tuman, who eventually signed a lease on a two-bedroom apartment in Gramercy, where he now sleeps behind a curtain in the living room. He has two roommates, though only one shares the lease. Even in this cramped arrangement, he says he spends half of his earnings on rent.

Before he and a classmate from the School of Visual Arts in Manhattan could move in, they had to prove they could afford it. They rallied all four of their parents, who, combined, had to demonstrate they made 80 times their kids' monthly rent of $2,250, or $180,000. One couple was retired. "They didn't make that much," Mr. Tuman said.

Still, they managed, and Mr. Tuman, who is now a broadcast designer for Black Entertainment Television, got the apartment.

His case would seem the perfect example of the growing imposition of the "40 times rule," as it is commonly known, for rental apartments in Manhattan and parts of Brooklyn. In addition to undergoing credit and background checks, most hopeful tenants must prove to their landlords or brokers that they draw an income of around 40 times their monthly rent. Newcomers to the city are sometimes taken aback by the procedural rigors, but most willingly submit. They have no choice; with microscopic vacancy rates, it's a lessor's market.

"The 40 times rule is really only one of the ways landlords check to see whether a tenant can pay rent," an executive for the brokerage firm Citi Habitats, Gary Malin, said. Mr. Malin said the demand for rentals is so high that landlords could enforce the rule without losing business. "It doesn't shut out so many people that the landlords can't get what they need."

In real terms, though, the 40 times rule is daunting, particularly for young professionals who are just starting off in their careers. The New York Real Estate Group's February rental market report lists the average rental price for a two-bedroom apartment at roughly $3,800 per month. Applicants for a rental at that price would have to earn $152,000 a year. As rental prices continue to rise — citywide averages for two bedroom rentals have risen by more than $300, or nearly 10%, in just the last month, according to the report — the 40 times rule is producing earnings requirements that many renters could not hope to meet.

There is one loophole in the system: Some tenants claim brokers do not actually apply the rule as strictly as it would first seem.

"They don't care," a financial software programmer who rents a two-bedroom in the West Village, Nick Ganju, said. Mr. Ganju said he remembers when he had to adhere to the 40 times rule. He said he viewed brokers as willing negotiators because "they want to help you get them their fee."

Mr. Ganju said his application process involved heavy scrutiny. "They did a full credit check and everything, they called my employer, and they wanted to see my pay stubs, and they wanted to look at my bank balances, so it was pretty invasive."

But he maintained his view that brokers, in general, could be lenient. "It's actually in their interest to help you get into the apartment," he said. "They'll do the credit check and they'll try to help you make your credit look better."

The rule itself, born out of the mortgage lending requirement that a recipient spend no more than 30% of his or her income on housing, breaks no law.

"It's certainly legal," said Vicki Been, a law professor and the director of the Furman Center for Real Estate and Urban Policy at New York University. "Building owners and brokers on their behalf can certainly insist that the tenant have a certain level of income."

Ms. Been said that New York City's extensive tenant protection laws meant landlords had to exercise their judgment early because evicting a tenant who was not paying rent would be much more difficult. "When they rent an apartment to you it's their risk whether you pay the bill at the end," Ms. Been said.